It just got a little (stress on little) bit cheaper for tax professionals to practice in 2016. As of November 1, 2015, the annual fee for a 2016 preparer tax identification number (PTIN) is $50 for new applications and for renewals. That’s a few dollars cheaper than the prior fee schedule ($64.25 for new registration and $63 for renewal).
Out of that $50, the Internal Revenue Service has earmarked $33 as a “user fee to support program costs.” A third-party vendor will collect the remaining $17 in order to operate the online system and provide customer support.
I know what you’re thinking: do I even need a PTIN this year? The quick answer is yes. With all of the court cases, including Loving v. Commissioner (which the IRS lost and lost again) and AICPA v. Commissioner (where AICPA was recently granted standing to sue IRS over its tax credential program), it’s awfully confusing. Here’s what you need to know for 2016:
Anyone who prepares or assists in preparing federal tax returns for compensation must have a valid 2016 PTIN before preparing returns. All enrolled agents must also have a PTIN.
That’s not just important information for tax preparers: it’s good information for taxpayers. If you pay anyone to prepare your 2015 tax return in 2016, that preparer must have a valid PTIN (it’s in the Tax Code). If your preparer doesn’t have a valid PTIN, walk away. And if your preparer doesn’t have a valid PTIN and attempts to wave it off by saying they’ll let you sign without including any preparer info, run away. Fast.
For tax preparers with a 2015 PTIN, it’s easy to renew. Just sign in to the system and complete the online PTIN renewal application.
Once in the system, you’ll have to verify your personal information and answer a few new questions. Then, pay your $50.00 PTIN renewal fee and voila, you’re ready for tax season.
If you’re a first-time PTIN applicant, you’ll head over to the IRS PTIN site and click under “New User” to create a new account.
You’ll need to have the following information handy:
- Social Security Number
- Personal information (name, mailing address, date of birth)
- Business information (name, mailing address, telephone number)
- Previous year’s individual tax return (name, address, filing status)
- Explanations for felony convictions (if any)
- Explanations for problems with your U.S. individual or business tax obligations (if any)
- If applicable, any U.S.-based professional certification information (CPA, attorney, enrolled agent, enrolled retirement plan agent, enrolled actuary, certified acceptance agent, or state license) including certification number, jurisdiction of issuance, and expiration date
Once you’ve entered your info and paid the fee ($50.00), you’re done.
If you’d prefer to apply or renew by paper, you’ll use form W-12, IRS Paid Preparer Tax Identification Number (PTIN) Application, (downloads as a pdf). As with all paper forms, the IRS will take much longer to process the form W-12 – up to 4-6 weeks – so keep that in mind when applying through the mail.
The IRS likes the use of PTINs because, per the Temporary Regs, “requiring the use of PTINs enables the IRS to better collect and track data on tax return preparers…” Additionally, “PTIN use allows the IRS to more easily identify and communicate with tax return preparers who make errors on returns, which benefits tax return preparers by improving compliance and therefore reducing the number of client returns that are examined.” And finally, “the PTIN also enables the IRS to more easily locate and review returns prepared by a tax return preparer when instances of misconduct or potential misconduct are detected, which aids tax administration and compliance.”
It’s all very big brother, I know, but the party line is that it’s intended to protect taxpayers. Whether that’s actually the case is up for debate. However, it is the rule and tax preparers and taxpayers should be aware of the continued PTIN requirement for 2016.
