The modern era of tax return preparer administration began on Sept. 28, 2010.

That’s the date that the new Preparer Tax Identification Number registration system went online. All federal tax return preparers, even those who already have a PTIN, need to be registered on the new system and have a PTIN prior to filing any return after Dec. 31, 2010.

PTINs themselves aren’t new, having been introduced a number of years ago to replace the need for a preparer to place their Social Security number on a client’s income tax return. Those who already have a PTIN must get it “refreshed” by also applying through the new system. If they haven’t done so by Jan. 1, 2011, they can still sign up, pay a fee ($64.25), and obtain or renew a PTIN.

If the applicant already has a PTIN and the system locates matching information, they will be assigned the same PTIN. If matching information is not located, the applicant will get a new PTIN.

Testing — for those who are not CPAs, attorneys or enrolled agents — is currently slated to begin in mid-2011. As an inducement for those who are unsure if they need a PTIN (such as non-signing preparers who work for a firm) to register before then, those who do so will have until Dec. 31, 2013, to pass the test and may take the test an unlimited number of times to pass it.

However, those who apply after testing has begun will need to take the competency test and pass it before they can obtain a PTIN.

The starting date for continuing education has not yet been determined, however once the continuing education requirement begins, preparers will have a full 12 months to meet that requirement.

Signing up early had one drawback, according to Alan Straus, a former chair of the New York State Society of CPAs’ Committee on Relations with the IRS. “For those who filed early, renewal will be next October,” he said. “Since it doesn’t go into effect until January, by filing early, you’ve shorted yourself out of three months.”

“Each day the system gets better,” opined Alan E. Weiner, CPA, Esq., partner emeritus at Holtz Rubenstein Reminick. “I registered the first day, and I didn’t have a problem, although I didn’t get my number until several days later.”

“What the service is doing is good for tax preparation,” he added. “It will lend credibility to the industry, in addition to getting some of the bad preparers out. I don’t think it should be a concern for CPAs or attorneys.”

Definition of Preparer

The unresolved issue concerns exactly who is a “preparer” and needs to get registered, according to Weiner. “That’s the biggest unknown,” he said. “Which employees at accounting firms or law firms need to get registered? Anybody who is compensated for preparing, or assisting in preparing, all or substantially all of a return needs to register.”

The problem is that there is no definition of “substantial,” although there is guidance in the regulations, he noted. “Generally, the IRS will be considering the complexity of the work performed by the non-signing preparer, the decision-making authority, and the dollar amount of the items on the return or the amount of the tax or credit. If in doubt, you should register.”

“Right now, there is no requirement for the preparer to list the PTINs for all the people involved, so if five people are working on the return, they may all need a PTIN, but only one goes on the return,” he continued. “If it comes down to a question of getting a PTIN for this employee in the future, it’s probably best to do it right away.”

“That’s an area where we hope to see some relief,” agreed Ed Karl, vice president of taxation at the American Institute of CPAs. “There is a strong likelihood that certain non-signing preparers will be exempted from some of the requirements.”

IRS Commissioner Doug Shulman, in a speech at the AICPA National Tax Conference, indicated that, “It is highly likely that as we implement the new rules and procedures, there will be some relief for testing and continuing education requirements” for such non-signing preparers supervised by a CPA, enrolled agent or attorney.

“They have indicated that continuing education could be delayed for a year,” said Karl. “The date for testing might start to slide a bit as well.”

“The Circular 230 regulations give the definition of a ‘preparer,’” Karl explained, “and every preparer has to have a PTIN, whether they’re a signing preparer or a non-signing preparer. It comes down to whether someone prepares all or substantially all of a return, but there are all sorts of situations where this is open to question. As they go along, the service is learning and updating the FAQs on the Tax Professionals page” on

OPR Recommendations

The Internal Revenue Service Advisory Council, in its annual report issued in late November, weighed in on preparer registration.

In a report by the Office of Professional Responsibility Subgroup, IRSAC indicated that it was concerned about “the lack of clarity and guidance regarding the definition of the term ‘preparer’ for purposes of the new registered tax return preparer requirements.

Among its recommendations were that the IRS postpone implementation of the registration requirements with respect to all non-signing preparers pending further study; if the definition of return preparer included in the final regulations is retained, additional guidance should be issued that provides a measurable standard to determine what constitutes the preparation of “substantially all” of a tax return; and the IRS and OPR should not attempt to hold a firm or employer accountable for a non-signing employee’s failure to comply with the new registration requirements until clarifying guidance on the definition of return preparer has been issued.

Although Weiner applauded the new rules, he would have been in violation of them if they were in effect years ago, he explained. “I started preparing payroll and simple income tax returns for my father, a CPA, when I was 13,” he said. “Under the upcoming PTIN rules, I could not do this because a PTIN can’t be issued to anyone under the age of 18.”

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