The Internal Revenue Service anticipates that the number of individuals who will request Preparer Tax Identification Numbers will swell to 1.2 million after its new rules for registration of paid tax preparers go into effect at the end of the year.
The IRS recently announced proposed regulations imposing new user fees on individuals who apply for or renew their PTIN (see IRS Readies Tax Return Preparer Application System). In posting the proposed rules to the Federal Register, the IRS noted that the proposed regulations will require a tax return preparer who prepares all or substantially all of a return or a claim for a tax refund after Dec. 31, 2010, to have a PTIN.
Only attorneys, CPAs, enrolled agents and registered tax return preparers will be eligible to apply for a PTIN. The requirements to become a registered tax return preparer will be provided in future Circular 230 guidance. The IRS also plans to provide other guidance (including forms and instructions) on how to apply for a PTIN or other prescribed preparer identifying number, for the regular renewal of a PTIN or other prescribed preparer identifying number, and for the payment of a user fee.
Additional user fees related to the programs for regulating enrolled agents, enrolled retirement plan agents, and registered tax return preparers will be established in future regulations as those programs are implemented, the IRS noted. Future regulations will also address user fees associated with taking the registered tax return preparer examination and providing continuing education programs.
The user fee for taking a registered tax return preparer examination will recover the costs to the government for creating, administering and reviewing the examination. The user fee for providing continuing education programs will recover the costs to the government for the review, approval and oversight of continuing education providers to ensure their compliance with program requirements for continuing education programs. The vendor also will charge a reasonable fee to take the registered tax return preparer examination.
Future regulations will coordinate the enrollment and renewal user fees imposed on enrolled agents and enrolled retirement plan agents with the PTIN user fees because the costs to the government to process an enrollment application are substantially the same as the costs to the government to process a PTIN application.
For example, the IRS generally may conduct only a single background check and compliance check for an individual who applies to become an enrolled agent and applies to obtain a PTIN, and therefore the enrollment application fee and the PTIN application fee must be coordinated to prevent the collection of excessive fees, the IRS noted. The IRS anticipates that future regulations will require enrolled agents to obtain a PTIN and pay the associated application or renewal fee, in which case the enrollment and renewal fees for enrolled agents will be substantially reduced.
The IRS currently issues PTINs to tax return preparers without charging a user fee. However, the IRS noted that the PTIN application, issuance and renewal process would become significantly more expansive and intricate with the implementation of the registered tax return preparer program. Federal tax compliance checks will be performed on all individuals who apply for or renew a PTIN. Suitability checks also will be performed.
Furthermore, the IRS said it will further investigate individuals when the compliance or suitability check suggests that the individual may be unfit to practice before the IRS. These checks were not previously performed as a prerequisite to obtaining a PTIN.
In addition, the IRS said it would establish and implement a reconsideration process for individuals who apply to become a registered tax return preparer and are denied a PTIN upon their initial application or renewal. The IRS will incur costs to apply existing Circular 230 procedures when those individuals who are CPAs, attorneys, enrolled agents or registered tax return preparers are denied renewal of a PTIN.
The charging of user fees is authorized by the Independent Offices Appropriations Act of 1952, which authorizes agencies to prescribe regulations that establish charges for services provided by the agency. The charges must be fair and must be based on the costs to the government, the value of the service to the recipient, the public policy or interest served, and other relevant facts. The IOAA provides that regulations implementing user fees are subject to policies prescribed by the president.
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