I received an email yesterday from my local IRS liaison:
IRS Issues Proposed Rules Setting Fee for Tax Preparers to Get Unique ID Numbers
By Diane Freda
The Internal Revenue Service July 21 issued proposed rules (REG-139343-08) establishing a new annual $50 user fee for individuals who apply for or renew a preparer tax identification number (PTIN).
The much-anticipated guidance is the first step in setting up a regime of registration with the IRS that will in essence create a new profession of government-sanctioned tax preparers, IRS officials have said in recent forums.
IRS is anticipating that the number of individuals requesting PTINs will increase to as many as 1.2 million under the new registration program, and all individuals who receive or have received PTINs will be required to renew them in the future, the guidance said.
In March, IRS proposed rules requiring tax return preparers who prepare all, or substantially all, of a tax return or claim for refund after Dec. 31 to obtain a PTIN. Further, those rules specified that the PTIN would be the only allowable identifier going forward, as part of a multiprong approach to new and sweeping oversight of the tax preparation industry.
Attorneys, certified public accountants, and enrolled agents have had to obtain a PTIN from the IRS Office of Professional Responsibility and to adhere to that office’s standards of competency and conduct. But IRS officials said that hundreds of thousands of other practicing tax preparers have never before been required to have a PTIN and have been unregulated by any agency at the national level.
The $50 fee to apply for or renew a PTIN is based on an annual renewal period, and the procedures for renewing a PTIN will be provided in other guidance, IRS said, including forms and instructions. The user fee is nonrefundable, regardless of whether the applicant receives a PTIN or not, IRS said.
This is the first step in the IRS’ plan to force every tax preparer to register. The idea is that the IRS will have a database of PTINs covering everyone. Additionally, electronic filing is being mandated on all preparers (100 or more returns by a preparer mandates electronic filing next year; 10 or more returns in 2011). The combination will, in the view of the Office of Professional Responsibility, allow them to stop unscrupulous tax preparers by shutting them down. (No valid PTIN, no ability to prepare a return).
A question that’s obvious is what about the unscrupulous preparers who buy a copy of TurboTax and then prepare returns for fees and just print out copies that say “self-prepared”? The IRS plans on using some of the money raised to have an advertising campaign. In the ads the IRS will tell the public that a preparer is required to put down his or her PTIN (if you pay to have a return prepared).
If you already have a PTIN, you will be required to re-register your PTIN and pay the $50.
The IRS justification for the fee is:
The user fee also will recover costs for personnel, administrative, and management support needed to evaluate and address tax compliance issues of individuals applying for and renewing a PTIN, to investigate and address conduct and suitability issues, and otherwise support and enforce the programs that require an individual to apply for and renew a PTIN.
There will be a public hearing on August 24th, and comments can be made until that date on the rules.
The official regulation is here. Comments can be made:
Via mail: CC:PA:LPD:PR (REG-139343-08), Room 5205, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044; or
Electronically via the Federal eRulemaking Portal at http://www.regulations.gov (IRS REG-139343-08).
