According to
governmental regulators, tax return preparation problems are more likely to
occur among small mom-and-pop tax return firms. In November 2013, The National
Consumer Law Center, a consumer-advocacy group, reported on examples of
unlicensed tax preparer problems and called for states to enact their own
rules. The Internal Revenue Service’s attempt to regulate these unlicensed tax
preparers was blocked by a law suit filed by a libertarian group opposing the federal
regulations. (RTRP Rules Challenged) The Obama administration has appealed the
ruling and a decision is expected in the near future. In addition, legislation
has been introduced in Congress that would give the IRS the authority to impose
regulations on unlicensed tax return preparers.
New York is
now the fourth state to pass regulations governing unlicensed tax return
preparers, joining the states of California, Oregon, and Maryland. New York
will require independent preparers to pass a competency test and take
continuing education classes before being allowed to prepare income tax returns
for the public.
Among the new
rules, New York preparers cannot charge “an unconscionable fee” and must adhere
to “best practices” according to the New York Department of Taxation and
Finance site. The state’s new rules became effective December 11, 2013 and
carry possible criminal penalties.
New York
taxpayers will eventually be able to look up tax preparers on the department’s
web site to see if they are complying with the rules. A spokesperson for the
department indicates that they will be investigating complaints, assessing
penalties and seeking criminal prosecution.
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