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Sunday, August 14, 2016


A PTIN is a Preparer Tax Identification Number. Paid preparers of most federal returns must have one and include it on the return along with their signature in order to avoid penalties. The IRS can use the PTIN to track returns prepared by particular individuals (years ago they had to use the preparer's SSN). PTINs are part of a system rolled out in 2010 where the IRS planned to regulate all preparers of individual returns and a few others. The system was found contrary to Section 330 of Title 31. Basically, the IRS can't regulate preparers who do not represent clients before the IRS and preparing a return is not considered representation before the IRS. [IRS categories of preparers - here]
Recent news:
  1. The annual fee to obtain or renew a PTIN has been reduced from $50 to $33 starting on September 9, 2016. This likely presents the fact that the IRS doesn't need as much money if it won't be regulating about half of preparers - the roughly 350,000 preparers who are not an attorney, Enrolled Agent or CPA.  [TD 9781 (8/10/16) + IRS preparer stats]
  2. Preparers need to protect their PTIN. On August 11, the IRS alerted people of phishing schemes where someone pretending to be from a tax software company, aiming to get the preparer's PTIN. [IR-2016-103]
More work is needed by the IRS and Congress to get all paid return preparers subject to rules of conduct (beyond penalty provisions of the law). I think that is what most taxpayers expect. The law is complex, even for Form 1040EZ. Preparers need to keep up to date with changes (there were over 120 statutory changes in 2015!).   How this is to be done remains a topic of discussion.

What do you think?

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