It’s baaaaack!

The IRS has announced that professional tax return preparers can now renew their Preparer Tax Identification Numbers (PTINs) for the 2012 filing season. PTINs must now be renewed annually as part of the IRS’ plan to raise revenue regulate professional tax preparers. Tax preparers who fall under the registration rules are those prepare, or help prepare, all or substantially all of tax returns or claims for refunds for compensation; in other words, if someone pays you to do their return, help prepare their return or file a claim for refund, you need a PTIN. Don’t try to be sneaky or play semantics with the IRS. It will just get you into trouble and subject you to penalties.

If you plan to prepare tax returns for compensation in 2012, you’ll have to have a valid, current PTIN. PTINs must be renewed before the next year begins which means that, for the 2012 tax season, you have until December 31, 2011.

The fee for 2012 is $63 (no, I don’t know why they chose such an odd number – to keep you on your toes perhaps?). If you haven’t yet applied for a PTIN at all (meaning that you didn’t register for 2011), the application fee is $64.25.

You can renew your PTIN online (hopefully it works better than last year – check out the comments) or use a paper form W-12, IRS Paid Preparer Tax Identification Number Application (downloads as a pdf). Of course, if you deal with the IRS on a regular basis, you know that using a paper app is the kiss of death: be prepared to wait four to six weeks for processing.

As a nod to the upcoming rules on continuing education and testing, the IRS is asking tax preparers to identify who they are and what exactly they do. Be prepared to note whether you’re a supervised preparer or non-1040 preparer or a credentialed preparer like a CPA, attorneys or EA (hey, don’t beat me up here, Bob, it was the IRS’ term, not mine).

And taxpayers, don’t assume that this means nothing to you. You should make sure that your tax preparer has a valid PTIN. This shouldn’t be a big deal, just ask. If your preparer balks at the question, that should be a red flag: a true professional shouldn’t blink when you ask about credentials.

Got all that? Now take a big breath. Smell that? Tax season is just around the corner.

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Kelly Erb is a tax attorney, tax writer and podcaster.

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