Proposal Would Kill Tax Prep Registration Law

Earlier this year, the state tax department's deputy commissioner of enforcement, William Comiskey, told a group of CPA tax return preparers at a FAE tax conference that legislation would soon be introduced that would require them, and every other tax return preparer who filed tax forms in New York state, to register with the state and pay a fee.

The bill was expected to raise millions in revenue; and Comiskey said a database would be created by the tax department that could be used by the state to track unscrupulous tax return preparers. It was also supposed to be a first step to require a certain level of education for tax return preparers who filed in New York, Comiskey said.

A few months later, the bill was signed into law by Gov. David A. Paterson, one provision among many in one of the state's budget bills. However, an exemption was included in the bill that became law. CPAs and attorneys licensed in New York state would not be included in the definition of tax return preparer, since the new accountancy reform law already requires all New York licensed CPAs, including tax practitioners, to register with the state and earn continuing professional education credits. However, out-of-state CPAs and any non-CPA signing returns in New York state are still obligated to follow the law's registration mandate.

On May 28, shortly after the bill became law, a bill amendment (A8556) was introduced in the Assembly by Assemblyman Herman D. Farrell Jr. (D-Harlem, Washington Heights) that would exempt out-of-state CPAs from the registration requirement, as well as any tax return preparer who prepared returns under the supervision of an attorney, a CPA or PA in a law or CPA firm.

Yet another bill, S52209, was introduced June 24 by David A. Paterson in the Senate Rules Committee, that would undue the rule completely, striking the registration requirement for any tax return preparer from the law. The Assembly version (A9028) is also sponsored by Farrell.

The bill memo recognizes that the state will lose $3.5 million in revenue in the current budget by rescinding this law, although it says the loss will be "offset somewhat by administrative savings associated with initiating this new program."