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
National

Florida man charged with murdering son to play…

A Florida man annoyed that his 16-month-old crying son was preventing him from playing video games suffocated the toddler, police said on Friday.

International

Powerful 7.2 magnitude earthquake rattles Mexico

A powerful earthquake struck Mexico Friday, shaking buildings and sending people running into the street, although there were no reports of major damage.

News

OMG! Exercise can make skin (and butt) look…

A moderate exercise regime can turn back time and actually reverse the skin's aging process, according to new research. The study showed that a minimum…

International

Jews in eastern Ukraine ordered to register, Kerry…

Secretary of State John Kerry condemned reports that Jews in eastern Ukraine had been ordered to register with the authorities "or suffer the consequences."

Entertainment

Whoopi Goldberg makes her debut as marijuana columnist

"It helps my head stop hurting, and with glaucoma your eyes ache, and she takes the ache out. It's wonderful," she said.

The Word

Kate Middleton made fun of Prince William's bald…

Kate Middleton and Prince William are in Sydney, Australia, right now, and it sounds like that brash Aussie sense of humor might be rubbing off.

The Word

Is Tom Cruise dating Laura Prepon?

"Mission: Impossible" star Cruise is said to be dating Laura Prepon, star of "Orange is the New Black."

Television

'Scandal' recap: Season 3, Episode 18, 'The Price…

Sally is Jesus, Olivia caused global warming, and Mellie's still drunk. Let's recap the Scandal finale. A church full of Washington insiders is about to…

NBA

Carmelo Anthony agonizing over Knicks future as season…

There’s still the cloud hanging over the franchise’s head as to the pending free-agent status of All-Star forward Carmelo Anthony.

NFL

Jets host players with eye toward NFL Draft

The Jets hosted a number of NFL Draft hopefuls for workouts on Thursday, with an eye toward some under-the-radar players.

NFL

Chris Johnson: I wanted to go to 'a…

Now that Chris Johnson is a Jet, the team has to figure out if one of the most explosive players in the NFL over the last half decade has anything…

NHL

Rangers' speed versus Flyers' size makes interesting playoff…

Among the myriad aspects that will make this Metropolitan Division semifinal series fascinating will be the battle between the Rangers' speed and the Flyers' size,…

Tech

VIDEO: 'Vein-scanning' may become the future of paying

Designed to make transactions quicker and easier, the technology works by scanning the unique vein patterns in each person's palm.

Tech

#FollowFriday: 10 of the smartest Twitter accounts

Spending lots of time on Twitter? You might as well learn something. Here are some of the smartest accounts to follow.

Style

Light-up nail art syncs with phone

This Japanese technology syncs light-up nail art with your phone.

Wellbeing

Why is dance cardio taking off in NYC?

Instructors at some of the city's hottest classes explain why.