Wednesday, December 5, 2012


I realize that in the course of running a business there are many required expenses that must be incurred.  Some of these expenses may be painful and difficult to accept, but nonetheless are necessary to remain in business, or keep certain clients or customers, and must be paid.

As a tax professional I just made such a payment that is especially heinous.  I sent $100 to the State of New York for the privilege of preparing the 20 or so NY resident and non-resident state income tax returns I do for good long-time clients.

Unlike the lower fee I must pay every year to the IRS to renew my PTIN, which goes for maintenance of the new tax preparer regulation regime, the one and only purpose of this $100 fee is to raise funds for the legislature in Albany to waste on pork and entitlements.

Attorneys and CPAs who practice in New York State are exempt from this payment – but only because they have already pay a licensing fee to Albany.

While the IRS requires at least half of PTIN-holders to take a competency test, however basically useless and unnecessary, and, more appropriately, maintain CPE in federal tax topics, the State of New York requires nothing from those who prepare state tax returns other than a check that does not bounce.

In my practice at least I am not “out of pocket” for this $100 extortion.  I include a specific line item on the invoice of each and every 1040 client who files a NY state income tax return of $5.00, which I clearly identify as “NYS Tax Preparer Extortion Fee”.  As I do at least 20 NY state returns, this covers the $100.

I am surprised that the success of this fee has not prompted other states in financial trouble to enact similar extortion schemes.

Oh well – only at most 9 more tax seasons (including the upcoming one) to go.

To be honest to the State of New York, they at least have done one thing right.  The state’s electronic filing mandate for tax professionals (especially oppressive, as clients cannot "opt out") applies only to those who use tax preparation software to prepare client returns.  Since I do not, I am statutorily exempt from the requirement.  I am thankful for small favors.


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