Most individuals who are paid to prepare at least 10 state tax returns a year will be required to pass a state competency exam, take four hours of annual continuing education and meet applicable Internal Revenue Service requirements, based on new regulations announced by Gov. Andrew Cuomo today.
The changes build on a requirement since 2011 that most tax preparers register annually with the state Department of Taxation and Finance. Tax preparers also have to be at least 18 and a high school graduate, or possess the equivalent of a high school degree, and tax preparers with fewer than three years of experience on state returns must take a 16-hour basic tax course.
The new standards make New York only one of four states that regulate the tax preparer industry, which comprises 40,000 paid tax preparers. Violating them could lead to a range of disciplinary actions, from remedial education to suspension or cancellation of registration.
“With 70% of New York taxpayers depending on a tax preparer to file their taxes, we need to ensure clear standards exist to prevent fraud and protect consumers,” Cuomo said in a statement. “These new regulations will better protect New Yorkers who use tax preparers by requiring minimum qualifications and professional practices within the industry.”
Cuomo is urging New Yorkers to be cautious when selecting a tax preparer and do their homework. They should check the internet, get a referral and make sure the person they hire is legally registered with the Department of Taxation and Finance, he said.
Taxpayers should be cautious to avoid preparer scams that include:
— Advertising or promising in-person to do an income tax return for a low price, but then billing the client for a much higher fee, arguing the return was more complicated than anticipated.
— Convincing clients to have their refund deposited into the preparer’s account instead of the client’s, and then the preparer steals part of the refund.
— Offering high-interest loans, often with unclear terms, prior to refunds being received.
To file a complaint, call 518-530-HELP or file it online. Free tax preparation is available at IRS-certified volunteer sites for people with maximum incomes of $52,000, or at AARP Tax-Aide sites. There are no income limits at those sites.