For Immediate Release – December 30, 2002
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California To Go After Illegal Tax Preparers
SACRAMENTO – A new law taking effect in just two days will make it
more difficult for illegal and unregistered tax preparers to ply their trade
Contact: A new law written by State Senator Liz Figueroa urges illegal tax
Cindy B. Lopes preparers to follow the law or face stiff penalties. The law also requires
(916) 772-5365 tax preparers in California to be registered with the California Tax
Education Council (CTEC). The only practitioners exempt from this
law’s provisions are certified public accountants, enrolled agents,
attorneys, and employees of those groups.
Walt Thomas, an enrolled agent in Hayward and a CTEC Board
Member, said he believes the new law will help keep consumers safe
from illegal tax preparers’ schemes.
“It’s a big weight off our shoulders,” Thomas said regarding the bill’s
passage. “When the council was formed, we did not have any authority
for citing and fining illegal tax preparers. This gives us some bite to go
with our bark.”
CTEC and the State of California’s Franchise Tax Board will work
together to enforce the provisions of the bill. CTEC will notify
authorities when the Franchise Tax Board identifies any tax preparer
not in compliance. CTEC would first send a notice to the illegal tax
preparer providing information about what one needs to do to become
registered, including a requirement of continuing education. If there is
no response, then CTEC can pursue citing and fining those individuals.
“Our main objective is not to fine people, but to register tax preparers to
ensure they have the continuing education and the required bond to
prepare tax returns,” Thomas said.
Partnering with the Franchise Tax Board will be a benefit to CTEC as
well as to consumers, Thomas said. “They have a number of people in
the field whose responsibility is to monitor the tax preparer community,”
according to Thomas. “They will enable us to find and get a better
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California to Go After Illegal Tax Preparers
handle on illegal tax preparers. It’s an enormous task.”
The new law outlines practices which all tax preparers in the state must follow in order
to be registered. These practices are designed to ensure that tax preparers file their
clients’ returns as accurately as possible and include safeguards to protect consumers
and their financial information.
Five Warning Signs A Tax Preparer is Disobeying the Law:
1. The preparer asks for your signature on a blank return.
2. The preparer will not sign your return after receiving payment.
3. The preparer won’t give you a copy of anything you’ve signed withi n a
4. The preparer does not give you back financial information or documents you
provided to complete the return.
5. The preparer doesn’t keep a copy of a tax return he helped you file three years
The new law makes any of the above a crime and citable violation. It outlines specific
penalties illegal tax preparers could face. Tax preparers who do not follow the rules
could be subjected to a $1,000 fine and given a cease-and-desist order. The order
remains in effect until the tax preparer comes into compliance with the law.
There are approximately 30,000 CTEC registered tax preparers in California, but
according to Thomas, there are nearly 10,000 illegal tax preparers operating as well.
Tips For Finding Someone to Prepare Your Taxes:
There are four groups legally allowed to charge a fee to prepare your taxes:
1. CTEC Registered Tax Preparers (CRTP’s)
2. Certified Public Accountants (CPA’s)
4. Enrolled Agents (EA’s) enrolled before the Internal Revenue Service (IRS)
To find out if your tax preparer is registered with CTEC:
?? Ask him or her;
?? Look for a CTEC sign in his or her office; or
?? Check our Web site: www.ctec.org or call us at (877) 850-CTEC (2832). We’ll
tell you if he or she is registered.
For more information, contact CTEC at (877) 850-CTEC (2832) or visit us online at
The California Tax Education Council is an entity formed to
register tax preparers who serve Californians.