Tax preparers: exemptions.

Senator Niello's tax preparer legislation modifies California's regulatory framework by expanding exemptions from Tax Preparation Act requirements for certain licensed professionals and financial institutions. The measure revises Section 22258 of the Business and Professions Code to exempt individual licensed accountants, authorized public accountancy practitioners, and accounting firms with valid California Board of Accountancy licenses from registering with the California Tax Education Council.

The bill delineates specific conditions under which employees of exempt entities may prepare tax returns without individual registration. Employees must work under the supervision of an exempt individual who reviews and signs the returns. The legislation also extends exemptions to active State Bar of California members, trust companies, state or federally regulated financial institutions, and IRS-enrolled practitioners. These changes apply to tax returns prepared for tax years beginning January 1, 2025 or later.

Under current law, tax preparers must register with the California Tax Education Council and provide clients with written disclosures about their services. The amended code maintains these requirements for preparers not covered by the expanded exemptions while establishing a framework for supervision of exempt entities' employees. The measure preserves existing oversight mechanisms through the California Board of Accountancy and other regulatory bodies for their respective licensees.