New for 2010:

• Return preparers subject to the mandate must now e-file fiduciary returns to the extent they are supported by your approved NY e-file software.
• Balance due individual IT-370 extensions are no longer excluded from the mandate.  You must e-file all extensions, even those with a balance due, unless your client opts-out or you have other reasonable cause documented on Form TR-800-IT.

Who the mandate applies to
 
You must e-file all individual income tax, fiduciary and partnership returns (including Form IT-204-LL) and individual income tax and partnership extensions beginning on January 1, 2010, if you were subject to the mandate in a prior year, or if you:

• Prepared more than 100 combined original individual, fiduciary and/or partnership returns for tax year 2008 in calendar year 2009, and
• Use tax software to prepare one or more New York State individual, fiduciary and/or partnership returns for tax year 2009 in calendar year 2010.

You are subject to the e-file mandate even if you are located outside of New York State.

To determine if you meet the 100 return threshold:

• Count returns 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 individual income tax, fiduciary and partnership returns for tax year 2008 prepared in calendar year 2009.
•  Don’t count extensions, amended returns, or returns filed for prior years. 
•  If you prepare a group return, you must count each nonresident partner or shareholder as a separate return.

It is your responsibility to determine if 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 client can.  They must sign an Opt-out/Reasonable Cause Record for Tax Return Preparers (Form TR-800 series). For joint returns, both spouses must sign.

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

You don’t need Form TR-800 if your New York approved e-file 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 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.

How to comply with the mandate

To e-file New York individual income tax, fiduciary or partnership returns, you must:

• have an EFIN (Electronic Filer Identification Number) issued by the IRS and be authorized to e-file the equivalent Federal return.
• use approved software (income, partnership or fiduciary)to e-file your New York State returns.  If you prepare both income tax and partnership returns, you must have software that supports e-file for income tax and partnership returns and extensions.  However, for tax year 2009, you are not required to purchase new software for fiduciary e-file.  If your approved software supports e-file of fiduciary returns you must e-file those returns, but you are not required to purchase new software that supports fiduciary e-file for tax year 2009 returns. 

Special circumstances:

• You don’t have to enter every transaction on Schedule D for individual income tax returns. You can use summary statements in the electronically filed return. We do not require you to mail us the supporting details for these transactions when the return is filed. If we need the detailed transaction information, we will request it.
• You must provide transaction details on your e-filed partnership returns.  You can do so by entering each  transaction into your software, importing the data if your software allows it, or providing a pdf attachment with the e-filed return.
• If your approved e-file software doesn’t support the e-filing of a required attachment, like a credit form, you must file a  paper return. You don’t need a TR-800 form in this case.
• Volunteer return preparers who are not compensated for preparing returns (i.e VITA volunteers) are not subject to the mandate

Penalties

A $50 penalty applies to each return or extension that you fail to e-file, unless your client opts out of e-filing or you have other reasonable cause for failure to comply.