The IRS has finalized the rules surrounding its tax preparer registration program. At the same time, it has launched an online registration system that preparers must use to obtain a Preparer Tax Identification Number, or PTIN.
Here are some important points, directly from the IRS:
“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.”
“Individuals who currently possess a PTIN will need to reapply under the new system but generally will be reassigned the same number.”
“The IRS has 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.”
“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.”
Further details are available here.
The IRS also has published a comprehensive Q&A document regarding the registration program. That document includes the following scenarios that might prove helpful (thanks to the MACPA's Mary Beth Halpern for digging these up):
Q. I am a tax return preparer, and I have a PTIN. My firm employs a bookkeeper. She gathers client receipts and invoices, and organizes and records all information for me. Although I use the information that our bookkeeper has compiled, I prepare my clients’ tax returns and make all substantive determinations that go into computing the tax liability. Does my bookkeeper need to have a PTIN?
A. No, she is not a tax return preparer, and is not required to have a PTIN.
Q. I am a tax return preparer, and I have a PTIN. Every tax filing season I hire two paid interns from the accounting program at a local college to help me during the busy season. The interns perform data entry from the tax organizer that my clients fill out, and assemble the documentation that the clients have submitted. Where clients have submitted incomplete information, or more information is needed, the interns may call clients to gather information missing from the tax organizer, but they are not allowed to provide advice or answer tax law questions. I prepare and sign all my clients’ returns. Do my interns need to have a PTIN?
A. No, the interns are not tax return preparers, and are not required to have a PTIN.
Q. Same facts as above, but in order to help my interns get exposure to the tax system, I allow them to work with clients who have very simple tax situations, and prepare the Form 1040-EZ. I review the forms carefully, and sign them. Are my interns required to have PTINs?
A. Yes, the interns are tax return preparers and are required to have a PTIN, whether or not they sign the returns.
Q. I am a tax return preparer, and I have a PTIN. I have an administrative assistant in the office who also performs data entry during tax filing season. At times, clients call and provide him with information, which he records in the system. Using the data he has entered, I meet with my clients and provide advice as needed. I then prepare and sign their returns. Is my administrative assistant required to have a PTIN?
A. No, the administrative assistant is not a tax return preparer, and is not required to have a PTIN.
Q. I am a retired tax professional, and I volunteer during the tax filing season. I volunteer at a VITA site, where I prepare individual tax returns for lower-income individuals for no compensation. Do I need to have a PTIN?
A. No, you are not a tax return preparer and you are not required to have a PTIN.
Q. I run a small tax return preparation business that is heavily software-based. I employ four associates who sit with taxpayers and walk through a step-by-step software program that uses an “interview” process that results in a draft tax return. I check and sign the returns, and I have a PTIN. Do my four associates need to have a PTIN?
A. You will need to perform additional analysis to determine whether your four associates must have a PTIN. The answer depends on the specific circumstances of your firm. In general, if individuals prepare all or substantially all of a tax return, including making determinations that affect tax liability, they must have a PTIN.
More registration-related resources can be found on the MACPA Web site.
IRS webinar offers more details
The IRS will offer a webinar-based demonstration of the PTIN registration system at 2 p.m. ET on Oct. 19. The webinar will examine the new process for obtaining a PTIN, the information preparers need to do so, how to access the system, and step-by-step instructions. Get details and register here.