Tax Preparation Mandates

(1040) Preparers who prepare more than 50 individual income tax returns, and use tax preparation software, must file all returns using electronic means. Electronic means include electronic filing or printed returns with 2D barcodes. Taxpayers not wanting to electronically file must complete an additional “Opt-Out” form, Form EOO – Taxpayer E-File Opt-Out Election form. This form must be completed and attached to the taxpayer’s printed 2D barcode return.

All business returns must be filed electronically.

(1120/1120S/1065) If an income tax return preparer prepares 25 or more acceptable, original corporate/partnership income tax returns using tax preparation software in calendar year 2011, all acceptable corporate/partnership income tax returns prepared by that income tax preparer must be filed using electronic technology. There is no opt-out provision.

Preparers who prepare more than 100 individual income tax returns during a calendar year are required to e-file all individual income tax returns. The preparer will be assessed a $50 penalty for each acceptable individual income tax return that is prepared using software and not filed by the preparer electronically, unless the failure to file electronically is due to reasonable cause and not due to willful neglect. The tax preparer would then not be subject to the penalty if the taxpayer elects not to e-file the tax return.

Connecticut legislation requires preparers who prepared 50 or more income tax returns in the previous calendar year to file all personal income tax returns electronically.

If you paid $20,000 or more in tax during Florida’s fiscal year (July 1- June 30), you must electronically file and pay Florida corporate income tax.

All 1120 State returns must be e-filed.

Preparers who prepared 100 individual income tax returns in the previous tax-filing season are required to electronically file all individual income tax returns.

Preparers who prepare more than 50 Kansas Individual Income tax returns during any calendar year must electronically file a minimum of 90% of the returns. There is currently no opt-out provision. However, the mandate does not have a penalty for failure to comply with the electronic filing requirement.

Preparers who prepare more than 100 individual returns in any calendar year are required to e-file 60 percent of the returns due on or after January 1, 2010; and 90 percent due January 1, 2012.

(1040) Preparers who prepared 100 or more MA Forms 1 and 1-NRPY during the previous calendar year are required to file electronically. Preparers must continue to file electronically in subsequent years unless they prepare no more than 25 individual income tax returns. Electronic payment of tax liability for e-file individual income tax returns is encouraged, but not required. Payment may be made with the e-file return or by the taxpayer through the DOR’s website. The taxpayer may opt out of e-filing, but must file paper forms containing 2D barcodes.

(1040 Extension) Personal Income Tax Extension requests with no payment or payments of $5,000 or more must be made electronically. Extensions may be filed through the software.

(1041) Fiduciaries filing Form 2 with total Part A, Part B, and Part C net taxable income of $50,000 or more must use electronic means to make any payments to the Department. Payments may be made through the DOR’s website.

(1065) Partnerships filing Forms 3 and meeting the following income thresholds, loss thresholds, or with 25 or more partners, must submit all Forms 3 and Schedules 3 K1 by electronic means. Income threshold: (1) $50,000 or more in gross income, or (2) $100,000 or more received from the sale of stock and securities. Loss threshold: (1) $50,000 or more in ordinary loss from trade or business activities, or (2) $100,000 or more in losses from the sale of stock and securities.

(1120) All corporations subject to the corporate excise, including security corporations, with more than $100,000 in gross receipts or sales, must file returns and tax payments using electronic means. Exception: financial institutions, insurance companies, and public utilities.

(1120 Extension) Corporate Extension requests and accompanying payments must be filed electronically. Any corporation with more than $100,000 in gross receipts or sales must e-file. In addition, any corporation making a payment of $5,000 or more with its corporate excise extension must e-file the request and make the payment by electronic means. Requests and payments can be made through the DOR’s website.

Reference MA Mandate TIR04-30 on the MA DOR website at www.dor.state. ma.us.

The threshold for TY2011 and beyond is 100 Maryland individual returns.

There is a taxpayer opt out provision and the preparer can apply for a hardship waiver by writing to the Maryland Comptroller’s office.

A penalty may be imposed of $50 per return with a maximum penalty for one year of $500.

For returns filed in calendar year 2011 or any subsequent calendar year, a tax return preparer must file by electronic data submission all original Maine tax returns for individual income tax that are eligible for electronic filing, except:

1. When for the previous calendar year, the tax return preparer prepared 10 or fewer original Maine tax returns for individual income tax that are eligible for electronic filing;

2. When the taxpayer refuses to allow the return to be filed by electronic data submission and the tax return preparer notes the refusal in the taxpayer’s records; or

3. When the tax return preparer has been granted a waiver from mandatory participation under section .05.

The Michigan Department of Treasury mandated electronic filing for both individual income tax and single business tax returns. Preparers completing 10 or more personal income tax returns are required to e-file all eligible returns that are supported by their software.

Preparers who prepared more than 100 individual income tax returns in the previous tax-filing season are required to e-file all individual income tax returns. Exceptions: (1) Joint returns where both reciprocity and form M1NR are required to file, or (2) the SSN was used erroneously on a previously e-filed return. The preparer will be fined $5 per return for each return filed on paper.

Preparers filing 11 or more returns may be required to file them electronically.

Practitioners who prepared 25 or more returns will be required to file returns electronically.

Preparers who prepared more than 25 individual income tax returns in the previous tax-filing season are required to file all returns using electronic means. Electronic means includes electronic filing or printed returns with 2D barcodes.

Individual/Partnership/Fiduciary: If a practitioner filed a total of 4 NY state returns for individual, partnership, and fiduciary, or uses tax software to prepare one or more returns, they must file all of their returns electronically. A $50 penalty applies to each return or extension that they fail to e-file. The taxpayer will be assessed a $25 penalty for not e-filing. Preparers may not charge a separate e-file fee.

Corporate: The new mandate requires tax return preparers who meet certain requirements to e-file authorized tax documents. The mandate also requires electronic payment of the balance due on any authorized tax document.

There are two parts to this mandate:

Part I – If a preparer prepares over 100 corporate business documents, then they must file their corporate returns electronically. The following are considered corporate business documents and figure into the threshold for the mandate: Estimated payments, Extensions, and Corporate return. So, the actual threshold could be as low as 17 corporate returns for a practitioner if they filed 4 estimated payments, the extension, and the return.

Part II – If a business files their own return and they use tax software that has been approved for corporate electronic filing, they must file their return electronically.

A $50 penalty applies to each document that they fail to e-file, unless the taxpayer opted out of e-filing or they have other reasonable cause for failure to comply.

The taxpayer will be subject to a $50 per tax document penalty for failing to electronically pay the balance due. The Department cannot abate the payment penalty for reasonable cause.

As of January 1, 2011, tax preparers who prepared more than 100 original New York City General Corporation Tax or Unincorporated Business Tax documents in calendar year 2010, including tax documents for prior periods; and used tax software to prepare one or more corporation tax documents in 2010 must electronically file New York City Forms NYC-3L, NYC-4S, NYC-4SEZ, NYC-204, NYC-204EZ and NYC-EXT; and submit the payment electronically.

Paid tax preparers who filed more than 75 tax returns during the 2008 calendar year or during any subsequent year must, beginning on Jan. 1, 2010, use electronic filing technology to file state income tax returns. This requirement does not apply to paid tax preparers who, during the previous calendar year, prepared 25 or fewer tax returns. The law provides that the tax commissioner may impose a $50 penalty for each return above 75 that is not filed, but should have been filed, by electronic technology.

Preparers who prepare more than 50 individual income tax returns in the previous tax-filing season are required to e-file all individual income tax returns. There is an opt-out if the taxpayer indicates on the return that they do not want the return to be filed by electronic means.

If a third party preparer has prepared more than 50 PA Corporate returns/reports within the last calendar year, that person is required to file them electronically. Once the preparer has filed his/her returns electronically, they must continue to file PA Corporate returns electronically regardless, even if the number of PA Corporate returns prepared decreases.

Preparers who prepared more than 100 individual income tax returns in the previous tax-filing season are required to e-file all individual returns. The tax administrator won’t require e-filing by a paid preparer’s client who specifically requests that a return be filed on paper.

Preparers who prepare more than 100 individual income tax returns in the previous tax-filing season are required to electronically file all individual income tax returns.

A tax return preparer, or two or more tax return preparers affiliated together in the same establishment, who prepare 101 or more individual income tax returns, must submit all individual income tax returns electronically or use 2D barcode technology. Exceptions: Taxpayers who elect out of electronic filing or 2D barcode technology, returns that include a schedule that cannot be electronically filed or by 2D barcode, and undue hardship on the tax return preparer.

Preparers who prepare more than 50 individual income tax returns must file individual income tax returns using electronic means or software that produces a 2D barcode. A waiver can be requested in writing to the Tax Commissioner clearly demonstrating the nature of the undue hardship to comply with the mandate.

Preparers who prepare 100 or more WI Forms 1, 1A, and WI-Z, and Schedule H are required to e-file individual income tax returns. Exception: WI returns on which the taxpayers write “no e-file” before their signatures to indicate they do not want to e-file the return.

Preparers who prepare more than 100 individual returns in any calendar year are required to e-file.