28. September 2010 · Comments Off · Categories: Federal Tax Topics


IR-2010-99, Sept. 28, 2010

WASHINGTON — As part of an initiative to ensure that tax return preparers are competent and qualified, the Internal Revenue Service today issued final regulations requiring paid tax return preparers to register with the IRS to obtain a Preparer Tax Identification Number (PTIN). A new online application system to obtain a PTIN is now available.

All paid tax return preparers who prepare all or substantially all of a tax return are required to use the new registration system to obtain a PTIN.

Access to the online application system will be through the Tax Professionals page of IRS.gov. Individuals who currently possess a PTIN will need to reapply under the new system but generally will be reassigned the same number.

“Getting a new, industry-wide registration system in place is essential to our efforts to improve the standards and oversight of tax return preparation,” said IRS Commissioner Doug Shulman. “These efforts are essential to the future of the nation’s tax system. This will create higher standards for the tax preparation community and ensure quality service for taxpayers.”

The IRS set up a special toll-free telephone number, 1-877-613-PTIN (7846), that tax professionals can call for technical support related to the new online registration system.

Applicants will pay a $64.25 fee to obtain a PTIN, which will be valid for one year. As part of that fee the IRS will receive $50 per user, as authorized by final user fee regulations issued by the IRS today, to pay for technology, compliance and outreach efforts associated with the new program. And a third-party vendor will receive $14.25 per user to operate the online system and provide customer support.

Receipt of a PTIN will be immediate after successful online registration. Or a paper application may be submitted on Form W-12, IRS Paid Preparer Tax Identification Number Application, with a response time of four to six weeks. Before registration, applicants should consider that the date the PTIN is assigned is established as the annual renewal date.

Individuals without a Social Security number will also need to provide one of the following: Form 8945, PTIN Supplemental Application for U.S. Citizens Without a Social Security Number Due to Conscientious Religious Objection, or Form 8946, PTIN Supplemental Application for Foreign Persons Without a Social Security Number.

The new online registration system and final regulations are part of a series of steps underway to increase oversight of federal tax return preparation.

In January, Shulman announced the results of a comprehensive six-month review of the tax return preparer industry, which proposed new registration, testing and continuing education of federal tax return preparers. With 60 percent of American households using a tax preparer to help them prepare and file their taxes, higher standards for the tax return preparer community will significantly enhance protections and service for taxpayers, increase confidence in the tax system and result in greater compliance with tax laws over the long term. Currently, many return preparers do not have to meet any government or professionally mandated competency requirements before preparing a federal tax return for a fee.

Work on Testing, Continuing Education Components Continue

The start of the PTIN registration process begins as the IRS continues to review the testing and education components of the return preparer initiative as recently announced in proposed regulations that would amend Treasury Circular 230.
The proposed Circular 230 regulations announced that attorneys, certified public accountants and enrolled agents would not be subject to additional testing or continuing education requirements in order to obtain a PTIN. These professionals are currently subject to strict professional standards of conduct and ethics.

Pending finalization of guidance, the IRS has under serious consideration extending similar treatment to a discrete category of people who engage in return preparation under the supervision of someone else — for example, some employees who prepare all or substantially all of the return and work in certain professional firms under the supervision of one of the above individuals who signs the return.

The IRS will provide guidance defining this area in the coming months, and will continue to seek feedback during this process to help ensure the creation of a fair, equitable oversight system that minimizes burden.

On the continuing education requirements, the IRS recognizes the need to have transition rules in place and plans to issue additional guidelines by the end of the year.

21. September 2010 · Comments Off · Categories: Federal Tax Topics

After an extensive review that included significant public input, the Internal Revenue Service announced in January 2010 a fundamental change in how the agency will regulate the tax return preparation industry. Under this change, the IRS will implement new regulations and procedures that will better serve taxpayers, tax administration and the tax professional industry.

The new requirements take effect on January 1, 2011, and include: mandatory preparer tax identification numbers (PTINs), continuing education, competency testing, ethical standards and electronic filing.

For purposes of PTIN registration, a tax return preparer is an individual who, for compensation, prepares all or substantially all of a federal tax return or claim for refund.


Step One: Sign Up Electronically

Beginning in mid-September 2010, federal tax return preparers may begin signing up for a PTIN.  All tax return preparers, including those tax return preparers who are attorneys, certified public accountants, and enrolled agents, must have PTINs if they prepare tax returns after December 31, 2010.

Access to an online sign-up system will be available through www.IRS.gov/taxpros.  An annual fee of $64.25 will be required.

Everyone must pay the fee and sign up for a PTIN using the new process, including those preparers who already have PTINs.  Tax return preparers who already have PTINs will be assigned the same PTIN under the new system

Step Two:  Competency Exam

Beginning in mid-2011, tax return preparers must pass a competency test to officially become a registered tax return preparer.

Tax return preparers who have PTINs before testing becomes available will have until Dec. 31, 2013, to pass the competency test.  After testing becomes available, new tax return preparers will be required to pass the competency test before they can obtain a PTIN.

Attorneys, certified public accountants, and enrolled agents will be exempt from the competency test requirement.  Enrolled actuaries and enrolled retirement plan agents will be exempt from the competency test requirement if they only prepare returns within the limited practice areas of these groups. More guidance on testing will be available in spring 2011, including the amount of the testing fee.

Step Three:  Continuing Education

A new continuing education requirement of 15 hours per year will also be implemented in the future.  The beginning date has not been determined.  

Courses will need to include 3 hours of federal tax law updates, 2 hours of ethics, and 10 hours of other federal tax law. 

This will not apply to attorneys, certified public accountants, enrolled agents, enrolled actuaries, or enrolled retirement plan agents due to their existing education requirements.

Continuing education credit opportunities will be available from a variety of approved sources.  More guidance will be available through www.IRS.gov/taxpros.