Questions and Answers
This document will be updated as additional questions are received.
EXEMPTIONS
| Question 1: | Does a current Internal Revenue Service (IRS) Annual Filing Season Program participant (AFSP) designation and/or the previous IRS Registered Tax Return Preparer (RTRP) designation qualify a tax preparer for an exemption to the permit requirement? |
| Answer 1: | No. Participating in the AFSP or RTFP does not make one exempt from having to register and obtain a permit in Connecticut. |
| Question 2: | In addition to the Tax Counseling for the Elderly (TCE) and the Volunteer Income Tax Assistance (VITA) programs, are there other tax preparers exempt from the permit requirement? |
| Answer 2: | Yes. Any volunteer in Low Income Taxpayer Clinics that works with the IRS to provide assistance to low income taxpayers would be exempt and do not need to get a permit. |
| Question 3: | I am retired but continue to prepare approximately 60 Connecticut Individual returns for compensation. I also participate in the AFSP. Additionally, I am a VITA participant. Do I need a permit? |
| Answer 3: | No. As a VITA participant, you are exempt and do not need to register for a permit. |
| Question 4: | We are an accounting firm with two CPAs. We have some employees who have Preparer Tax Identification Numbers (PTINs) and sign the returns they prepare. Will these other employees have to obtain a state permit, or are they exempt, because they perform official duties for exempt persons? |
| Answer 4: | The employee under the exempt category would be one that helps the exempt preparer draft the return, but does not sign or use his or her own PTIN. If the employee signs the return and uses his or her own PTIN, and the employee is not otherwise exempt, then that employee is required to register. |
| Question 5: | Can you give an example to illustrate the following exemption:individual is employed, full-time or part-time, to act as a tax preparer solely for the business purposes of such individual’s employer(from Special Notice 2018(8)). |
| Answer 5: | Example: I am an employee of ABC LLC, and as part of my duties I prepare ABC LLC’s tax returns. I am an exempt preparer and a permit is not required. |
| Question 6: | Since H&R Block, Jackson Hewitt, Liberty Tax, etc. hire employees, and as these companies sole business purpose is to prepare tax returns, does this mean employees of these tax preparation companies are exempt? |
| Answer 6: | No. Such employees must register as paid preparers unless exempt under another exempt category. |
| Question 7: | If the "employer" is a tax preparation firm, such as Jackson Hewitt or H&R Block, is this a qualifying "employer" for the exemption referenced in Question 5 and Question 6? |
| Answer 7: | No. Only if the individual prepares Jackson Hewitt’s own return,not returns for Jackson Hewitt’s clients, would the exemption apply. |
| Question 8: | I am an out-of-state tax preparer, with fewer than 10 Connecticut clients for whom I prepare tax returns. Am I subject to the new permit requirement? |
| Answer 8: | If you do not prepare more than 10 Connecticut income tax returns or more than 10 federal income tax returns for Connecticut clients, or a combination of both, for a fee, you do not need to register as a paid preparer. |
| Question 9: | Does the permit requirement apply only to preparers and facilitators operating within the state? Or does it relate to preparation of all Connecticut tax returns? |
| Answer 9: | If you prepare more than 10 Connecticut income tax returns or more than 10 federal income tax returns for Connecticut clients, or a combination of both, for a fee, you must register as a paid preparer. |
REFUND ANTICIPATION LOAN (RAL)/REFUND ANTICIPATION CHECK (RAC) FEES
| Question 10: | Can a bank charge a fee and have the tax preparer pass on that fee to the customer? |
| Answer 10: |
Yes. The bank can charge a RAL/RAC fee. The preparer cannot impose an additional fee to the taxpayer for choosing one of these options. |
| Question 11: |
If the bank RAL paperwork discloses the bank fee for the bank loan, is it permissible for the tax preparer to use the bank paperwork, and have the customer pay the fee to the bank for a RAL? |
| Answer 11: |
DRS has no jurisdiction over the method by which the bank RAL fee is disclosed to the taxpayer. It is between the bank and the taxpayer as to which method of payment is preferred for payment of said fee. For truth in lending purposes the bank’s RAL fee or other consideration must be disclosed to the taxpayer. The DRS Fraud Unit has jurisdiction to investigate complaints regarding the actions of tax preparers and can take corrective action, including sanctions. |
ONLINE REGISTRATION
| Question 12: | I went through the entire registration process and my application was denied at the end because I registered as a business, and not an individual. |
| Answer 12: |
Permits are issued to individuals, not at the business level. |
| Question 13: | I registered for a permit online but have not received a confirmation receipt. |
| Answer 13: | Please e-mail DRS at ct.efile@po.state.ct.us. |
| Question 14: | How do I update the address submitted as part of my permit application? |
| Answer 14: | Please e-mail the change to DRS at ct.efile@po.state.ct.us. |
MORE INFORMATION
DRS website’s Paid Preparers and Facilitators page
Special Notice 2018(8), Permit Requirements for Tax Preparers and Facilitators