Class action by CPAs, sues IRS over PTIN fees

[jklcpa]

Article from Accounting Today -

 

CPAs Sue IRS over PTIN Fees
Washington, D.C. (September 9, 2014)
By Michael Cohn

A pair of CPAs have filed a class-action complaint against the Internal Revenue Service challenging IRS regulations requiring tax practitioners to annually register and pay a fee to the agency to obtain and maintain a Preparer Tax Identification Number.

The class action involves more than 700,000 individual practitioners who are forced to pay for a PTIN every year. The lawsuit, which was filed Monday, seeks an injunction barring collection of the fee and recovery of the more than $150 million in fees the IRS has collected since 2010.

The challenged regulations were issued several years ago as part of a broad IRS initiative to radically expand its oversight of attorneys, accountants, and other tax return preparers who prepare tax returns for compensation, the CPAs’ attorneys noted. Last year, the a federal court in Washington, D.C., ruled that large portions of the regulations issued by the IRS were invalid because the IRS lacked statutory authority to issue the regulations in the case of Loving v. United States, and that decision was upheld by the D.C. Circuit Court of Appeals earlier this year.

The rulings invalidated the IRS’s program for requiring mandatory testing and continuing education of tax preparers. However, the courts allowed the IRS to continue to require registration of tax preparers through the PTIN, but did not rule on the question of fees. The IRS has announced plans to offer a voluntary testing program instead known as the Annual Filing Season Program, but the American Institute of CPAs has filed suit to stop the program (see AICPA Sues IRS over Voluntary Program for Tax Preparers). http://www.accountingtoday.com/news/irs_watch/aicpa-sues-irs-over-voluntary-program-for-tax-preparers-71366-1.html

Congress allowed the IRS to require tax practitioners who prepare tax returns for compensation to place a PTIN on the returns to help IRS identify the preparer. The plaintiff CPAs argue that the IRS lacks the statutory authority, however, to charge fees to obtain or renew a PTIN and the IRS cannot use fees it has collected for unrelated activities. The IRS uses only a small portion of the fees collected to pay the vendor who manages the on-line PTIN registration process and uses the bulk of the fees for other IRS activities. Plaintiffs seek restitution of the fees collected by IRS in the past and injunctive relief barring the IRS from collecting similar fees in the future.

“If an agency can charge U.S. citizens to fulfill a requirement, then an agency can tax,” said plaintiffs’ co-counsel, Allen Buckley of Atlanta. “Unlawfully, the IRS has been taxing Americans.”

The other co-counsel Stuart Bassin of Washington, D.C., said, “The courts have rejected the IRS’s effort to regulate return preparers and it is time for the IRS to return the PTIN registration fees it has collected to support that effort.”

The docket number of the case is 1:cv-14-1523. A copy of the complaint has been posted online by Kelly Phillips Erb of Forbes.

[Jack from Ohio]

[kcjenkins]

It's not a bad idea to have a PTIN required, but charging you every year for that number makes no sense.  But remember, it started out being for OUR convenience, so we did not have to use our SSN.  They've been able to track preparers ever since they asked for that.    

 

I guess next the SSA will charge us an annual fee for our SSN?

[BulldogTom]

But remember, it started out being for OUR convenience, so we did not have to use our SSN.  They've been able to track preparers ever since they asked for that.    

 

I guess next the SSA will charge us an annual fee for our SSN?

 

This pisses me off every year when I have to pay it.  Paid preparers have always had to identify themselves on the tax return, and the PTIN just allowed us to not use our SSN on the return.  They have turned this into a required registration to use the e-file system that they require us to use.  I agree with the plaintiffs and I hope they prevail.  This attack on preparers needs to stop.

 

Tom

Hollister, CA

[SFA]

Because it is the right thing to do, I pay my employees PTIN renewal fees and the cost of their CPE training. They are compensated for the time they spend at seminars and their travel to and from the events. This is not chump change.

 

The PTIN is simply a method to shield a preparer's social security number. Having a PTIN is not a credential that has been "earned," so it does nothing to attract new clients or add to our bottom line.

 

Perhaps we would be better served by paying for "Life Lock" protection instead of paying for a PTIN. 

[SCL]

It's not a bad idea to have a PTIN required, but charging you every year for that number makes no sense.  But remember, it started out being for OUR convenience, so we did not have to use our SSN.  They've been able to track preparers ever since they asked for that.    

 

I guess next the SSA will charge us an annual fee for our SSN?

 

This pisses me off every year when I have to pay it.  Paid preparers have always had to identify themselves on the tax return, and the PTIN just allowed us to not use our SSN on the return.  They have turned this into a required registration to use the e-file system that they require us to use.  I agree with the plaintiffs and I hope they prevail.  This attack on preparers needs to stop.

 

Tom

Hollister, CA

$65 is not much...forest/trees? i don't have a problem with it.

 

i see it as a small attempt by the irs to weed out the barber, gas station attendant, monkey's uncle, or anyone who thinks they can prepare and efile a tax return with little or no barriers to entry.

[SFA]

$65 is not much...forest/trees? i don't have a problem with it.

 

i see it as a small attempt by the irs to weed out the barber, gas station attendant, monkey's uncle, or anyone who thinks they can prepare and efile a tax return with little or no barriers to entry.

 

Competition is fine. We don't need the IRS to "help" us by keeping the little guys out of the game. There are plenty of easy tax returns out there. Lots of people do their own and help out family and friends. They should not have to pay the IRS for the "privilege."  

[Jack from Ohio]

$65 is not much...forest/trees? i don't have a problem with it.

 

i see it as a small attempt by the irs to weed out the barber, gas station attendant, monkey's uncle, or anyone who thinks they can prepare and efile a tax return with little or no barriers to entry.

Tell me how the IRS attempt to weed out unqualified preparers has worked so far?? Fraudulent returns are at an all time high? Taxing the honest preparers is counterproductive, and only a money grab.

[BulldogTom]

It is a tax, and the IRS does not have the authority to tax, congress has that authority.  Congress has not passed a tax law on tax preparers.  This is just another Big Brother intrusion into our profession.

 

We used to have to get recertified every year to e-file.  I never had a problem with that.  But the whinny little twerps at IRS thought it was too much work to keep that program going, so they passed a tax instead.  Typical Washington BS.  Don't make us work, pass a tax and make our life easier.  They could weed out the rotten preparers with the old program if they did their job.  It is not about weeding out bad preparers, it is about taking cash from our pocket to fund their department.

 

Tom

Hollister, CA

[kcjenkins]

Yep, just blackmail.  Anyone can use programs like TaxAct, H&R, TurboTax, etc to do a return for someone else, you know.  IRS is using the PTIN now as a control over preparers, but the crooks still get PTINs, so it does not really do anything but raise money for them.  

[Gail in Virginia]

I wonder what would happen if one year all of the professional preparers decided that it just wasn't worth the hassle, and none of us prepared tax returns....

[BulldogTom]

I wonder what would happen if one year all of the professional preparers decided that it just wasn't worth the hassle, and none of us prepared tax returns....

HRB, Jackson Hewitt and Liberty would see their revenues soar.....

 

Tom

Hollister, CA