Suit Challenges IRS Right to Collect PTIN Fees

[Elrod]

Two CPAs have filed suit against the Internal Revenue Service claiming its collection of annual fees for Preparer Tax Identification Numbers is not legal. Minnesota CPA Adam Steele and Georgia CPA Brittany Montrois seek to have their litigation certified as a class action suit. The plaintiffs are seeking to have the fees halted and receive refunds on those paid since they were implemented in 2010.

The IRS plan to require tax preparers be regulated was thrown out by a federal court early in 2013 and an appeal court agreed later the agency lacked the authority to enforce such regulations. CPAs, Enrolled Agents and tax attorneys were exempt from proposed requirements for competency testing and mandate education courses. However, the court rulings let the PTIN requirements stand, following the litigation brought by another group of preparers.

This year, the IRS began rolling out a voluntary plan for education and registration. That is being contested in court by the American Institute of CPAs, which says the IRS also lacks the authority to implement those procedures.

In the latest case, the plaintiffs are arguing that only a small portion of the PTIN fees are being used for that process and that the remainder are going to other IRS activities and therefore represent an illegal tax.

http://www.theprogressiveaccountant.com/Tax/suit-challenges-irs-right-to-collect-ptin-fees#comments

[Abby Normal]

There were/are other suits. I hope we win one of these.

[BulldogTom]

Sign me up. 

Tom
Newark, CA

[Terry D EA]

Well I for one couldn't understand why the PTIN number that I have had since forever, FREE became an item I have had to pay for, well I guess, since 2010. It would be nice to see a refund of those fees. On another note, I think the IRS should develop some type of plan that is "legal" to critique tax preparers. The general public who pursue the use and advise of a tax preparer has the right to know the individual is competent. This should apply to ALL and not automatically eliminate the CPA's and Attorney's. They too should show competence and do make as many, if not more, mistakes than others. JMHO

[SaraEA]

I think that EAs and CPAs were exempted from the RTRP requirements because they are already subject to more stringent rules.  For example, in our state the state board of accountancy requires CPAs to have  40 CPE hours every year, while the IRS requires EAs to take 24 (the professional associations require 30).  These professionals had background checks when they received their credentials, and they have to be current on their own tax filings.  In fact when the PTIN came into being, EA license fees went down a lot because they had already been vetted.

I don't object to the PTIN annual fee.  It's a small cost of doing business and it does help the IRS to track down some unqualified preparers who tarnish our whole profession. Doesn't do much to curtail fraud and those who don't bother to sign returns, but it's one tool I'm glad they have.

[mcb39]

I, also, have no objection to the PTIN fee.  I believe that it separates the preparers who are afraid of scrutiny from those who are not.  There has to be some distinction between honest preparers and those that are just trying to make a few bucks on the side.  The cost of doing business honestly is increasing yearly.  If we are really "a business" we should have some entitlement.  These protesters may force me to hang it up before I truly want to.

[Lion EA]

I'll pay the about same either way, because EA renewal fees went down to account for PTIN fees.  And, those fees are small compared to software, computer upgrades, education, etc., each year.  I, too, am optimistic enough that maybe PTINs might help track abusers.  I resent those that tarnish our profession.

[BulldogTom]

21 hours ago, SaraEA said:

I don't object to the PTIN annual fee.  It's a small cost of doing business and it does help the IRS to track down some unqualified preparers who tarnish our whole profession. Doesn't do much to curtail fraud and those who don't bother to sign returns, but it's one tool I'm glad they have.

Sorry, I very much disagree.  The PTIN has become a tax and a powerful, unfettered hammer that the commissioner can wield against tax professionals without due process.  The commissioner can pull your PTIN at any time and you cannot practice because it is now required for efile, and efile is required as well.  There is no appeals process to stop this from happening.  You can do absolutely nothing wrong and the commissioner can pull your PTIN and put you out of business.  By the time you go through the bureaucracy to get it back, too late, you missed a season or two and you have no clients left.

It isn't about the dollars, it is about the power.  Never forget that government power affects the lawful more than it affects the lawless.

Remember, the PTIN was a tool for practitioners to hide their social on tax returns.  That is what it was created for.  It is now required by the IRS to practice your profession.

I am for preparer oversight and regulation.  I have my EA license and I don't have a problem with renewing and paying for that license.  I am also for IRS oversight and competency testing as well.  If we had more professionals in the IRS, we might have a better tax system.  They need to stop doing the president's dirty work and get rid of the Lois Lerners of the service.  If they would have just fessed up about her, rather than let her piss off the Congress, they might have gotten some funding.  Now they get what they deserve.

Rant over.

Tom
Newark, CA

[Jack from Ohio]

4 hours ago, BulldogTom said:

Sorry, I very much disagree.  The PTIN has become a tax and a powerful, unfettered hammer that the commissioner can wield against tax professionals without due process.  The commissioner can pull your PTIN at any time and you cannot practice because it is now required for efile, and efile is required as well.  There is no appeals process to stop this from happening.  You can do absolutely nothing wrong and the commissioner can pull your PTIN and put you out of business.  By the time you go through the bureaucracy to get it back, too late, you missed a season or two and you have no clients left.

It isn't about the dollars, it is about the power.  Never forget that government power affects the lawful more than it affects the lawless.

Remember, the PTIN was a tool for practitioners to hide their social on tax returns.  That is what it was created for.  It is now required by the IRS to practice your profession.

I am for preparer oversight and regulation.  I have my EA license and I don't have a problem with renewing and paying for that license.  I am also for IRS oversight and competency testing as well.  If we had more professionals in the IRS, we might have a better tax system.  They need to stop doing the president's dirty work and get rid of the Lois Lerners of the service.  If they would have just fessed up about her, rather than let her piss off the Congress, they might have gotten some funding.  Now they get what they deserve.

Rant over.

Tom
Newark, CA

I totally agree 100%  Fees for PTIN have not done, nor cannot do, anything about the incompetent and unscrupulous preparers.  The REAL issue are those that prepare return, do not sign them, and process them as self-prepared. 

The top two tiers of the IRS need to be thrown in jail.  It would improve the integrity of the service, and Congress might be willing to fund them enough to allow them to do a proper job.

Now if you believe any of that will happen in our lifetime, I have a bridge to sell  you...

[Roberts]

Are Enrolled Agent annual fees an unfair tax?

 

[Abby Normal]

14 minutes ago, Roberts said:

Are Enrolled Agent annual fees an unfair tax?

 

No. It's a fee. CPAs pay the state a license fee and we have to complete 40 hours of CPE per year.

[mcb39]

I have to complete a minimum of 15 hours of CPE each year to maintain my AFSP.  I consider the fee for the PTIN to be part of this.  I still say, "Leave it alone!"

[Abby Normal]

23 minutes ago, mcb39 said:

I have to complete a minimum of 15 hours of CPE each year to maintain my AFSP.  I consider the fee for the PTIN to be part of this.  I still say, "Leave it alone!"

As a CPA, I resent having to fund IRS programs for other types of preparers.

[BulldogTom]

1 hour ago, Roberts said:

Are Enrolled Agent annual fees an unfair tax?

 

It is every 3 years, and it is a license.  Supposedly, it allows me to practice before the IRS.  However, without the PTIN, I cannot have clients to represent, unless all I do is representation, not preparation. 

The PTIN fee is a TAX. 

Tom
Newark, CA

[Roberts]

1 hour ago, BulldogTom said:

It is every 3 years, and it is a license.  Supposedly, it allows me to practice before the IRS. 

Actually, to be an active enrolled agent you must have a PTIN. It is literally a condition of being an active licensed enrolled agent.

 

Right from the IRS website: Anyone who prepares or assists in preparing federal tax returns for compensation must have a valid 2016 PTIN before preparing returns. All enrolled agents must also have a PTIN. (under the section on how to maintain your license outlines this also)

That's a bizarre definition of a tax versus a license.

If I pay the IRS a fee to earn continuing education they produce (CE is required by my license just like the PTIN is required), is that also a tax?

[Catherine]

38 minutes ago, Roberts said:

If I pay the IRS a fee to earn continuing education they produce (CE is required by my license just like the PTIN is required), is that also a tax?

No, because there are alternatives for acquiring CE.  The IRS is one of many sources, so in this instance they are merely a vendor.

[SaraEA]

C'mon folks, we are talking about a $50 annual PTIN fee here.  Most of us make three to five or six times that amount on a single tax return that takes less than an hour of our time. The PTIN does serve a purpose beyond the original one of replacing our SS numbers on signed returns. To some extent it helps the IRS track down dishonest or poorly trained preparers. For example, they now send letters to preparers who have too many errors on EITC, Sch C, and Sch E returns. How do they know who makes too many mistakes?  The PTIN. At an IRS liaison meeting the presenter said in routine audits their staff record the PTINs and if the same number keeps popping up they target that preparer's returns. This is how they catch preparers who habitually inflate charitable deductions, employee business expenses, fuel tax credits, education credits, etc. The same unsubstantiated deductions appear on the majority of their returns, which authorities would never have figured out without the PTIN.

What will be another plus is that preparers will be able to monitor the number of returns filed under their PTIN. Currently only EAs can do this, but I was told we were chosen because we were the smallest sample to test the process. Preparers have become the target of identity thieves, so at least we will be able to check if someone is filing returns under our PTINs.  I will gladly give up one-fifth of my fee on a single tax return for this protection.

I'm with Lion that the cost of the PTIN is inconsequential compared with the cost of everything else we need.  E&O, tax prep software, Quickbooks, etc. seem to go up at a faster rate than we can raise our fees.

[Jack from Ohio]

23 hours ago, Jack from Ohio said:

Fees for PTIN have not done, nor cannot do, anything about the incompetent and unscrupulous preparers.  The REAL issue are those that prepare return, do not sign them, and process them as self-prepared. The PTIN fee is simply a method by the IRS to control paid preparers.  Their policies have shown that they prefer haphazard returns done with DIY software by the taxpayers themselves, despite the massive mistakes and actual intentional fraud that is perpetrated.

Any contention that fees for PTIN will be of any effect to reduce fraud and incompetence are as realistic as Y2K and the Zombie Apocalypse.  It is a tax with intent to control and nothing else. 

Anyone who has read the latest release from the IRS about them increasing penalties on us preparers to force us to do more due diligence should see what the intentions of the IRS toward us truly is.

The top two tiers of the IRS need to be thrown in jail.  It would improve the integrity of the service, and Congress might be willing to fund them enough to allow them to do a proper job.

Now if you believe any of that will happen in our lifetime, I have a bridge to sell  you...