Can New York Regulate Me?

I live and work in Orange County, California.  My license comes from the federal government (I’m an Enrolled Agent, regulated under Circular 230). Yet New York State has enacted a measure that if legal would force me to remit $100 a year to the Empire State.

New York has passed mandatory state registration for tax preparers. The New York State Department of Taxation and Finance has more here. New York is forcing all Enrolled Agents (whether within or without of New York State) and all non-New York CPAs and attorneys to pay this tax fee if they prepared ten or more New York returns for 2008 and expect to do the same in 2009. I have already prepared more than ten 2008 New York returns; I don’t know if I will for 2009 but it’s likely.

Robert Flach asked, “I am curious to know if any of the tax preparation membership organizations are planning to seek a Court ruling on New York State’s authority to force preparers with absolutely no physical presence in New York State to pay this fee.” I have been told that the New York State Society of Enrolled Agents has or will soon file a lawsuit over this. I’m unsure if the lawsuit is just on the discrimination issue (New York EAs must pay the fee by New York CPAs don’t).

I am considering filing a lawsuit against New York in Federal Court in nearby Santa Ana. I believe I have plenty of grounds for a temporary restraining order against New York:

  • Restricting and Regulating Interstate Commerce
  • Improper Regulation (My license comes from the federal government)
  • The fee is an improper tax, also restricting interstate commerce

I’m sure my attorney will attempt to dissuade me; the cost to fight New York would be a lot more than the $100. He’s right, of course. However, my parents taught me that there are times to stand up for your principles. I do believe that New York has the right to issue such a fee on New York tax professionals (assuming that New York law allows such a fee). But the last time I checked I’m located in Irvine, California, not Irvine, New York.

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