How are CTEC requirements enforced?
In 2005, California Senate Bill 1543 granted the California Franchise Tax Board (FTB) the authority to pursue and penalize unregistered individuals who, for a fee, assist with or prepare state and/or federal tax returns. Individuals who are caught breaking the law will receive a $2,500 penalty for first failure to register
The penalty will be waived if proof of a valid credential is provided to FTB within 90-days from the date the penalty notice is mailed to the tax preparer. A $5,000 penalty will be issued for each subsequent failure to register.
2005
FTB estimates between 10,000 to 20,000 individuals are preparing tax returns illegally.
2006
CTEC registration jumps within one year due to enforcement from 36,000 to over 39,000!
2007
SB 484 passes to give CTEC the authority to deny, suspend or revoke CTEC registrations.
2008
SB 737 passes to better define "assisting with" and those signing returns under exempt tax preparers.
2017-Now
Due to enforcement unregistered tax preparers average less than 4,000 each year. CTEC registers nearly 40,000 tax preparers annually.
*CTEC pays for the entire program without any reimbursement. All penalties collected by FTB are deposited into the state's general fund.
Want to Report a Tax Preparer?
All information you provide (including name and contact information) is kept confidential due to privacy disclosure laws.
Reports are sent directly to the California Franchise Tax Board Tax Preparer Enforcement Team.
