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While the National Association of Tax Professionals “feels our pain” with regard to the New York State requirement that “non-resident” tax professionals who prepare NYS income tax returns must register and pay a fee, this empathy seems to be the extent of its involvement in the issue.
A little history from the NATP government relations office -
“The New York Chapter of NATP informed its membership of the bill to regulate tax return preparers. Thereafter, the state Chapter’s government relations volunteers interacted with the New York legislature concerning its position with regard to this law. It came as a surprise to all that the bill was going to affect non-resident tax preparers. None of the professional organizations, to our knowledge, were focused on the non-resident implications of this legislation. They were more focused on the implications for New York preparers and, in some cases, on credentials not recognized in the legislation. We were not a little surprised to note, a good while after passage, that the state was going to interpret this legislation as applying to non-resident preparers as well. We received this information from our New York Chapter volunteers.”
New York is not the only state that requires the registration of tax preparers, but it is apparently the only one that extends this requirement to “non-resident” preparers. NATP told me –
“Oregon, by comparison, has a law requiring everyone who prepares an individual income tax return to be licensed in the state of Oregon. The state, however, does not interpret the legislation to apply to non-resident preparers unless they either have a physical presence or are actively soliciting business in the state.”
California also regulates its tax preparers, but I am not aware of any requirements for “non-resident” tax pros who happen to prepare California state income tax returns.
As for any legal action on behalf of affected members, NATP said -
“The likelihood of a successful suit on behalf of non-resident preparers is low because of the impracticality of incurring significant legal costs to mount such an attack over a $100 fee. I’ve read your blogs, and I know you’re upset over the principle of this thing. So are we. But we are also constrained with proper stewardship of membership dollars. This couldn’t be more frustrating from that standpoint.”
I do agree that an extensive legal campaign would be expensive, and prohibitive for one organization. But perhaps in conjunction with other organizations with affected members? I told NATP that I would be willing to contribute $10-$20 toward a “legal defense fund” to fight this unfair, and perhaps illegal, requirement
The bottom line advice from NATP was to simply, “pass it on to the consumer”.
“Let your clients know where it has come from. Even though the $100 charge comes to you for the rest of your practicing life, it will be levied on the “tolerant” taxpayer each year. Your $100 annually spread over 12 returns will wind up as a $8.50 surcharge.”
It should be pointed out that this fight is not simply over $100 – but $100 (and possibly more in the future) per year over the tenure of one’s tax practice. And, as I told NATP in my email, “if NYS can get away with it - and add $3.6 Million to the state coffers - you can be sure there will be more states to follow suit.”
Just curious – are they any lawyers reading this post? What is your take on the legality of a state imposing registration and fee requirements on individuals with absolutely no physical presence in that state?
As a point of information, I first learned of this nonsense via a “tweet” from a fellow tax blogger who is an Enrolled Agent practicing in New York State and not from NATP.
TAFN
