N.Y. Comp. Codes R. & Regs. Tit. 20 § 158.12 - Requirements applicable to tax return preparer

Tax Law, § 658(g)

(a) Signing of New York State income tax returns and claims for refunds prepared by a person other than the taxpayer.

(1) For purposes of section 658(g)(1) of the Tax Law, which requires the signature of a tax return preparer on certain returns and claims for refund, such tax return preparer must sign such return or claim for refund (which may be a duplicate) in the appropriate space provided on the return or claim for refund after it is completed and before it is presented to the taxpayer (or nontaxable entity) for signature. The preparer shall sign the return or claim for refund in the manner prescribed in forms, instructions, or other appropriate guidance of the Department of Taxation and Finance. Also, in accordance with section 658(g)(2) of the Tax Law, which requires tax return preparers to include identifying numbers on certain returns and claims for refund, any such return or claim for refund prepared by a tax return preparer shall bear such identifying number (i.e., social security number, Federal preparer tax identification number and/or employer identification number) necessary for securing proper identification of such preparer, such preparer's employer, or both, as may be required by forms and instructions of the Department of Taxation and Finance. Where the preparer is unavailable for signature, another preparer must review the entire preparation of the return or claim for refund and then must sign such return or claim for refund and furnish the identifying number(s) required by section 658(g)(2) of the Tax Law.

(2) Where more than one income tax return preparer is involved in the preparation of the New York State income tax return or claim for refund, the individual preparer who has the primary responsibility as between or among the preparers for the overall substantive accuracy of the preparation of such return or claim for refund shall be considered to be the income tax return preparer for purposes of the signature requirements of this section.

(3) Each New York State income tax return or claim for refund which is prepared by one (or more) income tax return preparer(s) must have typed or printed the name(s) of the individual income tax return preparer(s) or the name of the firm (if applicable), the street address, city, state, and postal ZIP code of such preparer' s place of business where the preparation of the New York State income tax return or claim for refund was completed. Where such place of business is not maintained on a year-round basis, such return or such claim for refund shall bear the street address, city, state, and postal ZIP code of the preparer's principal office or business location which is maintained on a year-round basis or, if none, the preparer's residence.

(4)

(i) The signature requirement of this subdivision may be satisfied by a photocopy of a duplicate of the New York State income tax return or claim for refund, which duplicate is signed by the preparer after completion of such return's or such claim for refund's preparation. After a duplicate of the New York State income tax return or claim for refund is signed by the preparer and before such return or such claim for refund is photocopied, no person other than the preparer may alter any entries on such duplicate other than to correct arithmetical errors discernible on such return or such claim for refund. The employer of the preparer or the partnership in which the preparer is a partner, or the preparer (if not employed or engaged by a preparer and not a partner of a partnership which is a preparer), must retain the signed duplicate of the New York State income tax return or claim for refund. A record of any arithmetical errors corrected must be retained by the person required to retain the signed duplicate of the New York State income tax return or claim for refund and be made available upon request by the Department of Taxation and Finance.

(ii) Where mechanical preparation of the New York State income tax return or claim for refund is accomplished by computer not under the control of the individual preparer, then the signature requirement of this subdivision may be satisfied by a signed attestation by the individual preparer attached to such return or such claim for refund that all the information contained in such return or such claim for refund was obtained from the taxpayer and is true and correct to the best of such preparer's knowledge, but only if such information (including any supplemental written information provided and signed by such preparer) is not altered on such return or such claim for refund by another person. For purposes of the preceding sentence, the correction of arithmetical or clerical errors discernible from the information submitted by the preparer does not constitute an alteration. The information submitted by the preparer must be retained by the employer of the preparer or by the partnership in which the preparer is a partner, or by the preparer (if not employed or engaged by a preparer and not a partner of a partnership which is a preparer). A record of any arithmetical or clerical errors corrected must be retained by the person required to retain the information submitted by the preparer and be made available upon request by the Department of Taxation and Finance.

(iii) Any items required to be retained and kept available for inspection under subparagraphs (i) and (ii) of this paragraph must be retained and kept available for inspection for the same three year retention period described in paragraph (d)(5) of this section.

(iv) If the Department of Taxation and Finance determines that a preparer or preparers have abused the permissive signature rules of this paragraph, such as by altering the New York State income tax return or claim for refund after signature (in contravention of subparagraph [i] of this paragraph) or by altering information on the New York State income tax return or claim for refund after attestation (in contravention of subparagraph [ii] of this paragraph), then the Department may, by written notice, prospectively deny to the preparer or preparers the right to use these permissive signature rules.

(b) Furnishing a copy of the New York State income tax return or claim for refund to the taxpayer.

Any person who is an income tax preparer of any New York State income tax return or claim for refund shall furnish a completed copy of the original New York State income tax return or claim for refund to the taxpayer (or nontaxable entity) not later than the time the original New York State income tax return or claim for refund is presented for the signature of the taxpayer (or nontaxable entity). Such preparer may, if such preparer wishes, request a receipt or other evidence from the taxpayer (or nontaxable entity) sufficient to show satisfaction of the requirement of this subdivision.

(c) Copy of New York State income tax return or claim for refund or list to be retained.

Any person who is an income tax return preparer of any New York State income tax return or claim for refund shall, for a three year retention period (see paragraph [d][5] of this section):

(1)

(i) retain a completed copy of the return or claim for refund; or

(ii) retain a record, by list, card file, or otherwise of the name, taxpayer identification number, and taxable year of the taxpayer (or nontaxable entity) for whom the New York State income tax return or claim for refund was prepared and the type of New York State income Tax return or claim for refund prepared;

(2) retain a record, by retention of a copy of the New York State income tax return or claim for refund, maintenance of a list or card file, or otherwise, for each New York State income tax return or claim for refund presented to the taxpayer (or nontaxable entity) of the name of the individual preparer required to sign the New York State income tax return or claim for refund in accordance with section 658(g)(1) of the Tax Law (see subdivision [a] of this section); and

(3) make such copy or record of New York State income tax returns and claims for refunds and such record of the individuals required to sign available for inspection upon request of the Department of Taxation and Finance.

(d) Meaning of terms.

(1) Paid preparer defined. For purposes of this section, an income tax return prepareris any person who prepares for compensation, or who employs (or engages) one or more persons to prepare for compensation, other than for such person/employer, all or a substantial portion of any New York State income tax return (including any New York State employer's return referred to in Part 174 of this Title) or claim for refund required to be filed pursuant to article 22 of the Tax Law.

(i) Substantial portion.

(a) Only a person (or persons acting in concert) who prepares all or a substantial portion of a New York State income tax return or claim for refund will be considered to be a preparer (or preparers) of such return or such claim for refund. A person who renders advice which is directly relevant to the determination of the existence, characterization or amount of an entry on a New York State income tax return or claim for refund will be regarded as having prepared that entry, so long as such person has actual knowledge that the taxpayer utilized the advice rendered on the New York State income tax return or claim for refund. Whether a schedule, entry or other portion of such return or such claim for refund is a "substantial portion" is determined by comparing the length and complexity of, and the tax liability or refund involved in, that portion to the length and complexity of and tax liability or refund involved in, the New York State income tax return or claim for refund as a whole.

(b) For purposes of applying the rule of clause (a) of this subparagraph, where the schedule, entry or other portion of the New York State income tax return or claim for refund involves amounts of gross income, amounts of deductions, amounts of modifications or amounts on the basis of which credits are determined, which are:

(1) less than $2,000; or

(2) less than $100,000, and also less than 20 percent of the gross income (or New York adjusted gross income if the taxpayer is an individual) as shown on the New York State income tax return or claim for refund, then the schedule or other portion is not considered to be a substantial portion. Where more than one schedule, entry or other portion is involved, they will be aggregated in applying the rule of this clause. Thus, where a person prepares a schedule which totals $1,500 for an individual taxpayer's New York State income tax return and also gives advice making such person a preparer of another schedule which totals $1,500, such person is not a preparer if the taxpayer's New York adjusted gross income shown on the New York State income tax return is more than $15,000. This clause shall not apply to a person who prepares all of a New York State income tax return or claim for refund.

(c) A preparer of a New York State income tax return is not considered to be a preparer of another New York State income tax return merely because an entry or entries reported on such New York State income tax return may affect an entry reported on such other return, unless the preparer actually prepared a substantial portion of both returns. For example, if a substantial portion of an individual partner's New York State personal income tax return consists of an entry or entries derived from a New York State partnership return, a preparer of the New York State partnership return shall not be considered the preparer of the individual partner's New York State personal income tax return, unless the preparer of the New York State partnerships return actually prepares the individual partner's New York State personal income tax return.

(ii) A person who furnishes to a taxpayer or other preparer sufficient information and advice so that completion of the New York State income tax return or claim for refund is largely a mechanical or clerical matter is considered an income tax return preparer, even though such person does not actually place or review placement of information on such return or such claim for refund.

(iii) A person who only gives advice on specific issues of law will not be considered an income tax return preparer, unless:

(a) the advice is given with respect to events which have occurred at the time the advice is rendered and is not given with respect to the consequences of contemplated actions;

(b) the advice is directly relevant to the determination of the existence, characterization or amount of an entry on the New York State income tax return or claim for refund; and

(c) the person has actual knowledge that the taxpayer utilized the advice rendered on the New York State income tax return or claim for refund.

(iv) A person must prepare a New York State income tax return or claim for refund for compensation to be an income tax return preparer. A person who prepares a New York State income tax return or claim for refund for a taxpayer with no explicit or implicit agreement for compensation is not a preparer, even though such person receives a gift, a return of services or a favor.

(v) A person who prepares a New York State income tax return or claim for refund outside the United States is an income tax return preparer, regardless of such preparer's nationality, residence, or the locations of such person's places of business, if such person otherwise satisfies the definition of income tax return preparer.

(vi) An official or employee of the Internal Revenue Service or the New York State Department of Taxation and Finance performing such official's or employee's official duties is not an income tax return preparer.

(vii) The following are not income tax return preparers:

(a) any individual who provides tax assistance under a Volunteer Income Tax Assistance (VITA) program established by the Internal Revenue Service or the New York State Department of Taxation and Finance;

(b) any organization sponsoring or administering a Volunteer Income Tax Assistance (VITA) program established by the Internal Revenue Service or the New York State Department of Taxation and Finance, but only with respect to that sponsorship or administration;

(c) any individual who provides tax counseling for the elderly under a program established pursuant to section 163 of the Federal Revenue Act of 1978; and

(d) any organization sponsoring or administering a program to provide tax counseling for the elderly established pursuant to section 163 of the Federal Revenue Act of 1978, but only with respect to that sponsorship or administration.

(viii) Persons who are not income tax return preparers. A person will not be considered to be a preparer of a New York State income tax return or claim for refund where such person performs only one or more of the following services:

(a) typing, reproduction, or other mechanical assistance in the preparation of a New York State income tax return or claim for refund;

(b) preparation of a New York State income tax return or claim for refund of a person or general partner, by whom the individual is regularly and continuously employed or in which such individual is a general partner; or

(c) preparation of a New York State personal income tax return or claim for refund for any person by a fiduciary if such fiduciary is preparing such return or such claim for refund in such fiduciary's capacity as a fiduciary of such person.

(2) Person defined.

For purposes of this section, the term person includes an individual, a corporation (including a dissolved corporation) or a partnership.

(3) New York State income tax return defined.

For purposes of this section, the term New York State income tax return means any return required under article 22 of the Tax Law.

(4) Claim for refund defined.

For purposes of this section, the term claim for refund means a claim for refund of or credit against any New York State tax imposed under article 22 of the Tax Law, and includes any claim for refund of any credit treated as an overpayment of New York State tax under article 22 of the Tax Law.

(5) Retention period defined.

For purposes of this section, the term retention period means:

(i) in the case of a New York State income tax return, the period ending the later of three years after the due date of such New York State income tax return (without regard to extensions of time to file), or three years after the date such New York State income tax return was presented to the taxpayer for such taxpayer's signature; and

(ii) in the case of a claim for refund, the period ending three years after such claim for refund was presented to the taxpayer for such taxpayer's signature.

(e) Any person who fails to comply with the provisions of section 658(g) of the Tax Law and this section may be liable for the civil penalties provided for by sections 685(i) and 685(u) of the Tax Law, and the criminal penalty provided for by section 1801(a) of the Tax Law.

(f) The provisions of section 658(g) of the Tax Law and this section in no way affect the taxpayer's obligation to sign and certify such taxpayer's New York State income tax return or claim for refund (see section 653 of the Tax Law and Part 153 of this Title).

Notes

N.Y. Comp. Codes R. & Regs. Tit. 20 § 158.12