State: Tax preparers who ignore state rules face penalties

The New York State Department of Taxation and Finance says tax preparers must meet “several” obligations to avoid possible penalties and revocation of their authorization to file tax returns in New York. 

The department made the statement in a Feb. 11 news release announcing that it had issued more than $453,000 in fines to noncompliant tax professionals. The dollar-figure in fines is combined for the calendar years 2017 and 2018, James Gazzale, a department spokesman, said in an email response to a CNYBJ inquiry. 

The obligations include registering with New York State, paying an annual fee, and filing electronically. Preparers must also sign all returns they prepare and provide a copy of the return to the taxpayer. 

They must also ensure all information submitted is “accurate and truthful” and meet continuing-education requirements each year, the department said.

“Tax professionals, with access to the sensitive personal information of clients, must be held to a high standard,” Nonie Manion, the department’s acting commissioner, said in the release. “While most are honest professionals intent on delivering exceptional services, the relatively few unreliable or unethical practitioners can tarnish the industry and cause serious problems for their clients.”

The department listed the penalties if tax preparers don’t meet specific requirements. The penalty is $5,000 for submitting a fraudulent return, $250 for failing to register, and $250 per return filed for failing to sign a completed return.

In addition, the penalty is $100 per return filed up to $2,500 for failing to include a registration number.

If a tax preparer doesn’t file electronically or fails to submit an annual registration fee, the penalty is $50 per return filed. The penalty is also $50 per return filed up to $25,000 for not providing a copy of the return to the taxpayer. 

The department also provided the following example.

If tax preparers fail to register or pay the annual fee; submit 40 income tax returns without their signature or registration number; fail to electronically file the returns; and fail to provide clients with a copy of the return, the Tax Department could assess nearly $19,000 in fines.