Enough
already!
I
must register with the IRS and get a number (PTIN) if I want to continue to
prepare tax returns for a fee, which is how I make my living. I also have to take a test to prove to the
IRS that I know what I have been doing for 40 years now. And I have to maintain a minimum number of
annual credits in continuing professional education in federal income taxation
(I take more than the required annual CPE each year anyway – so this is not an
issue).
Because
I do about 20 New York resident and non-resident state income tax returns I
also have to register with the State of New York, give Albany $100, and get
another number for NY returns only, even though I do not live or work in New
York. NY CPAs and attorneys are exempt
from this fee because the State already gets a licensing fee from them. NY EAs were originally not exempt, but now
are.
The
State of New York does not care if I know what I am doing – they just want my
$100 (which I pass along to my NY clients as a $5.00 “NYS Tax Preparer
Extortion Fee”). However, a panel has
recommended that those who prepare NY state income tax returns also take a test
and maintain minimum annual state-specific CPE.
When
the NY state registration first came out I knew that once NY was successful in
charging “unenrolled” tax preparers everywhere in the world $100 for the
privilege of preparing a state return, other states would follow its lead as an
easy way to raise additional funds for its legislatures to waste on pork and
entitlement. NJ legislators love to
waste taxpayer money on pork and entitlements – and this would be a natural for
them.
Now
a colleague has informed me that “The New
Jersey Assembly Regulated Professions Committee is considering A.1752 {the
Tax Preparers Licensing Act – rdf}, which
would create a State Board of Tax Preparers and establish requirements for tax
preparers. Enrolled agents (and other legacy Circular 230 practitioners) are
exempted in the bill. However, unlike other state legislation, tax preparers
are not exempted (i.e., "grandfathered") by virtue of length of
practice.”
This
Act states –
“No person shall provide, nor present, call or
represent himself as able to provide, tax preparation services for compensation
unless licensed in accordance with the provisions of this act.”
And
–
“No person shall assume, represent himself
as, or use the title or designation “tax preparer” unless licensed pursuant to
the provisions of this act.”
It
creates a “State Board of Tax Preparers” within the NJ Division of Consumer
Affairs to administer the licensure of paid tax return preparers, which is made up of 3 political patronage members and 4 actual tax preparers.
In
order to be licensed a tax preparer must –
·
be
of good moral character,
·
have
successfully completed high school or its equivalent,
·
have
successfully completed an approved course of study of 60 hours, which includes
instruction in basic personal income tax law, theory and practice, and
·
have
passed an examination administered or approved by the Board, which measures the
applicant’s knowledge of New Jersey and federal personal income tax law, theory
and practice.
Licensed
tax preparers will also have to complete continuing education courses, the
number of actual credits, not to exceed 20 hours every two years, to be
determined by the Board.
And,
of course, “A fee to be determined by the
board shall accompany each application for licensure”, which must be
renewed, for another fee, “biennially”.
I expect that there will be another license number issued that preparers
will have to enter on NJ returns.
The
Act would exempt attorneys and CPAs licensed to practice in NJ and Enrolled
Agents. As usual the exemption of
attorneys and CPAs is ridiculous. I
would even question the exemption of EAs when it comes to state tax issues.
It
is unclear if only those preparers who live and work in NJ must be so licensed,
or if anyone who wants to prepare a certain number of NJ individual income tax
returns, regardless of location, be licensed.
The
Board will be able to revoke a license under a variety of conditions.
OK. Either
the federal government, in the form of the Internal Revenue Service (or, as I
have suggested) an independent industry-based agency, tests and credentials tax
return preparers, like they do with Enrolled Agents, or the individual states
test and license tax return preparers, as is done with CPAs and attorneys. Having both is ridiculous.
A
person who wants to prepare income tax returns for a fee currently must
register with the IRS and pass a competence test maintained by the Internal
Revenue Service. Under the proposed NJ
act, If that person happens to live in New Jersey and wants to also prepare
NJ-1040s he/she will have to be tested again
on federal tax issues. If he/she does
not pass this test he/she cannot prepare either federal or state tax returns,
although the federal government allows him/her to preparer federal 1040s?
Does
the IRS not share the names of resident PTIN holders with the individual
states, so that the states need a separate registry?
I
can see the need for CPE in resident state tax issues. The IRS could amend the federal CPE
requirements to include 4 hours annually in state-specific tax updates, either
as part of the current 15 hours or in addition thereto. I already take 8 hours in state CPE (mixed NJ
and NY) each and every year, so, again, this would not affect me.
NJ
wants tax preparers to take a 60 hour course in basic federal and state tax
topics to be licensed. I learned how to
prepare federal and state income tax returns not by taking any classroom courses
but through “apprenticeship” – actually preparing federal and state income tax
returns in the office of a tax professional.
This is a truly valid method of education.
The
text of the act does not mention any grandfathering. Does that mean that I, who have been
preparing federal income tax returns for 40 years and NJ state income tax
returns for as long as there has been a state income tax, must now go back to
school and take basic tax preparation courses?
You know damned well that I will not waste my money in this way.
To
be honest, I would prefer individual state licensing of tax return preparers,
under a Department of Consumer Affairs, to federal licensing by the IRS. But, of course, I would require some kind of
grandfathering of at least any basic course of study requirements, and for
competency testing as well.
A
federal registry with PTIN issuance could be a part of each state’s requirement
as an alternative to having each state issue separate license numbers. In such a situation there should be no fee to
register with the IRS and receive a PTIN, as there had been no fee to obtain a
PTIN before the regulation regime was proposed.
Enough
already!
What
do you think?
TAFN
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