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.
Registered Preparer Guidance Coming
Future guidance will spell out a number of other requirements, including the critical requirements for becoming a registered tax preparer, which will be provided in future Circular 230 guidance, the proposed rule said. There will also be guidance coordinating the enrollment and renewal of user fees imposed on enrolled agents and enrolled retirement plan agents with the PTIN user fees, the service said.
A third-party vendor, previously announced as Accenture, will administer the PTIN application and renewal process and will charge “a reasonable fee” that is independent of the user fee charged by the government, the guidance said. The vendor will develop a web-based database that individuals will use to apply for or renew a PTIN, IRS said, and will also process paper PTIN applications. The database also will be used by the applicant to become a registered tax return preparer, to renew his or her registered tax return preparer status, to self-certify continuing professional education credits for registered tax return preparers, and to pay applicable user fees.
Recovering Government Costs
IRS justified the new user fees by noting the increase in resources the new registration program will take. It said the fees will be used to recover the costs the government incurs in administering the PTIN process.
IRS currently issues PTINs to tax return preparers without charging a user fee, “but the application, issuance, and renewal process will become significantly more expansive and intricate with the implementation of the registered tax return preparer program,” it said.
The user fee will recover the costs of IRS customer service support activities, which include website development and maintenance and call center staffing to respond to questions regarding PTIN usage and renewal.
“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,” it said.
Fees for Testing
Future regulations will also address user fees for taking the registered tax return preparer examination and providing continuing education programs, the guidance said.
Note that in yesterday’s NATP TaxPro Weekly there was a similar announcement, but there was an emphasis on the fact that Accenture, the company the IRS is contracting with to manage the registration process, will also charge a “reasonable fee,” so the actual cost of annual registration will be higher than the $50 IRS fee. I’m thinking probably double; I hope not more.
Bill