The Internal Revenue Service plans to start fingerprinting thousands of tax preparers as part of its oversight program and run the fingerprints through an FBI database.
The IRS released more details on its tax preparer oversight program on Wednesday, and said registered tax return preparers would now be required to renew their Preparer Tax Identification Numbers on an annual basis. In addition, the 15-hour continuing education requirement will take effect next year.
As part of the new guidance, the IRS released Notice 2011-80, which provides that PTINs must now be renewed on a calendar year basis. All PTIN holders must renew their numbers using the online PTIN application or paper Form W-12 and pay the required fee, which will be $64.25 for next year, after Oct. 15 and before Jan. 1 on an annual basis.
The notice also clarifies a number of other issues. The IRS has been issuing provisional PTINs to individuals who are not attorneys, CPAs, or enrolled agents to allow them to prepare tax returns prior to meeting competency testing and suitability requirements because the testing and continuing education programs have not yet begun. The IRS said it would continue issuing provisional PTINs at least through April 18, 2012. Once the IRS stops issuing provisional PTINs, however, tax return preparers who are required to complete the competency test or suitability requirements must complete these requirements successfully prior to obtaining an official PTIN.
Certain tax return preparers who must pass a suitability check will have to provide their fingerprints so that a Federal Bureau of Investigation database search can be conducted. Generally, the fingerprint requirement will affect those preparers who currently have provisional PTINs.
Under the current proposed regulations, any participant in the PTIN, acceptance agent, or authorized e-file provider programs who resides and is employed outside of the U.S. will not have to be fingerprinted to participate in these programs. Those preparers, however, must comply with all the other elements of the suitability check. In addition, the Treasury Department and the IRS are continuing to study which additional requirements should apply to people outside the U.S. Any additional requirements will be set forth in future guidance.
Attorneys, CPAs, enrolled agents, enrolled retirement plan agent and enrolled actuaries also are expected to be exempt from the fingerprinting requirement at this time. However, they are still required to answer all the suitability questions on the PTIN application, such as whether they have been convicted of a felony in the previous 10 years. Individuals participating in the PTIN, acceptance agent, or authorized e-file provider programs also are required to meet any other requirements of the programs in which they are participating.
The IRS said it is working with third-party vendors who will collect and process the fingerprints.
The IRS notice also provides that the 15-hour continuing education requirement for certain tax return preparers will take effect starting in 2012. Registered tax return preparers and individuals required to pass the competency examination before Dec. 31, 2013, must complete the 15-hour requirement prior to renewing their PTINs for 2013 and subsequent years.
The IRS also published proposed regulations Wednesday (REG-116284-11) that would establish user fees for fingerprinting and taking the competency examination. As proposed, the IRS portion of the fingerprinting fee would be $33, and the IRS portion of the testing fee would be $27. These user fees are in addition to any fees charged by the third-party vendors administering the programs. The fees to be charged by third-party vendors are not being announced at this time, but the total fees, including the IRS user fees, are expected to be between $60 and $90 for fingerprinting and $100 and $125 for testing. For more information, visit www.IRS.gov/ptin.
27 Comments
As a CPA I have amended countless returns prepared by "tax preparers" who made numerous mistakes, were not keeping up-to-date, and cost my new clients thousands of dollars. The industry needs regulation, the proposed fees and education are minimal. My guess is the tax preparers who are conscientious will welcome the new IRS designation.
Posted by: tlfinkel | September 29, 2011 12:28 PM
Report this Comment
First off The losses sustained in Cali and Oregon were the worst in the country. Second and the IRS will still lie, Losses were highest throught there own website. Any person can file directly with the IRS without any PITN or EFIN number. The biggest case in Cali , by the way were CPA's file directly on the IRS. Website. Remember to obtain a Electronic file number you have meet sutibility, file taxes, FBI background checks. So they can track who is filing bad returns. !!! Now we have to pay for duplication.
It would be simplier to clearify some rules with regards to the EIC program , schedule A items deductions , independent contractors and Schedule C deductions. In addition there system needs some type of checks and balances. It is the problem !!!!
I'm all for some type of regulation but how this was done was just plain f-up. We should all take the test including the IRS Customer service Reps and CPA's. You all have to be ashamed of yourselves. You all cried foul when the IRS wanted you employees or non-CPA to take the test and take continuing education courses. What did you do you lobbied and got it waived. Pleaaaz you know this is going to distroy the industry so you can pick up a few clients.
California and Oregon did not speak on behalf of it tax preparers because those agencys are run by you guessed it CPA and EA. Not one taxpreparer on the board.. Its a JOKE!!!
Posted by: JDAVIS | September 29, 2011 11:44 AM
Report this Comment
I am a CPA and I want to lay this out for all of those who are complaining about these new IRS rules. First of all, this should surprise no one. We are in the business of regulations, we are constantly telling people their bad news of their results on their tax returns and how to rectify the situation in the future. So now it's our turn to "bite the bullet". In my opinion, given that I have previously paid thousands of dollars, in the past, for CPE and license renewals, the fees that the IRS is requesting are absolutely nominal. The time for fingerprinting and continuing ed. is miniscule compared to the 80 hours for every two years that I must obtain. The problem here is that too many people have gotten away with paying absolutely nothing and incurring no time in order to prepare returns. If someone cannot contend with these simple restrictions then I suggest they "take a hike". Their true problem is they are not sufficiently committed to the process of preparing tax returns.
Posted by: edmilotcpa | September 29, 2011 7:15 AM
Report this Comment
I was a CPA for 21+- years and never had any problems. I thought it better to forfeit my license as I saw this crap coming, and am changing my practice to a "problem resolution" firm, like Roni Dousche. She makes millions and does NOTHING!!! sAME IS TRUE OF jk HARRIS, etc.
Posted by: BRES | September 26, 2011 12:02 PM
Report this Comment
Unfortunately,anyone who thinks that the tax "code" will be simplified into a "flat" tax, and that this will eliminate the need for IRS and its agents, CPA's, EA's, and now licensed tax preparers, is very simply deluded to the realities of the situation. What I find objectionable is that, now we are to be fingerprinted like we common criminals; though we have done no wrong, and just to enable what kind of surety to the public - none? Are we to apprehend tax cheats now? Are we going to be police? I think not, but we are now beholden to the IRS (our new boss, and not our clients.
Posted by: Beep2011 | September 25, 2011 4:49 PM
Report this Comment
It is my understanding that the Feds went this direction is because Oregon and California have far fewer mistakes on their returns than those of the rest of the country. And Oregon and California are currently the only states that require competency and continuing education programs.
I do think that the Feds are nickel-and-diming folks on the fees though.
Full disclosure: AardvarkTax provides online continuing education services.
Posted by: AardvarkTax | September 25, 2011 10:30 AM
Report this Comment
I am not a CPA or Tax Preparer. I am an IT Consultant. But, I've got to say that I disagree with all these new requirements. I do agree with those who say this is all a ploy to milk more money out of people (CPAs and Tax Preparers) who are trying to stay afloat in their businesses. This is not building the economy and creating jobs; this is destructive, and I believe everyone has a role in doing what can be done to create jobs, including the almighty IRS.
From the article "The IRS has been issuing provisional PTINs to individuals who are not attorneys, CPAs, or enrolled agents to allow them to prepare tax returns...". Will someone please tell me what qualifies attorneys to be Tax Preparers? I don't get that one.
I believe the accountants and CPAs need to stand up for themselves a little more. For years, IT professionals didn't do it (too busy getting all the systems off the ground), and look what has happened to us: low income and no respect. Take a lesson from that.
Posted by: gerarda | September 24, 2011 11:49 AM
Report this Comment
There are preparers who take advantage of illegal or undocumented folks. The illegals who work under an "invented" social security number and get a ITIN still pay their taxes. These preparers count on the illegals' lack or no command of English. One of the ways the preparers get their money is by getting the dependent deduction even though some of the dependents claimed do not pass the joint test under IRC 152. But the big sale and money making scam is the earned income credit. They will show these tax illiterate illegals that the gov't is giving them money by claiming earned income credit to dependents that are living in Mexico and sometimes, these dependents my not be related to these "taxpayers". I don't know if these preparers get their monies on RAL's or a "contingency" of the refund or both. Remember, these preparers, do not follow circular 230.
Posted by: gerardotax | September 24, 2011 3:50 AM
Report this Comment
Is this a JOke !!! What happened to the finger prints that we submitted to obtain our E-File approval. They already have this information and FBI background check. LOL
In California we already have been regulated in fact the IRS is just copying the same system. Guess what it did not work for California why on earth would the IRS copy them and charge money. We now have to comply with two agency's and two fees.
Get real this was a republican lobby job for CPA , Attorney's and EA's they got everything they ask for. They are all dreaming of all the new business they are going to get. What to all the crazy clients enter your doors you will beg for the Tax-preparer to return..
This is about money and taking down H@R Block as the new IRS directed was fired from H@R Block. Check out the story its true.
Well we have survived Electronic Filing we will survive this and kick some butt..
Posted by: JDAVIS | September 23, 2011 5:48 PM
Report this Comment
I have been preparing tax returns for 16 years now and I never before IRS asked me to have a PTIN. I applied for it but instead I received an Employer Indentification Number for my Business and also received a Power of Attorney number from the IRS located in Minneapolis, MN, but no PTIN. I am currently pursuing my MBA in Accounting and I have taking 30 hours college credits on Individuals, Sole Proprietors, Partnerships, and Corporations and I still need to pass an IRS test for Tax Preparer? And continuing education for taxes? I am thinking that is a lot of study for continuing with income tax preparation...
Posted by: raguilar0419 | September 23, 2011 4:56 PM
Report this Comment
Speaking about the PTIN annual fees, it is handled by Accenture and that is why there is a $14.25 added to the base fee of $50 that goes to the IRS.
Even with the PTIN
Posted by: Skyranger | September 23, 2011 4:22 PM
Report this Comment
Having worked for over 22 years doing taxes and taking tax courses every year, I have no problem with the PTIN or the testing. I feel that we need to have a way to ensure that the person preparing the tax return has a certain level of competence before doing the return.
The downside is that if one person is required to take a test to prepare taxes, then all persons that want to prepare tax returns should take the test. There should be no exceptions to this rule. I am not saying that professionals accountants are bad, but all should be created equal.
Posted by: mlill@bellsouth.net | September 23, 2011 3:46 PM
Report this Comment
this is crazy been preparing taxes since 1974. never had a problem and on a % basis almost no mistakes.the government saw states like california an oregon that already have the same qualifications to prepare. the government saw this and decided to use the same programs to rob the preparer.the prices they are going to get for all the garbage they are sending down.there are tons of companies and schools doing the same classes as the irs school for 30 to 50 dollars, fingerprints usually run 7 to 10 dollars continuing ed. 30 to 50 dollars.license fees 20 to 30 dollars. irs license 64.25 what a joke just think highway robbery by the government again, all this government does is find ways to steal from the public, now they found a new way, audits don't give them enough revenue as they steal from the public, just think how much they can steal 64.25 per preparer. this is like gun control take guns from the public and only criminals will have them or do what they did 60 years ago make what they call zip guns. what a shame this country is and state it is in. flat tax 5% and consumption tax eliminate the goofy rules and get rid of the irs scum bags, won't need them than.
Posted by: roadragein | September 23, 2011 3:34 PM
Report this Comment
Just wanted to mention that before a CPA or EA receives their license they are fingerprinted and verified. We do not get our license without this process.
Posted by: Diane W | September 23, 2011 1:16 PM
Report this Comment
I have a question about the fingerprinting aspect of this. I received a PTIN several years ago, just by filing online. About two years ago (as this started to roll out) I had to renew my PTIN and pay a police agency to be fingerprinted, and it only cost me about $7. This was submitted to be able to file electronically. Now I need to pay another fee to be fingerprinted again? My fingerprints did not change, but the IRS is expecting me to pay more than $33 again (and how frequently)?
I understand that there is a system in place, and preparers are being asked to pay another $65 for annual registration. Is this the most efficient method that the government can develop? Can this be outsourced for less? If the government is needing our registration fees to support this process, are we sure that they are collecting an appropriate penalty from the violators who are not preparing accurate returns. Isn't this really where the revenue to run this program come from? If the bad apples are weeded out, will the bureaucracy be reduced?
Posted by: lakosofsky | September 23, 2011 12:37 PM
Report this Comment
These IRS new rules and regulations are good for taxpayers and tax preparers alike where the former will be deprived of creating illegal data and the latter will be scared of manipulating the figures to the detriment of losing the license.
Some taxpayers who have been audited were prepared by "self-prepared" and got paid for preparing the returns.The taxpayer does not even know that it was not signed by the tax preparer. His only focus of attention is the bottom line that says "refund to you".
It is sad commentary, but it has been helping people on the bad side of society. On the other hand, it is time to regulate the tax preparation business.
rumacpa
Posted by: Unknown | September 23, 2011 11:55 AM
Report this Comment
Actually I don't believe the new requirements will help as much as some people think they will. Most of the erroneous and error filled returns that I have seen have been either by preparers who don't sign their name to the return so there is no record of how many returns they prepare; or by individuals using software that either know the loop holes and how to "play with the numbers" to claim larger refunds or are confused by the software's questions and answer them wrong or however is most beneficial.
Posted by: jsmithdta | September 23, 2011 10:45 AM
Report this Comment
When will
Posted by: virginiaprihoda | September 23, 2011 10:03 AM
Report this Comment
I believe that simplifying the tax code would be a much simpler solution to the tax filing problem. Get rid of all the exceptions and extra credits that cause some people to look for loop-holes. Mandating fingerprinting, taking tests won't solve the tax collection and tax filing problem. It just increases the funds going to the government and those companies lucky enough to be able to handle the government criteria. Those preparers who are causing tax problems will just find other ways to continue cheating on returns. Simplify the tax code.
Posted by: dholland | September 23, 2011 10:02 AM
Report this Comment
This is one time that I agree with government regulations. I believe that registering tax preparers and requiring continuing education is beneficial for everyone involved. The preparer is held responsible for their actions; and with continuing education, they are better prepared to do the tax returns. The client benefits by having confidence in their tax preparer, and the IRS has an easier time when they process the tax returns. As far as the fees are concerned, it is a business expense, and when one is in business, they should expect to have expenses. Many tax preparers probably have the best intentions, but like the old saying goes "The road to Hell is paved with good intentions."
Posted by: StAlice | September 23, 2011 9:06 AM
Report this Comment
I think there is a better way than finger printing tax preparers which seems like CPA's and and other professional tax preparer will probably be printed in the future. The IRS knows those tax preparers who continously prepare errnoneous tax returns. Why does not the IRS go after them for investigation rather than treating everyone like a potential criminal suspects? Unless, of course, if they are just after the potential windfall of fees accruing to the IRS.
Posted by: Lino | September 23, 2011 8:55 AM
Report this Comment
The big issue here is not bad tax preparers, it is a bad big brother. Finger printing is a way over board. To embrace this type of intrusion into business speaks loudly of the unmentionables.
Where this is taking us is... why have tax preparers at all? Just have the government prepare all tax returns......
So I guess that is kind of where we are heading... tax prepares are simply becoming agents of the government with the first obligation is to big brother.
Small tax preparers will not go out of business.... they will just prepare tax returns and not sign them or they will become tax consultants and self prepared taxes will become the way of the norm, with all the great software out there, it is getting easier and easier for small business to do their own taxes.
For those accountants that think this kind of government control is going to protect them from the small competitors... they could just be dreaming.... the reverse is what just may happen.
The first thing to be recognized that neither the IRS or CRA is being seen as fair or reasonable by small business.
Let's get one thing clear... this legislation is targeted to stop tax cheaters... tax cheating is not the problem. Tax cheating is a symptom of an overly complex tax act that is the real problem. Fix the real problem and you won't need a whole new expansion of tax police to monitor tax preparers.
What is wrong with having a fair and reasonable tax system that people are not motivated to cheat?
An overly complex tax system got us to this point, making it more complex will just make the problem worse.
We as tax prepares need to promote the concept of "why us?" And why business should not use a fly by nighter... If we can't compete with the little guys, then we need to ask ourselves some serious questions. Questions such as "What is our value proposition to our clients," other than an extension of the tax department.? DW
Posted by: DanWhite | September 23, 2011 8:50 AM
Report this Comment
My firm required that all preparers obtain a PTIN when the program began as a voluntary action. We are an Enrolled Agent firm and not a CPA firm. We have always required continuing education for ALL persons preparing returns in our office. My concern is this; Are those persons that have already provided fingerprints under the voluntary system going to be required to repeat the process? Are the PTINS of the regular preparer (non CPA and/or Enrolled Agent) considered temporary even though they obtained the PTIN over 10 years ago? I have been reading the IRS procedures as they come out and do not see any clear answers to these questions. We need more oversight for preparers. I have seen many that should have never filed the first tax return. I am asking if everyone that is not a CPA or Lawyer going to be represented as incompetent.
Posted by: PKCOOKE | September 23, 2011 8:44 AM
Report this Comment
What happens to the online prerarers and tax firms offerring free online tax filing ,,,,,,,,,,,,,,,,,,,these prepareres make whole lot of mistakes and sussequently file amended returns. Is there any oversight for them.?
Posted by: sman2352 | September 23, 2011 8:19 AM
Report this Comment
This is a fee that I gladly pay (the ptin.) I am a CPA so like Diane mentioned above, I get tot pay for more annual education, and other fees. Until now, any Joe Blow could hang a shingle and start filing tax returns. I've seen more than one non-cpa with 25 years experience that didn't need to be filing tax returns at all. I know of one that had as many math errors on his returns as there were totals. The man literally could not add. (in the days of paper filing.)
I think it is good, and will be good for taxpayers.
Posted by: Tom1952 | September 23, 2011 8:07 AM
Report this Comment
As a single preparer CPA firm. I am very pleased to see the regulations being applied across the board. I do not believe that the fees or requirements being place on tax preparers by the IRS are unreasonable. As a CPA, I am mandated to many more hours of CPE (80 per 2 year period) along with ADDITONAL licensing fees. I get to pay for both my CPA license and the $65 fee to the IRS to prepare taxes. I do not believe it will drive out the small tax preparer, its a start in leveling the business field for ALL small tax preparers.
Posted by: Diane W | September 23, 2011 7:58 AM
Report this Comment
I have been preparing tax returns for over 25 years and now IRS wants us to pay a fee of $65, take a test, have 15 hours of continuing education, and now fingerprint. This is way overboard. I hope other feel the same way. This will drive the small independent preparers out of business.
Posted by: jsanders | September 23, 2011 7:34 AM
Report this Comment
Add Your Comments...
Already Registered?
If you have already registered to Accounting Today, please use the form below to login. When completed you will immeditely be directed to post a comment.
Not Registered?
You must be registered to post a comment.