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

Brooklyn man charged in roommate's stabbing death

A Brooklyn man accused of violently stabbing his roommate to death on Monday is in police custody and faces murder charges.

International

Dinosaurs could have survived asteroid strike

It turns out there is a good and a bad time for the planet to be hit by a meteor, and dinosaurs were just unlucky.…

National

OkCupid admits to Facebook-style experimenting on customers

By Sarah McBrideSAN FRANCISCO (Reuters) - OkCupid, a top U.S. matchmaking website, intentionally mismatched users to test its technology, the IAC/InterActive Corp service said on…

Local

MTA fares still increasing 4 percent in newly…

The agency said the 4 percent increases, previously announced in December, will remain steady even as the MTA deals with increasing labor costs.

Movies

Interview: Brendan Gleeson on the way 'Calvary' depicts…

Brendan Gleeson talks about how his new film "Calvary" began over drinks and how his character here is the opposite of the lead in "The Guard."

Movies

'Get on Up' producer Mick Jagger on the…

Mick Jagger, a producer on the James Brown biopic "Get on Up," talks about the time had to tell the singer some bad news and his favorite JB record.

Television

'Glee' star Lea Michele to appear on 'Sons…

"Glee" star Lea Michele has been confirmed as a guest star in the final season of "Sons of Anarchy."

Television

TV watch list, Monday, July 28: 'The Bachelorette'…

See Andi Dorfman make her big choice on tonight's 'Bachelorette' finale.

MLB

Angelo Cataldi: Ryan Howard deserves better from Phillies

Just last week, Ryan Howard endured the embarrassment of a benching that was inevitable, and yet still shocking.

NFL

Larry Donnell has inside track in Giants tight…

Little-known Larry Donnell of Grambling State currently has the inside track, as the second-year player has received the bulk of the first-team reps.

NFL

Computer to Jets: Start Michael Vick over Geno…

Jets general manager John Idzik says the choice of who starts between second-year quarterback Geno Smith and veteran Michael Vick will be a “Jets decision.”

MLB

Yankees looking to trade for Josh Willingham: Report

CBS Sports’ Jon Heyman reported Sunday the Yankees are interested in Twins outfielder Josh Willingham.

Travel

Glasgow: Hey, hey, the gangs aren't here

This European city has done a good job getting rid of its more violent residents and revitalizing with artists.

Education

Babson College tops list of best colleges for…

Money magazine has just released its inaugural list of "The Best Colleges for Your Money" -- and the answers have surprised many. Babson College, which…

Education

NYC teens learn how to develop apps during…

Through a program sponsored by CampInteractive, the high schoolers designed their own community-focused apps.

Tech

The Ministry of Silly Walks app is both…

Monty Python have dug into their back catalogue for cash-ins once more, but with the Ministry of Silly Walks app, they've made something that's fun too.