Magazine article The CPA Journal

E-Filing Update for New York, New Jersey, and Connecticut

Magazine article The CPA Journal

E-Filing Update for New York, New Jersey, and Connecticut

Article excerpt

New York, New Jersey, and Connecticut have all recently enacted changes that will soon require tax preparers to file certain income tax returns electronically.

New York

The New York State Budget Act of 2005, Part Q, requires certain tax preparers to file all New York State income tax returns electronically. This provision covers all returns covered by the New York State Tax Law, Article 22. Included in Article 22 are personal income tax returns (Forms IT-201 and IT-203), fiduciary income tax returns (Form IT-205), and partnership returns (Form IT-204). Currently, the Department of Taxation and Finance is mandating that only personal income tax returns be filed electronically. In the future, the other types of returns covered by Article 22 may also be covered by the electronic filing mandate.

Tax return preparers who prepare more than 200 original New York personal income tax returns and prepare one or more original returns using tax software during calendar year 2005 must file all authorized returns electronically for 2006. The 200 return threshold will be reduced to 100 for calendar years beginning after 2005. The number of returns is calculated at the entity level. Thus, if an entity that is a preparer has multiple employees working on returns at several locations, the total number of returns prepared by all employees at all locations determines whether the entity is required to file electronically. Preparers that do not use tax software to prepare any New York personal income tax returns are not required to file electronically.

An original return is any personal income tax return that is filed, without regard to extensions, during the calendar year. An authorized return is any personal income tax return that the Commissioner of the Department of Taxation and Finance has authorized to be filed electronically.

The Commissioner of the Department of Taxation and Finance may, in instructions, consider the use of 2D-barcode technology to satisfy the electronic filing requirements.

The Department of Taxation and Finance has indicated that the mandatory electronic filing requirement will apply to all personal income tax returns, both resident income tax returns (Form IT -201) and nonresident/partyear income tax returns (Form IT-203). In addition, for tax year 2005 only, any personal income tax return filed by mail that contains the 2D bar code cover sheet will be considered as being electronically filed.

Because an electronically filed return cannot contain a manual signature, the Department of Taxation and Finance is developing an authorization form that the taxpayer must sign before the electronic return may be transmitted. This authorization form would constitute a digital signature and would be retained by the preparer.

Taxpayers will not necessarily have to file their return electronically. A new opt-out form is being developed that a taxpayer can sign and that would be retained by the preparer as proof of the opt-out election.

While the department requires the electronic filing of only resident and nonresident/part-year income tax returns, the 2005 Budget Act authorizes the department to ultimately require the electronic filing of all returns required under Tax Law Article 22. This includes returns for partnerships (Form IT-204) and for trusts and estates (Form IT-205), as well as the aforementioned Forms IT-201 and IT-203. …

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