Drake Tax - CT - Requirements for Preparers

Per the CT Special Notice 2017(8), the following items are required starting October 1, 2017:

"The new state law provides professional practice standards for tax preparers and facilitators. There are no exemptions from these requirements and restrictions.

All Tax Preparers and Faciliators

As of October 1, 2017, 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."

Refund Anticipation Loans or Checks

There are also requirements for those offering refund anticipation loans or refund anticipation checks to taxpayers. The following items are expressly prohibited by the new CT regulations. Civil penalties of up to $500 may be imposed per violation.

1. "Imposing any fee for making or facilitating a refund anticipation loan or refund anticipation check. The creditor or bank that originated the loan or check may charge a fee, but the preparer may not impose a fee or other consideration.

2. Arranging, directly or indirectly, for any third party to impose any interest, fee, or charge related to a refund anticipation loan or refund anticipation check, other than the creditor or bank that originated the loan or check.

3. Including any of the following provisions in any document related to a refund anticipation loan or refund anticipation check:

   • A hold harmless clause;

   • A confession of judgment clause;

   • An assignment of or order for payment of wages or other compensation for services;

   • A waiver of any provision in the federal or Connecticut Taxpayer Bill of Rights; or

   • A waiver of the right to injunctive, declaratory, other equitable relief, or relief on a class-wide basis.

4. Engaging in any unfair or deceptive acts or practices in making or facilitating a refund anticipation loan or refund anticipation check. This prohibition includes making any statement, written or verbal, that contradicts any information in the federal or Connecticut Taxpayer Bill of Rights.

5. Taking or arranging for a creditor to take a security interest in any property interest of the taxpayer other than the proceeds of the tax refund to secure payment of a refund anticipation loan.

6. Engaging in the collection of an outstanding or delinquent refund anticipation loan for any creditor or assignee."

More information about the requirements starting in 2018 and 2019 may be found in the Special Notice. You can also contact the CT Department of Revenue Services at (860) 297-5962 for details.