The Internal Revenue Service issued final regulations Thursday lowering the initial enrollment and renewal of enrollment user fees for enrolled agents and enrolled retirement plan agents, and separating the enrolled retirement plan agent user fees from the enrolled agent user fees.

The regulations, known as TD 9523, take effect on April 19, 2011. On Dec. 10, 2010, the Treasury Department and the IRS published in the Federal Register a notice of proposed rulemaking proposing to reduce the initial enrollment and renewal of enrollment user fees for enrolled agents and enrolled retirement plan agents to $30 from $125.

The reduction in user fees was necessary, they said, to account for the reallocation of portions of the enrolled agent and enrolled retirement plan agent renewal processes to the preparer tax identification number application and renewal process. The costs to the government for the reallocated portions of the enrolled agent and enrolled retirement plan agents initial enrollment and renewal of enrollment processes are now recovered by the user fee to apply for or renew a PTIN. In addition, the regulations proposed to separate the enrolled retirement plan agent user fees from the enrolled agent user fees.

The Treasury Department and the IRS said they took steps to prevent the duplication of costs for enrolled agents whose enrollment renewal period was scheduled to begin after the effective date of the user fee to apply for or renew of PTIN, but before the enrolled agent user fees are reduced. 

The enrolled agent and enrolled retirement plan agent user fees are being reduced to account for the reallocation of part of the enrollment processes to the PTIN application and renewal process. The Treasury Department and the IRS finalized regulations that require all tax return preparers who prepare all or substantially all of a tax return or claim for refund for compensation to use a PTIN as their identifying number and to pay a $64.25 fee, which includes the amount paid to the vendor, to apply for or renew a PTIN.  Tax return preparers who prepare all or substantially all of a tax return or claim for refund must obtain or renew their PTIN for the 2011 tax season.

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