N.Y. Tax Law § 32: Registration of tax return preparers

§ 32. Registration of tax return preparers. (a) For purposes of this

section, the following terms have the specified meanings:

(1) "Attorney" means an attorney admitted to practice law in New York

state or one or more of the other states or jurisdictions of the United

States.

(2) "Certified public accountant" means an accountant licensed

pursuant to section seventy-four hundred four of the education law or a

similar law of one or more of the other states or jurisdictions of the

United States.

(3) "Commercial tax return preparer" means a tax return preparer who:

(A) prepared ten or more returns for compensation in the preceding

calendar year and will prepare at least one return for compensation

during the current calendar year; or (B) prepared fewer than ten returns

in the preceding calendar year but will prepare ten or more returns for

the current calendar year.

(4) "Commercial tax return preparation business" means an entity that

employs individuals who prepare tax returns and that meets the

thresholds described in paragraph three of this subdivision.

(5) "Creditor" means any person who makes a refund anticipation loan

or who takes an assignment of a refund anticipation loan.

(6) "Facilitator" means a person who individually or in conjunction or

cooperation with another person: (a) solicits the execution of,

processes, receives, or accepts an application or agreement for a refund

anticipation loan or refund anticipation check, (b) serves or collects

upon a refund anticipation loan or refund anticipation check; or (c) in

any other manner facilitates the making of a refund anticipation loan or

refund anticipation check. This term excludes any employees of a

facilitator who provide only clerical or other comparable support

services to such facilitator.

(7) "Electronic" means computer technology.

(8) "Enrolled agent" means an agent enrolled to practice before the

internal revenue service pursuant to section 10.4 of subpart A of part

ten of title thirty-one of the code of federal regulations.

(9) "Public accountant" means an accountant licensed pursuant to

section seventy-four hundred five of the education law or a similar law

of one or more of the other states or jurisdictions of the United

States.

(10) "Refund anticipation check" means a check, stored value card, or

other payment mechanism which: (a) represents the proceeds of a tax

refund; (b) was issued by a depository institution or other person that

received a direct deposit of the tax refund or tax credits; and (c) a

fee or other consideration is paid for such payment mechanism.

(11) "Refund anticipation loan" means a loan that is secured by or

that the creditor arranges to be repaid directly or indirectly from the

proceeds of an income tax refund or tax credits. A refund anticipation

loan also includes any sale, assignment, or purchase of tax refund at a

discount or for a fee, whether or not the amount is required to be

repaid to the buyer or assignee if the internal revenue service or the

department denies or reduces the amount of the tax refund.

(12) "Return" means a return or report relating to a tax administered

by the commissioner.

(13) "Tax" means any tax, fee, special assessment or other imposition

administered by the commissioner.

(14) "Tax return preparer" means an individual who prepares a

substantial portion of any return for compensation. Employees of a tax

return preparer or a commercial tax return preparation business who

prepare returns for clients of that preparer or preparation business, as

applicable, and partners who prepare returns for clients of a

partnership engaged in a commercial tax return preparation business, are

all "tax return preparers" for purposes of this section. Excluded from

the definition of "tax return preparer" are attorneys, public

accountants, enrolled agents, and certified public accountants, and

employees of an attorney, public accountant, enrolled agent, certified

public accountant, or firm thereof preparing returns under the

supervision of such attorneys, public accountants, certified public

accountants and enrolled agents or firms thereof. Also excluded are

volunteer tax preparers, employees of a business or partners in a

partnership whose job responsibilities include preparation of only the

business' or partnership's returns, and employees of a tax return

preparer or a commercial tax return preparation business who provides

only clerical or other comparable services.

(b)(1) Each tax return preparer, who will prepare at least one return

in a calendar year, and each facilitator, who will facilitate the making

of a refund anticipation loan or refund anticipation check, must

register electronically with the department for that calendar year, in

accordance with instructions prescribed by the commissioner.

(2)(A) Upon completion of the registration process, each tax return

preparer and facilitator will be issued a tax preparer or facilitator

registration certificate. If an individual acts as both a tax return

preparer and a facilitator, one registration certificate shall indicate

both activities.

(B) In accordance with instructions prescribed by the commissioner,

each tax return preparer and facilitator will also be assigned a unique

identification number by the department, which must be used by the tax

return preparer and facilitator on each return which the tax return

preparer is required to sign and each refund anticipation loan and

refund anticipation check the facilitator is required to sign.

(C) If a tax return preparer or facilitator is an employee or

prospective employee of a tax return preparer, a commercial tax return

preparation business, or a facilitator, the tax return preparer,

commercial tax return preparation business or facilitator must ensure

that the employee or prospective employee is properly registered with

the department and possesses a valid tax preparer or facilitator

registration certificate. If an individual acts as both a tax return

preparer and a facilitator one registration certificate shall indicate

both activities.

(3) Each registered tax return preparer and facilitator must

electronically re-register with the department annually, in accordance

with instructions prescribed by the commissioner. If, at any time during

the year following registration or re-registration, as applicable, any

information provided by the tax return preparer or facilitator upon

registration or re-registration is no longer correct, the tax return

preparer or facilitator must update his or her information in accordance

with instructions prescribed by the commissioner.

(4) Each tax return preparer preparing any return must sign the

document and include the unique identification number specified in

paragraph two of this subdivision, in accordance with instructions

prescribed by the commissioner.

(c)(1) Each commercial tax return preparer must electronically pay an

annual fee of one hundred dollars to the department, in accordance with

instructions prescribed by the commissioner. Registration of a

commercial tax return preparer is not complete until payment of the fee

is made.

(2) All fees received by the commissioner pursuant to this

subdivision, reduced by those amounts the commissioner determines are

necessary to cover administrative costs to administer the registration

program prescribed by this section and the costs of any reimbursements

to commercial tax return preparers that may be required due to

duplicative fee payments under this subdivision, must be deposited

monthly to the credit of the general fund of the state. The commissioner

will maintain a system of accounts showing the amount of money collected

and disbursed from the fee imposed by this subdivision.

(d) The issuance of a tax preparer or facilitator registration

certificate to provide tax preparation services or refund anticipation

loan services is not, and must not be advertised as, an endorsement by

the department of the tax return preparer or the facilitator, or his or

her qualifications or the services rendered by him or her.

(e) A tax return preparer who has not registered with the department,

or a commercial tax return preparer who has not paid the required

registration fee, will not be allowed to represent his or her clients

before the division of taxation or the division of tax appeals. This

sanction is in addition to any penalties which may be imposed pursuant

to subdivision (f) of this section.

(f) (1) A tax return preparer or facilitator shall not: (A) charge or

impose any fee, charge or other consideration in the making or

facilitating of a refund anticipation loan or refund anticipation check

apart from the fee charged by the creditor or bank that provided the

loan or check;

(B) Engage in unfair or deceptive acts or practices in the

facilitating of a refund anticipation check or a refund anticipation

loan, including making any oral statements contradicting any of the

information required to be disclosed under the Taxpayer Bill of Rights

as set forth in sections three hundred seventy-one through three hundred

seventy-three of the general business law;

(C) Directly or indirectly arrange for a third party to charge any

interest, fee or charge related to a refund anticipation loan or refund

anticipation check;

(D) Include any of the following provisions in any documents provided

or signed to obtain a refund anticipation loan or refund anticipation

check, including the loan application or agreement: (i) a hold harmless

clause; (ii) a confession of judgment clause; (iii) a waiver of the

right to a jury trial; (iv) any assignment of or order for payment of

wages or other compensation for services; (v) a waiver of any provision

of the Taxpayer Bill of Rights, as set forth in sections three hundred

seventy-one through three hundred seventy-three of the general business

law; or (vi) a waiver of the right to injunctive, declaratory, other

equitable relief, or relief on a classwide basis. Any aforementioned

waivers shall be deemed null, void and of no effect;

(E) Take or arrange for a creditor to take a security interest in any

property interest of the taxpayer other than the proceeds of the tax

refund to secure payment of a refund anticipation loan;

(F) Directly or indirectly, individually or in conjunction or

cooperation with another person, engage in the collection of an

outstanding or delinquent refund anticipation loan for any creditor or

assignee;

(G) Make a misrepresentation of fact in obtaining or attempting to

obtain a registration; or

(H) Engage in any other action prohibited by rules promulgated by the

commissioner.

(2) If a tax return preparer violates any one of the provisions

provided for in this subdivision, then the tax return preparer must pay

a penalty of five hundred dollars for each such violation, in addition

to any other penalties provided for in this section.

(g) (1) The department shall issue a notice to a tax return preparer

or facilitator for failure to register or re-register with the

department pursuant to paragraph one or three of subdivision (b) of this

section, which shall set forth a fifteen day period to cure the failure

to register or re-register. The commissioner is authorized to send such

notice electronically to the tax return preparer's or facilitator's

online services account. A tax return preparer or facilitator who fails

to register or re-register in accordance with such notice must pay a

penalty of two hundred fifty dollars. The penalty can be waived only for

good cause shown by the tax return preparer or facilitator.

(2) The department shall issue a notice to a commercial tax return

preparer who fails to pay the fee as required in paragraph one of

subdivision (c) of this section, for a calendar year, which shall set

forth a fifteen day period to cure the failure to pay the fee. The

commissioner is authorized to send such notice electronically to the

commercial tax return preparer's online services account. A commercial

tax return preparer who fails to pay the fee in accordance with such

notice must pay a penalty of fifty dollars for each return the

commercial tax return preparer has filed with the department in that

calendar year. The maximum penalty that may be imposed under this

paragraph on any commercial tax return preparer during any calendar year

must not exceed five thousand dollars. The penalty can be waived only

for good cause shown by the commercial tax return preparer.

(3) If a tax return preparer fails to sign his or her name to any

return that requires the tax return preparer's signature, or a

facilitator fails to sign his or her name to any refund anticipation

loan or refund anticipation check facilitation documentation, then the

tax return preparer or facilitator must pay a penalty in the amount of

two hundred fifty dollars for each failure to so sign. Provided,

however, that this penalty can be waived only for good cause shown by

the tax return preparer or facilitator.

The maximum penalty imposed under this paragraph on any tax return

preparer with respect to returns filed during any calendar year by the

tax return preparer, or on any facilitator with respect to any refund

anticipation loan or refund anticipation check facilitation

documentation completed during any calendar year by the facilitator must

not exceed ten thousand dollars. Provided, however, that if a tax return

preparer or facilitator has been penalized under this paragraph for a

preceding calendar year and again fails to sign his or her name on any

return that requires the tax return preparer's signature or again fails

to sign his or her name on any refund anticipation loan or refund

anticipation check facilitation documentation during a subsequent

calendar year, then the penalty under this paragraph for each failure

will be five hundred dollars, and no annual cap will apply.

(4) If a tax return preparer or a facilitator fails to include the

unique identification number assigned by the department pursuant to

subparagraph (B) of paragraph two of subdivision (b) of this section on

any return, or any return anticipation loan or return anticipation check

facilitation documentation that requires his or her signature, then the

tax return preparer or facilitator must pay a penalty of one hundred

dollars for each failure to include his or her unique identification

number. Provided, however, that this penalty can be waived only for good

cause shown by the tax return preparer or facilitator. The maximum

penalty imposed under this paragraph on any tax return preparer or

facilitator with respect to returns filed during any calendar year must

not exceed two thousand five hundred dollars; provided, however, that if

a tax return preparer or facilitator has been penalized under this

paragraph for a preceding calendar year and again fails to include the

unique identification number on one or more returns during a subsequent

calendar year, then the penalty under this paragraph for each failure

will be two hundred fifty dollars, and no annual cap will apply.

(5) If a tax return preparer, facilitator or a commercial tax return

preparation business employs an individual to prepare tax returns who is

not registered with the department and does not possess a valid tax

preparer or facilitator registration certificate, then the tax return

preparer, facilitator or commercial tax return preparation business, as

applicable, will be subject to a penalty of five hundred dollars per

occurrence. This penalty can be waived only for good cause shown.

(6) The penalties provided for by this subdivision must be paid upon

notice and demand and will be assessed, collected and paid in the same

manner as taxes under article twenty-seven of this chapter.

(h) (1) Tax return preparers and facilitators must prominently and

conspicuously display a copy of their registration certificate issued

pursuant to this section, for the current registration period, at their

place of business and at any other location where they provide tax

return preparation and/or facilitation services, in an area where

taxpayers using their services are able to see and review such

registration certificate.

(2) Tax return preparers and facilitators must prominently and

conspicuously display at their place of business and at any other

location where they provide tax return preparation and/or facilitation

services the following documents:

(A) a current price list, in at least fourteen-point type, that

includes, but is not limited to, a list of all services offered by the

tax return preparer and/or facilitator; the minimum fee charged for each

service, including the fee charged for each type of federal or New York

state tax return to be prepared and facilitation service to be provided;

and a list of each factor that may increase a stated fee and the

specific additional fees or range of possible additional fees when each

factor applies; and

(B) a copy of the most recent Consumer Bill of Rights Regarding Tax

Preparers published by the department pursuant to section three hundred

seventy-two of the general business law.

(3) A tax return preparer or facilitator who fails to comply with any

of the requirements of this subdivision must pay a penalty of five

hundred dollars for the first month of non-compliance and five hundred

dollars for each subsequent month of non-compliance thereafter. The

maximum penalty that may be imposed under this subdivision on any tax

return preparer or facilitator during any calendar year must not exceed

ten thousand dollars. The penalty can be waived only for good cause

shown by the tax return preparer or facilitator.

(i) The provisions of this section will apply exclusively to the

registration of tax return preparers and facilitators with the

department, payment of the registration fee if required by commercial

tax return preparers, the signing of returns and use of the unique

identification numbers assigned by the department upon registration.

Other provisions of this chapter or any other provision of law

prescribing additional requirements applicable to tax return preparers

or facilitators will not be affected by the provisions of this section

except as set forth expressly herein, and will remain in full force and

effect.