PROPOSED FEES FOR PTIN'S

[michaelmars]

IRS Releases Proposed Regulations Related to Fees for Preparer Tax Identification Numbers

WASHINGTON — The Internal Revenue Service today released proposed regulations that would establish a fee for individuals who apply for a preparer tax identification number (PTIN). Proposed regulations that were issued in March would require certain tax return preparers to obtain a PTIN. The IRS is working to finalize those proposed regulations, which are the first of a series of steps planned to increase oversight of federal tax return preparation.

The proposed regulations (REG-139343-08) would establish a fee of $50, payable to the IRS, to cover technology costs, as well as compliance and outreach efforts associated with the new PTIN program. The proposed regulations would also provide for an additional fee (expected to be substantially lower than $50) to be charged by the third-party vendor chosen to operate the new online system. That fee amount is expected to be announced soon, as well as additional details about the launch of a new online application system. These fees could change in future years as program costs are reevaluated.

Agencies are directed by the Office of Management and Budget (OMB) to charge user fees to recover the cost of services that convey special benefits beyond those available to the general public, such as the authority to prepare federal tax returns for compensation.

Tax professionals and other interested parties have until Aug. 23, 2010, to submit comments regarding the proposed regulations. The official publication date of these proposed regulations is July 23.

In January, IRS Commissioner Doug Shulman announced the results of a comprehensive six-month study of the tax return preparer industry, which proposed new registration, testing, and continuing education of tax return preparers. With more than 80 percent of American households using a tax preparer or tax software to help them prepare and file their taxes, higher standards for the tax return preparer community will significantly enhance protections and service for taxpayers, increase confidence in the tax system and result in greater compliance with tax laws over the long term.

How to Learn More

The IRS recently broadcast the topic “New Requirements for Tax Return Preparers – Learn the Who, What, When and How” on the webinar IRS Live, an educational program for tax professionals. View the archive on IRS.gov.

Tax professionals can also learn more by attending one of six tax forums this summer around the country hosted by the IRS. The IRS Nationwide Tax Forums are three-day events that provide tax professionals with the most up-to-date information on federal and state tax issues.

[jainen]

>>80 percent of American households using a tax preparer or tax software<<

It seems to me that far less than one out of five still do their tax returns by hand.

[Gail in Virginia]

That one in five would also include those who use a paid preparer that does not sign the return, I would think. We have quite a few of those in the area I live in who either buy TurboTax or use the IRS' FreeFile system to file tax returns for all their friends and neighbors. They don't sign the returns, and won't be affected by the new regulations because they still won't be signing the returns. I wonder if this won't cause some of those who do sign the returns to continue filing returns but to quit signing them rather than paying all of the fees and having to take a competency test and continuing education.

[JohnH]

That one in five would also include those who use a paid preparer that does not sign the return, I would think. We have quite a few of those in the area I live in who either buy TurboTax or use the IRS' FreeFile system to file tax returns for all their friends and neighbors. They don't sign the returns, and won't be affected by the new regulations because they still won't be signing the returns. I wonder if this won't cause some of those who do sign the returns to continue filing returns but to quit signing them rather than paying all of the fees and having to take a competency test and continuing education.

I'm one of those who stopped signing returns I prepare for free. I have several family members and a few charity case returns that I prepare for no compensation. In the past I just signed them as "Paid Preparer" to keep things simple. But beginning in late 2009, I stopped signing any return for which I don't issue an invoice. I still prepare them on ATX just like any client return, but I delete the "Paid Preparer" info. Nothing sinister about it - I just want to reduce the number of returns with my name on them.

[Edward]

Gailtaxed you are totally correct. I know many in the area that do just what you stated. In fact, I personally delivered a W-7P to one of them and boy did I get the looks. Had a clients friend visit me who showed me a return prepared by a preparer who dosen't sign returns. New Home Buyers Credit was involved and IRS had promised to act on the 5405 credit but kept extending the promise. But theres more: The preparer had, for some strange reason, attached a copy of W-9 for each taxpayer, along with a 4506-T?? I asked the taxpayer why these attachments and he had no idea WHY but went ahead and mailed it all to IRS? I believe IRS should enlist the assistance of the Post Office to run down all these creeps. My son delivers mail in San Francisco and he claims to know of many of these types working out of their homes and we can assume that the majority are processing unsigned returns as gailtaxed mentioned.

[Catherine]

Had a lady a few years ago come to me when she got an IRS letter. Said the phone number of her preparer had been disconnected. The return said "self-prepared" and she told me that the preparer told _her_ that she'd have a much higher chance of being audited if he signed it, so as a favor to her, he wouldn't sign.

There will be more of those types.

There was a cartoon in the New Yorker last year, with two men in suits in an office. One says to the other, "These new regulations are going to fundamentally change the way we get around them." 'Nuff said.

[jainen]

>>IRS should enlist the assistance of the Post Office to run down all these creeps<<

Do "these creeps" include our good member JohnH, who in the post just before yours admits he prepares returns without signing them?

[JohnH]

Did you consider that maybe he just knows me better than you do?...

[Don in Upstate NY]

Do "these creeps" include our good member JohnH, who in the post just before yours admits he prepares returns without signing them?

I re-read his post. He doesn't sign the returns he prepares for free (i.e. in cases where he is not a paid preparer.) I guess technically none of us should fill in the paid preparer block on our own returns or those of non-paying friends or relatives.

The only cases I know of where the paid preparer block should by used by a non-paid preparer are returns prepared by volunteers in the IRS TCE or VITA programs. The preparers do not sign, but a site location number (looks like a PTIN number with a S instead of a P) is entered into the PTIN box.

[Edward]

Don in Upstate NY read it correctly - JohnH certainly is no "creep". I was referring to those that do returns and intentionally omit signing returns even tho they are being paid.

[mcb39]

Jainen is just "baiting" again. Of course, we all know that John is not a creep and we also all know what Edward meant.

[jainen]

>>we also all know what Edward meant<<

What jainen meant is that John's level of professional service and skill is presumably the same for the pro bono returns he does, so signing or not signing is no indication at all of whether a preparer is a creep.

Now let's acknowledge that our industry finds a nice market for paid preparers who don't sign. Why do you suppose that is? I think it's because preparers who don't offer follow-up service can charge a little less, and clients want the lower rates since there's only a small chance of being audited anyway. So why complain about the guy who didn't get paid for premium service? The clients made the choice and got what they bargained for. Edward didn't say whether he took on that particular cheapskate, but aren't we all at least interested in new clients?

[Edward]

For Jainen: IRS has stated that "All paid tax return preparers are subject to civil penalties for knowingly preparing a return and failing to sign or provide an identification nmber on a return they prepare". In view of this, what is your opinion on these preparers that deliberately avoid such rules? If they are going to continue as such shouldn't they be subject to the same critical oversight that all current tax prepares are facing in the future?

[jainen]

>> shouldn't they be subject to the same critical oversight <<

That's a very good point, and lack of such oversight no doubt allows mistakes or even abuses which degrade the image of the whole industry. But while I'm "baiting," I'll point out that this forum has not been very supportive of increased oversight lately.

[Catherine]

<snip>But while I'm "baiting," I'll point out that this forum has not been very supportive of increased oversight lately.

From a New Yorker cartoon: two men in high-end business suits. One says, "These new regulations will totally change the way we get around them."

'Nuff said.

[HV Ken]

From a New Yorker cartoon: two men in high-end business suits. One says, "These new regulations will totally change the way we get around them."

If you want to see the cartoon, click here: cartoonbank.com

[Catherine]

If you want to see the cartoon, click here: cartoonbank.com

Thank you, HV Ken!

[kcjenkins]

>> shouldn't they be subject to the same critical oversight <<

That's a very good point, and lack of such oversight no doubt allows mistakes or even abuses which degrade the image of the whole industry. But while I'm "baiting," I'll point out that this forum has not been very supportive of increased oversight lately.

That could probably be because we have serious doubts about the ability of the government to actually administer EFFECTIVE 'CRITICAL OVERSIGHT'. Frankly, they already had many tools to use against both fraudulent and incompetent preparers, and they have used those tools very erratically and often in a ham-handed manner when they did use them. WE often know who they are in our communities, so why does the IRS not do anything about most of them already? Probably a lot of us feel like I do, that this is not going to change much of anything, except to increase our costs and hassel us if they want to.