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e-file - Business Tax Mandate for Tax Return Preparers FAQs
Who is subject to the business tax e-file mandate?
The Tax Law requires tax return preparers who prepare more than 100 original tax documents in a calendar year and in a subsequent calendar year prepare one or more authorized tax documents using tax software to e-file all authorized tax documents. A tax document is defined as a return, report or any other document relating to a tax or other matter administered by the Commissioner of Taxation and Finance, other than a document relating to New York State and local income and earnings taxes. Once you are subject to the mandate, you remain subject to it for subsequent years, regardless of the number of tax documents that you prepare.
The e-file mandate will initially apply to Article 9-A general business corporation and S corporation tax documents filed on or after January 1, 2009. You must e-file authorized Article 9-A tax returns and extensions beginning on January 1, 2009 if you are a return preparer who:
For calendar year 2009, the business tax e-file mandate for tax return preparers will apply to Article 9-A general business corporation and S corporation returns and extensions.
A tax return preparer is a person or entity who prepares for compensation, or who employs or engages one or more persons to prepare for compensation, any return or claim for refund.
What business tax filings must be e-filed beginning January 1, 2009?
The Commissioner of Taxation and Finance has initially authorized the e-filing of Article 9-A general business corporation and S corporation tax documents beginning on January 1, 2009. You must e-file all Article 9-A general business corporation and S corporation tax returns and extensions that are supported by your NYS approved e-file software beginning January 1, 2009.
Additional business tax filings may be mandated for calendar year 2009 as electronic filing programs are added or expanded.
Will you notify me if I am subject to the e-file mandate?
It is the responsibility of the tax return preparer to comply with the business tax e-file mandate for tax return preparers.
How do I determine if I meet the 100 original tax document threshold?
Count the original Article 9-A general business corporation and S corporation tax documents that you prepared in calendar year 2008, including tax documents for prior years. Article 9-A tax documents include returns, reports, estimated tax documents, amended returns, elections or claims for refunds.
What is an original tax document?
For the business tax e-file mandate, an original tax document means a tax document that is filed during the calendar year for which that document is required or permitted to be filed. You must count original tax documents to determine if you meet the 100 document threshold.
To determine if you are subject to the mandate beginning on January 1, 2009, you must count Article 9-A general business and NY S corporation returns, reports, amended returns, extensions, estimated tax documents, elections and claims for refund prepared in calendar year 2008, regardless of the tax year to which they apply.
What is an authorized tax document?
An authorized tax document is any tax document that the Tax Department has authorized to be filed electronically.
For tax documents filed on or after January 1, 2009 the Tax Department has authorized the e-filing of Article 9-A general business corporation and S corporation tax documents.
Additional business tax filings may be mandated for calendar year 2009 as electronic filing programs are added or expanded.
Do I have to e-file requests for extensions if I am subject to the business tax e-file mandate?
Yes. You must also pay any amount due electronically with a direct debit from a bank account.
I have multiple transactions to report on an e-filed corporation tax return. Do I have to enter every transaction, or can I use summary statements?
You must provide the transaction detail for e-filed corporation tax returns. You can provide the detail by:
Please note that the fact that a return includes multiple transactions will not be considered reasonable cause for not e-filing that return.
My client has a corporation that files a combined return. Can I e-file the return and/or extension?
No. We don’t support e-file for combined returns or the extension on Form CT-5.3.
What are the payment options on e-file corporation returns and extensions?
The balance due on Article 9-A general business corporation and S corporation tax returns or extensions must be paid with a direct debit from a bank account at the time the returns or extensions are e-filed. We currently do not support electronic payment for estimated payments.
To make a direct debit payment, simply enter the bank routing number and account number into your software, and the payment information will be transmitted along with the tax data. The payment can be “post-dated” to a date up to and including the due date of the tax document. We will only debit the account for the amount authorized.
Do I have to submit an application to e-file NY corporation tax returns and extensions?
No. You don’t have to submit an application to e-file New York State corporation tax documents.
To participate in our Corporation Tax e-file program you must:
Can tax return preparers opt-out of e-file?
There is no provision in the law that allows a tax return preparer who is subject to the mandate to opt-out. However, if the preparer has reasonable cause for not e-filing a return, and maintains a properly completed Opt-out/Reasonable Cause Record for Return Preparers for that return, the return can be filed on paper.
What is the penalty if I don't comply with the mandate?
The law provides for a penalty of $50 for each tax document that is not e-filed unless your client opts out, or you have other reasonable cause for not e-filing.
In addition, the taxpayer will be subject to a $50 per tax document penalty for failing to electronically pay a balance due. The Department can’t abate the payment penalty for reasonable cause
What if my client does not want to e-file?
Your client can opt-out of e-filing an authorized tax document by signing an Opt-out/Reasonable Cause Record for Tax Return Preparers. A separate Opt-out/Reasonable Cause Record for Tax Return Preparers is required for each authorized tax document that is not e-filed.
You are required to retain a copy of the Opt-out/Reasonable Cause Record for Tax Return Preparers in your records for 5 years.
The software that I use to e-file corporation tax documents does not support all document types or attachments. Will I be penalized for not e-filing those returns
If you are using NYS approved e-file software to prepare Article 9-A general business corporation and S corporation tax documents and that software does not support the e-filing of a specific document type or required attachment, you can file the tax document on paper. You will not be subject to the penalty for failing to e-file tax documents that are not supported by your approved e-file software.
An Opt-out/Reasonable Cause Record for Tax Return Preparers is not required for these documents.
The software that I use does not support NY e-file. Do I have to buy new software?
Yes. If you are subject to the mandate, and the tax preparation software that you are using to prepare corporation tax documents is not approved for NYS approved e-file for tax year 2008, you must acquire NYS approved e-file software that supports the e-filing of Article 9-A general business and corporation tax documents for tax year 2008.
How do I find software that supports NY e-file for Corporation Tax?
You can check our web-site for a list of approved software, or ask your software company if they support New York State e-file.
I have employees who prepare tax documents. How should I count these with regard to the threshold?
Tax documents are counted at the entity level. It is the combined total of the documents prepared by you and your employees that determines whether or not you are subject to the e-file mandate.
My business has multiple locations. Does the threshold apply to each location separately?
No. Tax Documents are counted at the entity level. It is the combined total of the documents prepared at all locations that determines whether or not you are subject to the e-file mandate.
My business is located outside of NYS. Am I still subject to the mandate?
Yes. If you meet the requirements in the law, you are subject to the e-file mandate even though you are located outside of New York State.
I have not received my e-file authorization from the IRS. What should I do?
If you have not yet applied for an e-file authorization from the IRS, you should do so right away. Visit the IRS Web-site for more information on their application process.
When do I need an Opt-out/Reasonable Cause Record for Tax Return Preparers?
You must have an Opt-out/Reasonable Cause Record for Tax Return Preparers when:
How do I obtain an Opt-out/Reasonable Cause Record for Tax Return Preparers?
An Opt-out/Reasonable Cause Record for Tax Return Preparers may be printed using your tax software, or from the Tax Department Web-site. The Tax Department does not print, mail or maintain stock for these forms.
When don’t I need an Opt-out/Reasonable Cause Record for Tax Return Preparers?
You don’t need an Opt-out/Reasonable Cause Record for Tax Return Preparers if you are otherwise complying with the e-file mandate, but your NY approved e-file software does not support the e-filing of a tax document or attachment. (For example, a credit is claimed on a return and the software does not support the e-filing of the credit form).
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Last Modified: December 9, 2008
