New York regulates tax preparers

 New York state is the most recent state to regulate tax preparers. Credit: Getty Images
New York state is the most recent state to regulate tax preparers. Credit: Getty Images

New York this month became the fourth U.S. state to regulate unlicensed tax return preparers, at a time when consumer advocates are pushing for more state oversight as a federal crackdown stalled.

Nearly 80 million Americans pay someone to prepare their tax returns. While most of this work goes smoothly, some does not.

Tax return preparation problems – some inadvertent and some deliberate – occur frequently among small, mom-and-pop tax return firms, according to government watchdogs.

About a third of the $9.4-billion tax preparation market is controlled by H&R Block Inc and three other large companies, with the remaining two-thirds split between licensed and unlicensed preparers, said research group IBISWorld Inc.

Seeking to regulate the business for the first time, the U.S. Internal Revenue Service earlier this year tried to impose new testing and continuing education requirements on the estimated 350,000 unlicensed preparers nationwide.

But that effort was blocked in January after a lawsuit was filed by a libertarian group opposed to the rules. The Obama administration has appealed. A decision is expected soon.

In the meantime, interest in state oversight is growing, said David Williams, chief tax officer at Intuit Inc, which sells tax preparation software.

“You’re seeing the advocacy community step up and shift focus from the federal government to getting the states to do this,” said Williams, former IRS tax preparer office director.

Joining California, Oregon and Maryland in imposing regulations, New York will require independent preparers to pass a competency test and take continuing education classes.

Among the new rules, New York tax preparers cannot charge “an unconscionable fee” and must adhere to “best practices” according to the New York Department of Taxation and Finance web site.

The state’s rules, which became effective December 11, carry possible criminal penalties.

Eventually, New Yorkers will be able to look up their tax preparer on the department’s web site to see if he or she is complying with the rules.

“We will be investigating complaints, assessing penalties seeking criminal prosecution,” among other disciplinary actions, said Geoffrey Gloak, a spokesman for the department.

The New York rules may face a court challenge, as well, from the Institute for Justice, the group that sued over the IRS rules, said a lawyer with the group.

Dan Alban, who is representing the institute in its case against the IRS, said: “We’re always concerned when states impose burdensome licensing schemes … These regulations certainly raise those same concerns.”

In November, 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.

Chi Chi Wu, a lawyer and author of the NCLC report, said states lose tax revenue to fraudulent preparers. The institute’s attack on preparer rules is a threat to consumers, she said.

“We shouldn’t be sympathetic to a mom-and-pop shop if it’s making a lot of mistakes or committing fraud,” Wu said.

 



News
Entertainment
Sports
Lifestyle
Local

Protesters say new Met Opera is anti-Semitic

Protesters, including a former mayor and governor, gathered outside of the Metropolitan Opera on Monday afternoon to protest the opening of “The Death of Klinghoffer.”

Local

Brooklyn girl's death ruled a homicide

The New York City Medical Examiner has ruled the death of a Brooklyn toddler a homicide. Jeida Torres, 3, was found bruised and unresponsive Saturday…

Local

New York City continues to prepare for Ebola…

New York City continues to prepare for the possibility of Ebola. There have been numerous scares, but no confirmed cases. Representatives from about 150 unions…

Local

NYPD nabs alleged serial bank robber

  The NYPD has arrested a man they say is responsible for multiple Manhattan bank robberies this month. Police have arrested a Brooklyn man they…

Entertainment

We the Economy: Morgan Spurlock's new crusade

If Morgan Spurlock gets his way, you won't be able to avoid We the Economy, the series of 20 shorts films curated by the "Super…

Arts

3 Parody plays lampoon your childhood, adulthood and…

Whether you loved the source material or you're going in blind, these parody plays have something for every audience member. We rate three of NYC's hottest satirical shows.

Gossip

Who has more power: Harry Styles or Amal…

Amal Clooney comes in fourth on The Evening Standard's Most Influential Londoners list.

Music

#AskPaul McCartney reveals his love of American pop…

For an Englishman, Paul McCartney's pop culture tastes would fit right in stateside. The former Beatle (@PaulMcCartney) revealed that he has a real thing for…

NFL

John Idzik: 'We did a ton of background'…

Given John Idzik spent the previous five years with the Seahawks before he joined the Jets last January, there is a comfort level for the organization.

NFL

Jets add sizzle to struggling passing game with…

The Jets’ trade for Percy Harvin may have an air of desperation on the surface, but at 1-6 this season is hanging only by a thread.

NFL

Jason Pierre-Paul: 'We've got to regroup' during bye…

“We’ve got to regroup and figure out what went wrong,” said defensive end Jason Pierre-Paul. “When we come back, we want to be a great team.”

NFL

Breno Giacomini: Media blowing up Golden Tate-Percy Harvin…

According to Breno Giacomini, the fight between Golden Tate and Percy Harvin during Super Bowl week was over by the time the lineman turned around.

Education

Is a 'gap year' after high school for…

It’s a familiar script that millions of students follow each year: Graduate high school and then immediately start college. But more and more students are…

Parenting

New news about Kate Middleton's pregnancy

The Palace released a statement about Kate Middleton's pregnancy.

Parenting

Cool book for kids: 'The Princess In Black'

"The Princess In Black" will change the way girls view princesses.

Wellbeing

Gabby Bernstein: The 3 questions I always get

For the last decade, I’ve been writing self-help books and preaching the Gospel of Gabby to audiences throughout the world. And no matter what country…