Better brush up on your e-filing skills. Gov. Gray Davis' budget plan again contains a mandatory e-filing requirement for practitioners preparing more than 100 state tax returns a year. The proposal is outlined in SB 7x, which has passed the Senate and was in the Assembly at press time.

The proposal aims to reduce the processing costs of tax returns for the state. E-filing would be mandatory for those returns that can be e-filed unless the taxpayer objects in writing. Tax preparers would be subject to a fine of $50 per return for failing to e-file.

A more stringent proposal that did not allow taxpayers to reject e-filing was defeated last year. While inclusion of the opt-out provision has eliminated most opposition to the proposal, CalCPA remains opposed.

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