Connecticut Department of Revenue Services Requires a Permit for Tax Preparers

State of Connecticut Department of Revenue Services SN 2018(8) - In a special notice released by the State of Connecticut Department of Revenue Services, it was announced that beginning on January 1, 2019, tax preparers and facilitators cannot engage in the business of, solicit business as, or provide tax preparation services or act as a facilitator, or make representations to be a tax preparer or facilitator for Connecticut income tax returns without a permit issued by DRS. Exempt tax preparers and facilitators are not affected by this requirement.

For the purpose of the notice, the term tax preparer includes any person that prepares or assists in preparing more than ten federal or state individual income tax returns for a fee or other consideration, unless they qualify as an exempt tax preparer. Review the special notice to determine if you or your employees are exempt preparers. To apply and obtain a permit, click here.

The new requirement is the third phase in implementing new requirements for income tax preparers and facilitators of refund anticipation loans or checks. The second phase, which took effect on October 1, 2018, requires that a written disclosure be provided to the taxpayer by any tax preparer who is subject to the permit requirement described above. The written disclosure provided to the taxpayer must include the following information:

1. The tax preparer’s name, principal business address, and primary telephone number;
2. An estimate of the total charge for completion of all requested tax preparation services; and
3. A warranty that the tax preparer shall, by encryption or other means, provide for the secure storage and transmission of the taxpayer’s personal and tax record information. As of January 1, 2019, the written disclosure must also include the Connecticut preparer registration number of the non-exempt tax preparer.

The first phase, implemented on October 1, 2017 required that anyone who prepares federal or Connecticut state income tax returns or acts as a facilitator for a Connecticut taxpayer is required to do the following:

1. Sign any return prepared by such person and provide his or her preparer identification number (PTIN) issued by the Internal Revenue Service;
2. Return to a taxpayer any documents (or copies of such documents) that were provided by the taxpayer;
3. Provide the taxpayer with a copy of any document requiring the taxpayer’s signature; and
4. Maintain a copy of any return prepared for a taxpayer for a period of four years from the date of completion or the due date of the return, whichever is later.

In addition, anyone who prepares federal or Connecticut state income tax returns or acts as a facilitator for a Connecticut taxpayer is prohibited from doing the following:

1. Requiring or allowing a taxpayer to sign a blank or incomplete tax form;
2. Requiring a taxpayer to designate the tax preparer or a facilitator as the payee for a federal or Connecticut state personal income tax refund; and
3. Requiring a taxpayer to designate or use a specific depository institution, debit card, or stored value card provider for the purposes of receiving a federal or Connecticut state personal income tax refund.