Some States Regulate Tax Return Preparers; California requires CPAs to register in California

The New York State (NYS) Department of Taxation and Finance has plans to regulate tax return preparers by amending its Personal Income Tax Regulations and Procedural Regulations. Perhaps in reaction to the demise of the IRS’s registered tax return preparer program in federal court, NYS proposes to regulate all commercial tax return preparers – including prohibiting persons who have violated laws or “engaged in any dishonest or unscrupulous behavior” from becoming preparers. The proposed regulations would also require competency exams, continuing professional education and due diligence in the accuracy of return preparation. The good news for CPAs is that the underlying New York statue that authorizes tax preparer regulations exempts CPAs. Here’s a link to an article in The Tax Advisor with more information.

New York is not the only state that regulates tax return preparers; California, Oregon and Maryland also require preparers to meet minimum qualifications, take an exam and complete continuing professional education. Both Oregon and Maryland exempt CPAs from the requirements as New York does, but California only exempts California CPAs. That means CPAs in other states that prepare California tax returns must either be registered with the California State Board of Accountancy or register as a tax preparer with the California Tax Education Council.

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3 Responses to Some States Regulate Tax Return Preparers; California requires CPAs to register in California

  1. Bob Owen says:

    It does appear that CPAs who do not live or work in California are not covered by the tax preparation statute. Texas CPAs should be able to prepare California tax returns without registering with California.

  2. Rebecca McElroy says:

    When I go to the California Tax Education Council website, in the Q&A section, it appears if you are a Texas CPA preparing California returns in Texas, this law does not apply. Is that correct? It states that this pertains to only those individuals preparing California returns for a fee, within the state of California. Does anyone know if this is true?

  3. Mark Klecka says:

    Enrolled agents under the “Exempt Preparers” 22258 (a)(5) are exempt from registration with the California tax preparer registration requirements. Texas CPA’s should either have TSCPA petition for out of state exemptions as outlined in the California State Board of Accountancy rules or Texas CPA’s should obtain an Enrolled Agent designation to be exempt from the California registration requirements.

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