PROFESSIONAL NEWS
Mandated PTIN is upon on us – register now!
Before jumping into the 2011 tax season, paid preparers across the nation will need to obtain a first-ever mandated identification number from the Internal Revenue Service.
Since the IRS unveiled the Preparer Tax Identification Number this fall, the so-called PTIN has raised some red flags. One common questions is this: Who among non-signing preparers are exempt from the PTIN?
The answer: No one.
“The bottom line is that once you realize someone in your firm will be a preparer under the IRS definition, you should make all reasonable efforts to register that person,” said Edward S. Karl, CPA, the vice president of taxation at the American Institute of Certified Public Accountants. The IRS definition of a preparer required to register is any tax return preparer “compensated for preparing, or assisting in the preparation of, all or substantially all of a U.S. federal tax return or claim for refund.”
Preparers can apply for a PTIN through the new sign-up system at www.irs.gov/taxpros. David R. Williams, who leads the new Return Preparer Office of the IRS, said more than 380,000 preparers have registered, a requirement that began Jan. 1. Williams recommends registering as early as possible to avoid a rush as tax deadlines approach.
The IRS estimates that it takes 15 minutes to create an online account, apply for a PTIN, pay the $64.25 fee and for the system to generate an identification number. Preparers can file for a PTIN using a paper application, Form 12, but it will take between 4-6 weeks to process. Registration will be required each year going forward, as will payment of a fee.
The PTIN is part of a broader effort by the IRS to better regulate the tax return preparation industry and improve services for taxpayers. Previously, PTIN use was optional in place of the preparer’s social security number.
Preparers with an old PTIN must still register online, however. Generally, preparers with existing PTINs will be permitted to retain those numbers if the information they provide during sign-up matches the IRS file, the IRS stated in a press release.
Until the close of 2010, CPAs throughout the country had bigger concerns than just acquiring the nine-digit identification number for themselves and staff.
The IRS was calling for preparers who are not CPAs, attorneys or enrolled agents to be subjected to exams and continuing education courses. Junior accountants and interns who play critical roles at CPA firms during tax season were being targeting by these mandates.
After an outcry from tax professionals, including lobbying by the AICPA, the IRS issued a notice on Dec. 30 that exempted certain non-signing preparers from the exam and courses. There are conditions, though. The preparer must be supervised by a CPA, attorney or enrolled agent and the return or claim needs to be signed by a supervising CPA, attorney or enrolled agent. Also, the preparer needs to be employed by the same firm as the signer.
Patricia A. Thompson, tax partner with Rhode Island’s Piccerelli, Gilstein & Company LLP and Chair of the AICPA Tax Executive Committee, welcomed the revision by the IRS.
“This is very helpful because many employees are not CPAs but work on tax returns,” she said. Thompson added that the idea of continuing education courses approved by the IRS and exams would have become an expensive proposition for CPA firms. Also, those measures would have had an impact on the use of seasonal interns and other employees.
Karl echoed Thompson’s view and applauded the IRS for reconsidering its position.
“New ramifications of this program come to light every day; the issuance of this notice shows that the Service is willing to make changes that benefit everybody – taxpayers, practitioners and tax administration,” Karl told the Journal of Accountancy.
