IRS Tax Preparer Registration

Posted June 15, 2011

The IRS Return Preparer Office invites you to participate in a return preparer job analysis survey. The results will provide valuable input for the testing vendor, Prometric, to create test specifications for the upcoming registered tax return preparer competency exam. Start Survey

Completed surveys must be submitted before Wednesday, June 21, 2011 (12 PM, EDT).

Posted January 25, 2011

IRS Gives Relief to Return Preparers With Pending PTIN Applications

Responding to problems tax practitioners have experienced in obtaining a preparer tax identification number, on Monday the Internal Revenue Service provided relief to preparers who have made a good-faith effort to obtain a PTIN. Preparers who meet the criteria in the notice will be allowed to use a previous PTIN or their Social Security number until they obtain a new PTIN. Read Journal of Accountancy Article

Nonsigning Preparers Supervised by CPAs Exempted from Parts of IRS Preparer Registration Plan

On Dec. 30, the Internal Revenue Service issued guidance on its plan to regulate all paid tax-return preparers. The notice provides an exception from the competency test and continuing-education requirements for certain nonsigning preparers who are supervised by a Circular 230 practitioner, including a CPA. It also exempts from the competency test preparers who do not prepare Form 1040 returns, and it lists forms that are not considered "returns" and, therefore, will not require a preparer tax identification number. Read this Journal of Accountancy article for more information.

Posted December 30, 2010

Notice 2011-06  which provides transition guidance regarding the upcoming new return preparer regulations

Along with other items, this notice includes in particular:
Page 3 - guidance regarding a testing and education exemption for certain supervised return preparers
Page 6 - guidance regarding a testing and education exemption for preparers who do not prepare any Form 1040 series returns
Page 8 - a list of forms NOT subject to PTIN requirements

Posted December 15, 2010

Originally posted in CPA Letter Daily
An interview with AICPA President & CEO Barry Melancon, CPA

Question:
What is the status of the IRS' tax-preparer registration regulation?

Melancon's Answer:
We agree with the IRS' goal of eradicating abuse of refundable tax credits and we have no problem giving the IRS enforcement capabilities and assigning a preparer tax identification number to tax preparers. I note that nonsigning preparers in a CPA firm also will have to get a PTIN. While CPAs are exempt from the IRS' exam and CPE requirements, the IRS has released proposed Circular 230 regulations stating that the non-certified staff would have to comply with them. In response to our efforts, the IRS has indicated it is likely to exempt a CPA firm's non-CPA staff from the exam and CPE requirements when these regulations are finalized. We also believe the IRS' creation of an exam and a new designation for tax return preparers is likely to cause confusion among taxpayers in the marketplace in terms of the expertise and qualifications of all those who would be listed with the Service. We are working with the IRS on all of these issues.

Posted December 14, 2010

IRS Reminds Paid Tax Preparers to Register Now for PTINs

As year end approaches, the Internal Revenue Service today strongly encouraged paid tax return preparers to register now for their new or renewed Preparer Tax Identification Numbers (PTINs) to avoid any last-minute rush.

Starting Jan. 1, 2011, use of the PTIN will be mandatory on all federal tax returns and claims for refund prepared by a paid tax preparer. Individuals who, for compensation, prepare all or substantially all of any federal tax return or claim for refund must use PTINs. Paid preparers must apply for a new or renewed PTIN through the new sign-up system at www.irs.gov/taxpros.

"We urge you to register now if you plan on preparing tax returns in 2011. The holidays are approaching and it may be tempting to let this slip," said David R. Williams, leader of the new Return Preparer Office. "Our advice is to register now. It takes 15 minutes, and you're done. Over 380,000 preparers have registered so far."

Any preparer who obtained a PTIN prior to the new sign-up system launch on Sept. 28, 2010, must apply again. Generally, preparers with existing PTINs will be permitted to retain their existing numbers if the information they provide during the sign-up process matches what the IRS currently has on file.

The PTIN is a nine-digit number that preparers must use when they prepare and sign a tax return or claim for refund. Previously, PTIN use was optional in place of the preparer's social security number. Mandatory use of the PTIN is part of a broader effort by the IRS to regulate the tax return preparation industry and improve services for taxpayers.

Posted December 13, 2010
As of 12/8, over 351,000 PTINs have been issued with another 115,000 in various stages of the application process. In response to inquiries the IRS has received about paper applications, please read this communication and the following updated FAQ:

I sent in a paper W-12 and my check has not been cashed. What should I do?

Unlike tax returns, we will not process your payment until a PTIN has been issued. You will receive a letter in the mail when your application is processed. If you included an email address on your W-12, you will be notified via email when your application is processed. If you have a paper Form W-12 pending, you may still opt to go ahead and register online at any time. Your paper form and payment will be returned to you.

Posted December 8, 2010
The IRS released regulations on Dec 7 proposing  a decrease in the registration/renewal fee for enrolled agents and enrolled retirement plan agents from $125 to $30. Interested parties have until Jan. 10 to submit comments.

Posted December 8, 2010
Almost 350,000 individuals have successfully registered on the new PTIN system with another 110,000 in various stages of registration. Registration has increased significantly the past few days.

Two important FAQ updates:
Updated: How do foreign preparers without a social security number obtain a PTIN?
A foreign preparer who does not have and is not eligible to obtain a social security number and is neither a citizen of the U.S. nor a resident alien of the U.S. as defined in section 7701(b)(1)(A) will need to complete the Form W-12, IRS Paid Preparer Tax Identification Number (PTIN) Application, either online or on paper, and a paper Form 8946, PTIN Supplemental Application For Foreign Persons Without a Social Security Number. Only preparers that have a foreign (non-U.S.) address may file this form.

Individuals who have an Individual Taxpayer Identification Number (ITIN) are not eligible for a PTIN unless they are foreign persons with a permanent non-U.S. address.

Documentation to substantiate identity and eligibility must accompany the Form 8946. Documentation requirements and mailing information are included in the Form 8946 instructions.

To reduce burden for foreign preparers, the Form 8946 instructions about documentation requirements are being amended. Effective immediately, copies of documents that are certified by the issuing agency or notarized by a U.S. or foreign notary are acceptable. Additional review and certification by a U.S. Embassy, Consulate or an authority of the foreign government is no longer required. In addition, any government issued documents that establish foreign status and/or identity are acceptable.

An online Form W-12 combined with a paper Form 8946 will take 2-4 weeks to process versus an all paper application process which will take 4-6 weeks.

New: I sent in a paper W-12 and my check has not been cashed. What should I do?
Unlike tax returns, we will not process your payment until a PTIN has been issued. You will receive a letter in the mail when your application is processed.

Posted December 2, 2010
IRS Continues Efforts to Ensure Accurate Return Preparation; Reminds Tax Preparers to Sign Up for PTINs

Posted October 26, 2010
IRS commissioner announces new Return Preparer Office at AICPA National Tax Conference
Speaking at the AICPA's National Tax Conference in Washington, D.C., Internal Revenue Service Commissioner Doug Shulman revealed some details of the IRS' initiative to register and regulate return preparers and announced the formation of a Return Preparer Office to manage the IRS' return-preparer registration, testing and continuing-education effort.

Posted October 26, 2010
IRS implements process for foreign return preparers to obtain PTINs: Foreign return preparers and U.S. citizens who do not have a Social Security number because of a conscientious religious objection will be able to obtain preparer tax identification numbers under a two-step process announced by the Internal Revenue Service on Tuesday. The IRS also announced transition relief for such preparers to give them time to comply with the procedures.

Resources

Contact the IRS Tax Professional PTIN Information Line - 1.877.613.7846
Hours of Operation: Monday - Friday, 8:00 a.m. - 5:00 p.m. (CST)

IRS commissioner announces new Return Preparer Office at AICPA National Tax Conference
Speaking at the AICPA's National Tax Conference in Washington, D.C., on Tuesday, Internal Revenue Service Commissioner Doug Shulman revealed some details of the IRS' initiative to register and regulate return preparers and announced the formation of a Return Preparer Office to manage the IRS' return-preparer registration, testing and continuing-education effort. 

IRS implements process for foreign return preparers to obtain PTINs
Foreign return preparers and U.S. citizens who do not have a Social Security number because of a conscientious religious objection will be able to obtain preparer tax identification numbers under a two-step process announced by the Internal Revenue Service on Tuesday. The IRS also announced transition relief for such preparers to give them time to comply with the procedures.

New PTIN Requirements for Tax Return Preparers

New Requirements for Tax Return Preparers: Frequently Asked Questions

Furnishing Identifying Number of Tax Return Preparer (final regulations)

User Fees Relating to Enrollment and Preparer Tax Identification Numbers (final regulations)

New Online Registration System for Paid Tax Return Preparers Is Now Available
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. Read More

ISCPA Members may log into the member's only section of our website and listen to an interesting Federal Tax Podcast that discusses this issue as well as Circular 230 issues.

Article from July’s The Tax Adviser  about the AICPA’s concerns with the proposal.

Letter from AICPA President and CEO Barry C. Melancon, CPA - sent to IRS Commissioner Shulman regarding the non-signing preparer and exam implementation issues.

Article from JournalofAccountancy.com  about the letter signed by 31 Members of Congress to IRS Commissioner Shulman supporting a measured approach.

Article from JournalofAccountancy.com  on AICPA’s comment letter regarding the entire tax preparer registration proposal.

IRS proposed changes to Circular 230 issued on August 19.

IRS Releases Proposed Regulations Related to Fees for Preparer Tax Identification Numbers.  The Internal Revenue Service has announced  the release of proposed regulations  that would establish a fee for individuals who apply for a preparer tax identification number (PTIN). Proposed regulations that were issued in March would require certain tax return preparers to obtain a PTIN. The IRS is working to finalize those proposed regulations, which are the first of a series of steps planned to increase oversight of federal tax return preparation.   

Brief Background About the IRS Tax Preparer Registration Proposal

The IRS has proposed to register paid tax preparers by requiring:

1. A personal tax identification number (PTIN) for all preparers;
2. All preparers to be subject to Circular 230;
3. An exam for registered preparers; and
4. Continuing education for registered preparers.

CPAs, attorneys and enrolled agents would be exempt from the exam and continuing education requirements, but would be required to obtain and use a PTIN number.

The AICPA & ISCPA supports the IRS goal to improve the competency and ethical conduct of paid tax preparers. However, after the proposal was announced, the IRS also indicated its intent to require non-signing preparers (who are not CPAs) to register and take the proposed exam – even non-signing preparers who work at CPA firms under the supervision of a CPA.

The AICPA & ISCPA believes that requiring registration for non-signing preparers working at CPA firms under a CPA’s supervision is a duplicative regulatory burden on CPAs, who are already appropriately regulated by state boards of accountancy.

The AICPA & ISCPA also believes that the IRS is moving too quickly to implement an exam for all registered preparers, and believes that the results of PTIN tracking should be analyzed to prove whether there is a need for an exam for registered preparers.

The additional and unnecessary registration and exam requirements are a burden on American businesses, as the registration and examination costs will ultimately be passed on to consumers and businesses.

The AICPA &aThe AICPA &aThe AICPA & ISCPA supports the IRS goal to weed out “bad actors” through tracking personal tax identification numbers (PTIN) for all signing preparers, and encourages the IRS to fully implement the PTIN regulations before extending the requirement to non-signing preparers AND before requiring an examination.

AICPA Vice President Testifies about IRS Plans to Regulate Return Preparers

Testifying at an Internal Revenue Service hearing on Tuesday, Edward Karl, vice president of taxation for the AICPA, urged the IRS to slow down its plan to regulate paid tax preparers. He asked the IRS to consider the full costs of the proposed plan and the burden it will place on CPAs and CPA firms. "We strongly believe that the true costs of the regime should be considered in their totality," Karl said in his testimony. Read Karl's testimony on AICPA.org, view the press release  or read the comment letter from the AICPA's Tax Executive Committee.

The IRS Targets Incompetent Tax Preparers That's good news. But the agency is going overboard

Aug 26 ONION THE WALL STREET JOURNAL

By BRAD SHERMAN AND MICHAEL CONAWAY

The IRS is out to do something nice for us by ensuring we get quality help when we hire someone to prepare our tax returns. Unfortunately, parts of this laudable effort may be too much of a good thing. By going too far, too fast with more regulation than necessary, the IRS will add needless burden and expense. The agency's goals could be achieved more cheaply and efficiently without stretching its enforcement resources so thin.

Proposed IRS rules would properly address a regulatory gap by requiring all paid tax-return preparers to register for a "preparer tax identification number" (PTIN). This will enable the agency to track their work and find them when problems are uncovered.

Tax attorneys, certified public accountants (CPAs) and enrolled agents already are subject to extensive oversight and testing at both the state and federal levels. But a vast army of others operate with little federal or state supervision and may have little formal training. No independent cop on the beat protects taxpayers from the unprepared preparer. The proposed registration program would bring unregulated preparers within reach of the IRS, enabling it to identify those with a pattern of shoddy work, and, if necessary, act to protect taxpayers. That's the good news.

But the effort is flawed by plans to apply it too widely—going beyond the "signing preparer" (the person who directs and reviews the work and then signs the return) to basically every person who may touch a return.

This approach could require more than a million registrations nationwide, including legions of "nonsigning preparers" at CPA firms that are already subject to intense scrutiny and penalties by state accountancy boards and the IRS. Requiring a PTIN for nonsigners is regulatory duplication that will create volumes of additional paperwork and expense to be passed onto taxpayers—without providing any added protection.

In another exercise in excess, the IRS plans new competency tests for all newly registered preparers. The tests would even cover CPA firm employees who are closely supervised by CPAs, heavily regulated by the states, and often have passed or are about to take a rigorous CPA exam.

Taxpayers would be better served by more targeted rules that distinguish among those with different training. The rules should waive PTIN and testing requirements for nonsigning preparers at CPA firms. Such an approach would eliminate unnecessary costs and encourage the IRS to focus on initiatives that best protect the public.

What's more, the narrow tests planned by the IRS will likely cause confusion by suggesting to some taxpayers that all preparers have equal training and credentials. Explaining the distinctions would require a costly public educational effort.

Rather than racing to test, the IRS should consider a phased approach—implementing the PTIN program and assessing its impact before requiring new testing. Issuing the PTINs and extending IRS disciplinary rules to all registrants, including the estimated one million preparers who have not been covered before, may be protection enough. Armed with the ability to track and discipline incompetent tax preparers through the new registration system, the IRS may find its stated goals are met.

The IRS and its Commissioner Douglas Shulman have earned our appreciation for striving to ensure the competency of those who help Americans with their tax returns. But the IRS will put its own good work at risk if it tries to do too much too soon with excessive and duplicative regulation of those—such as CPA firms, tax attorneys, and enrolled agents— who are already covered by strong and effective oversight.

To maximize effectiveness, the IRS should close the obvious gaps first. Only later, after careful empirical study, should it determine if any additional regulations on preparers are warranted.

Mr. Sherman, a CPA, is a Democratic congressman from California. Mr. Conaway, also a CPA, is a Republican congressman from Texas.

If you have questions, comments, concerns, please email Melissa Nelson, ISCPA Executive Director.

THANK YOU for adding your CPA voice to this important issue.