It feels like the last tax season just ended (okay, it kind of did), but the Internal Revenue Service (IRS) is already sending out reminders for tax professionals to start the upcoming 2021 filing season. Specifically, the IRS is reminding paid preparers to renew their Preparer Tax Identification Numbers (PTINs) now. All current PTINs will expire December 31, 2020.
Any tax professional who prepares or helps prepare any federal tax return, or claim for refund, for compensation must have a valid PTIN from the IRS. Some forms which are used for informational purposes, like forms SS-4 and 2848, are excluded, as well as specific information returns, like forms W-2 and 1099. You can see the entire list of excluded forms and returns here.
Fees are $21 fee per PTIN application or renewal, plus a $14.95 fee payable to a contractor. According to the IRS, the third-party contractor fee pays for several functions, including processing applications, renewals, and operating a call center. The PTIN fee is non-refundable.
“Large segments of the taxpaying public rely on tax return preparers to assist them in complying with their filing and payment obligations,” said IRS Return Preparer Director, Carol A. Campbell. “Obtain or renew your PTIN now so you will be prepared to assist when filing season opens.”
The IRS suggests that tax preparers with a 2020 PTIN use the online renewal process, which takes about 15 minutes to complete. Here are the quick and easy instructions:
- Start at IRS.gov/taxpros.
- Select the “Renew or Register” button.
- Enter the user ID and password to login to the online PTIN account.
- Follow the prompts to verify information and answer a few questions.
The online system not only allows PTIN renewal, but can also be used by tax preparers to view a summary of the number of filed returns their PTIN has appeared on in the current year, and to receive communications through a secure mailbox from the IRS Return Preparer Office.
First time PTIN applicants can also apply for a PTIN online. Here’s how:
- Start at IRS.gov/taxpros.
- Select the “Renew or Register” button and select “Create Account” in the New User box.
- First time users are issued a temporary password and will be prompted to change their password upon logging in.
- Select the appropriate “PTIN Sign Up” option once logged in.
- Follow the prompts to obtain the PTIN online.
If you don’t want to or can’t file online, you can file by paper by using Form W-12 (downloads as a PDF). However, the paper form can take four to six weeks to process. Failure to have and use a valid PTIN may result in penalties.
Taxpayers should avoid paid preparers who refuse to include a PTIN on a tax return. That might happen because the paid preparer isn’t eligible for a PTIN or because they don’t want to be responsible for the return. Either way, it’s bad news. Those who set up shop and refuse to get a PTIN are sometimes called ghost preparers or black market preparers (for more, click here). Seek out a competent tax preparer who will answer your questions and sign your tax return. You can also check the IRS public directory to find a listing of preparers in your area who currently hold professional credentials recognized by the IRS or who hold an Annual Filing Season Program Record of Completion.