Only those
individuals who register with the Internal Revenue Service and receive a PTIN
are permitted by law to prepare tax returns for compensation.
What is a
PTIN? Here’s the story -
For as long
as I have been preparing 1040s, since February of 1972, paid preparers have
been required to sign the tax returns they prepare.
On the 1971
return the preparer signature attested that: “Under penalties of perjury, I declare that I have examined this return,
including accompanying schedules and statements, and to the best of my
knowledge and belief it is true, correct, and complete.”
The sentence,
“Declaration of preparer (other than
taxpayer) is based on all information of which preparer has any knowledge,”
was added to this statement sometime thereafter.
The 1977
return was the first that required, in addition to a signature, the preparer’s
“identifying number”, later specifically referred to as the preparer’s Social
Security number. Beginning with the 1978
Form 1040, the preparer’s “Firm’s name (or yours if self-employed), address and
ZIP code” and its corresponding Employer Identification Number had to also be
entered on the return under a section called “Paid Preparer’s Information.”
In an
attempt to avoid identity theft, a “Preparer
Tax Identification Number”, or PTIN, was created as an alternative to
listing one’s Social Security number on the return. The 1999 Form 1040 was the first that asked
for the preparer’s “SSN or PTIN”, and the first return on which I entered my
PTIN, which is the same PTIN I use today.
Up through
the 2009 return a PTIN was optional, and paid preparers could still use their
Social Security number when signing a return.
And up through 2009 there was no fee for applying for a PTIN, and one
never had to renew one’s PTIN.
Beginning
with the 2010 return all paid preparers were required to register with the IRS
and obtain a PTIN as part of the new IRS mandatory Registered Tax Return
Preparer regulation regime.
As a part of
the IRS regulation regime, tax preparers were required to pay an initial $64.25
to receive, or “refresh” an existing, PTIN.
PTINs were required to be renewed annually at a cost of $63.00. The PTIN fee was established as a method of
partially funding the mandatory RTRP program, and annual renewal was initiated
so that the preparer could verify that they had taken the required hours of
continuing professional education. The
IRS mandatory RTRP regulation regime was put to death by the court in Loving v.
IRS.
The PTIN
renewal fee for both new and renewing applicants was reduced to $50.00 in late
2015. This is still an excessive and
unnecessary fee. The $50.00 is composed
of an actual $33.00 IRS fee and $17.00 for the outsourced agency that maintains
the PTIN registry. The $17.00 per person
fee to an outside agency is truly excessive and unnecessary.
The IRS
truly needs to maintain a registry of tax return preparers, via the issuance of
a PTIN, and the judge in Loving v. IRS allowed the IRS to continue to require
that all paid preparers register with the service and receive a PTIN. But with the death of the mandatory RTRP
program there is no longer a need to charge such a substantial fee, or any fee,
for acquiring or maintaining a PTIN.
And, as there are no longer any requirements for being able to prepare
tax returns for compensation, there is no reason for annual renewal. A preparer’s PTIN could be renewed every
three years, at no charge, so the IRS could remove preparers who no longer
prepare from the system.
The message
to taxpayers – never use a
person to prepare or amend your tax return for a fee who does not have a PTIN,
or who will not sign the finished return and enter his or her PTIN.
TTFN
2 comments:
Great point. I think the only way the system will truly work though is that filers must be penalized if they file a return for which they paid someone to prepare and that return is not signed or is missing a PTIN. It may seem harsh to put this burden on the taxpayer, but that is the most logical place and filers are responsible for what they file.
AN-
I wholeheartedly agree with you that taxpayers discovered to use preparers who do not sign the return or do not have a PTIN should be penalized just as much as the unethical preparer.
RDF
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