The Internal Revenue Service has provided a dispensation for tax preparers who have tried unsuccessfully to register for a Preparer Tax Identification Number so they can go ahead and prepare tax returns for compensation, even though they have not yet received a PTIN.
Notice 2011-11, which will appear in Internal Revenue Bulletin 2001-7, dated Feb. 14. provides relief for tax preparers who have pending PTIN applications. The IRS said t expects tax preparers to comply with the new requirement to obtain a preparer tax identification number as soon as possible.
Tax return preparers who use the new online application system available through the IRS Web site at http://www.irs.gov/taxpros generally will receive their PTIN number when the application process has been completed. The IRS estimates that tax return preparers who apply for a PTIN using the paper Form W-12, IRS Paid Preparer Tax Identification Number (PTIN) Application, generally will receive their PTIN four to six weeks after the application and payment is received.
The IRS said it recognizes, however, that some tax return preparers are experiencing or may experience difficulty in obtaining a PTIN. If tax return preparers using the online system are unsuccessful in obtaining a PTIN, the IRS system will notify them that their application was not processed and provide appropriate instructions. Complying with these instructions prior to the preparation of a tax return or claim for refund for compensation will establish that these individuals are making a good faith effort to comply with the new PTIN requirement.
Tax return preparers who applied for a PTIN using paper Form W-12 prior to the date of publication of the notice in the Internal Revenue Bulletin and have not received a PTIN generally will receive a PTIN or an acknowledgment of receipt of the PTIN application within six weeks of the IRS’ receipt of the PTIN application or within six weeks of the date of publication of this notice, whichever is later.
Tax preparers who apply for a PTIN using paper Form W-12 after the date of the notice generally will receive a PTIN or an acknowledgment of receipt of the PTIN application within six weeks from the date the application is submitted. For individuals who do not attempt to submit a PTIN application via the online system, the submission of a processable paper Form W-12 and payment generally constitutes a good faith attempt to comply with the requirement to obtain a PTIN.
Accordingly, the IRS said it would permit any tax return preparer receiving either a notice from the IRS that the IRS was unable to process their online PTIN application, or an acknowledgment of receipt of the paper PTIN application, to prepare and file tax returns or claims for refund for compensation after the tax preparer complies with all instructions provided in the notification or acknowledgment letter. These tax preparers may use a PTIN issued before Sept. 28, 2010 (or their Social Security number if the tax return preparer does not have a previously issued PTIN), as their preparer tax identification number during the 2011 filing season or until they receive a new PTIN, whichever is earlier.
Once a new PTIN has been obtained, the new PTIN must be used, the IRS emphasized. Tax preparers who rely on the relief provided by the new IRS notice to prepare tax returns or claims for refund for compensation will be required to pay the $64.25 PTIN application fee for the 2011 filing season even though the processing of the application may be delayed. Payment must be submitted as instructed by the IRS. Tax return preparers who rely on the relief provided by the IRS notice are required to keep a copy of the notification or acknowledgement letter as documentation of their good faith effort in the event that the preparer is contacted by the IRS during the 2011 filing season or in the future.
The relief provided for in the notice only applies during the 2011 filing season and does not apply to individuals who engage in conduct that constitutes a willful violation of the applicable duties and restrictions prescribed in Circular 230 or disreputable conduct under section 10.51 of Circular 230.
The principal author of the notice is Matthew D. Lucey of the IRS's Office of Associate Chief Counsel, Procedure & Administration.