Business Tax e-file Mandate for Tax Preparers

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New for 2010

You must e-file extensions for Article 9, 9-A, 32 and 33 even if the subsequent return cannot be e-filed.
Beginning with the return due on April 20, 2010, you must electronically file monthly sales tax returns directly with the Tax Department by creating an Online Services account.

Who the corporation tax mandate applies to
Beginning January 1, 2010, you are subject to the mandate and must electronically file all general business and NYS S corporation returns (Article 9-A) and extensions (Articles 9, 9-A, 32 and 33) and electronically pay the balance due if you are a tax return preparer and were subject to the mandate in 2009, or you

Prepared more than 100 original corporation tax documents in calendar year 2009, including tax documents for prior periods; and
Use tax software to prepare one or more corporation tax documents in 2010.

New sales tax rules begin in April

Beginning with the sales tax return due on April 20, 2010 you also must e-file all monthly sales tax returns (ST-809 and ST-810) and PrompTax sales tax returns (Form ST-810), and e-file all general business and NYS S corporation returns (Article 9-A) and extensions (Articles 9, 9-A, 32 and 33) and electronically pay the balance due if you are a tax return preparer and were subject to the mandate in a previous period or you:

Prepared more than 100 combined original sales tax and corporation tax documents in calendar year 2009, including tax documents for prior periods; and
Use tax software to prepare one or more sales tax or corporation tax documents in 2010.

To electronically file corporation tax returns and extensions, you must acquire third-party software that supports New York corporation tax e-file. To Web file sales tax returns, you must create an Online Services account.

How to determine threshold

You are a tax return preparer if you prepare any return or claim for refund for compensation, or you receive compensation for returns or claims for refund prepared by people that you employ or engage.

To determine if you meet the 100 return threshold:

Count tax documents at the entity level. Include all of the returns prepared by you and all of the members or employees of your firm. If your business has multiple locations, use the combined total for all locations.
Count all of the New York corporation tax and sales tax documents that you filed in calendar year 2009. You must include extensions, amended returns, returns for prior years, estimated tax payments and any other New York tax documents, even if they are not subject to the mandate and cannot be e- filed.

You are responsible for determining whether or not you are subject to the mandate.

Once you’re subject to the mandate, it continues to apply to you in following years, even if you no longer meet the 100 return threshold.

Opt-out and reasonable cause provisions

You can’t opt-out if you’re subject to the mandate, but your clients can. They must sign an Opt-out/Reasonable Cause Record for Tax Return Preparers (Form TR-800).

You need separate Forms TR-800 if your client opts out of electronic filing for both the corporation tax extension and the corporation tax return.

You don’t need Form TR-800 if your New York approved e-file corporation tax software doesn’t support e-filing of a required attachment. (For example, the return includes a credit and your software doesn’t support the e-filing of the credit form.) You don’t need Form TR-800 if the sales tax return can’t be web filed because a required schedule or form is not supported by Sales Tax Web File.

You must keep Forms TR-800 in your records for three years, and can be required by the Tax Department to produce these records for an e-file compliance audit. You can keep these records electronically. (i.e. a scanned copy of the signed form)

You may access corporation tax e-file opt-out forms (TR-800-CT) through your tax preparation software and sales tax e-file opt-out forms (TR-800-ST) from your Online Services account.

How to comply with the mandate

To e-file New York corporation tax returns and extensions, you must:

Have an EFIN (Electronic Filer Identification Number) issued by the IRS and be authorized to e-file the equivalent Federal returns.
Use approved software to e-file your New York State corporation tax returns and extensions. If your software does not support e-file you must acquire approved e-file software. You may also Web File certain corporation tax extensions by creating an Online Services account.

To electronically file sales tax returns on the Tax Department Web site you must create an Online Services and gain access to your client accounts.

Additional information:

You must provide e-file corporation tax return transaction detail. You can do so by entering each transaction into the software, importing the data if your software allows it, or transmitting a pdf attachment that includes the detail with the e-filed return.
We do not support the e-filing of certain corporation tax returns and attachments, including combined returns. However, you must still e-file the extension for those returns, if supported by your software.

Penalties

There is a penalty of $50 for each return or extension that you don’t e-file unless you have reasonable cause or your client opts out.
You may be subject to a compliance audit of your e-file records if we are concerned about your compliance with the mandate in 2010.

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

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Last Modified: March 18, 2010