New legislation impacts California Tax Education Council (CTEC) requirements July 2019 Tax News

California Assembly Bill 3143 was signed into law last year with new provisions and requirements that will extend the California Tax Education Council (CTEC) program until January 1, 2023. It was the third Sunset Review for CTEC since its inception 21 years ago.

The renamed Tax Preparation Act (Section 22250*) stipulates revisions that will impact CTEC Registered Tax Preparers (CRTPs) and includes additional responsibilities for the Council.

New 2019 requirements

Disciplinary actions

Starting July 1, 2019, CTEC will post on the ctec.org website:

  • All disciplinary actions taken against registrants by the Council, including – but not limited to – misconduct that results in a suspension or revocation of a CRTP registration
  • A list of registrants on probation, including the misconduct that resulted in the probation and any terms of probation

Reporting bond claims

Effective July 1, 2019, CRTPs are now required to report all paid claims against their $5,000 surety bond to CTEC. CTEC will post all bond claims it receives on ctec.org.

California law requires nonexempt paid tax preparers (attorneys, certified public accountants and enrolled agents are exempt) to complete tax education courses, obtain a $5,000 surety bond to protect taxpayers against fraud and register with CTEC each year.

Tax preparers who are doing business in California without a legal designation may face penalties up to $5,000 from FTB.

New 2020 requirements

Background checks and fingerprint images – Begins July 1, 2020.

California Business and Professions Code Section 22251.3* was amended to require new applicants interested in becoming CRTPs to pass a criminal background check and submit fingerprint images to CTEC to determine an individual’s eligibility to register as a CRTP. The new requirements are NOT applicable to current CRTPs, only new applicants who register beginning July 1, 2020.

Also beginning July 1, 2020, if a CRTP allows their CTEC registration to expire and they would like to reregister with CTEC, they not only will be required to retake the 60-hour qualifying education course, but they will also be required to go through another background check and resubmit fingerprint images to CTEC.

*All references are in the California Business and Professions Code, Sections 22250-22259