On June 21, in a website posting, IRS announced that it put its online Preparer Tax Identification Number (PTIN) system, which had been shut down since June 2, back online. As a result, IRS is resuming the issuance of PTINs. And, it is doing so without charge. Separately, IRS has provided guidance on procedures that apply when a preparer’s PTIN has been in expired status for more than one calendar year.
Background—PTIN regs. IRS requires that tax return preparers obtain and exclusively use the PTIN in forms, instructions, or other guidance, rather than a social security number, as the identifying number to be included with the tax return preparer’s signature on a tax return or claim for refund. (Furnishing Identifying Number of Tax Return Preparer, 75 Fed. Reg. at 60309; Reg. § 1.6109-2(d))
Regs also impose a user fee requirement for obtaining a PTIN. (Reg. § 300.13) As authority for requiring these fees, IRS relied on 31 USC 9701(b), which provides that agencies “may prescribe regs establishing the charge for a service or thing of value provided by the agency.” (User Fees Relating to Enrollment and Preparer Tax Identification Numbers, 75 Fed. Reg. at 60317)
Background—the Steele case. On June 1, the District of Columbia district court held that IRS is authorized to require tax return preparers to obtain PTINs but isn’t authorized to charge preparers fees to obtain and maintain PTINs. (Steele, (DC Dist Col 6/1/2017) 119 AFTR 2d 2017-2065; see Weekly Alert ¶ 40 06/08/2017)
Background—IRS’s initial reaction to Steele. On June 5, IRS announced on its website that, as a result of the Steele decision, it suspended PTIN registration and renewal on June 2. It also said that IRS, working with the Department of Justice, was considering how to proceed. See Weekly Alert ¶ 40 06/08/2017.
IRS reopens PTIN systems. In a new posting to its website, IRS has announced that it, working with the Department of Justice, is still considering how to proceed, but it is making PTINs available while deciding how to address the court order. IRS resumed the issuance of PTINs, without charge, on June 21, 2017.
RIA observation: The PTIN system—see https://rpr.irs.gov/datamart/mainMenuUSIRS.do;jsessionid=500E761EE8232AEFAEFABEBEA29EED07.bm1kc1TE8af —is, in fact, back online as of June 21.
IRS provides additional information as part of its announcement. Together with its announcement that it is reopening its PTIN system, IRS also announced:
… PTINs are required. Anyone who prepares, or assists in preparing, all or substantially all of a federal tax return for compensation is required to have a PTIN. All enrolled agents must also have a valid PTIN. The Steele decision upheld IRS’s authority to require the use of a PTIN.
… Refunds of previously paid PTIN fees. IRS, working with the Department of Justice, is considering how to proceed with respect to refunding previously paid PTIN fees. Preparers who have any questions on this subject should not contact IRS. Rather, any questions regarding claims or refunds should be directed to the PTIN Fees Class Action Administrator at www.ptinclassaction.com . And, IRS will be posting information on its Tax Professionals webpage, https://www.irs.gov/for-tax-pros .
… Fees going forward. IRS said that it is unable to answer the question, “If I obtain or renew my PTIN now at no cost, will I have to pay for it later?”
… Obtaining other information. The PTIN Helpline will also reopen on June 21. And, on the PTIN website, all previously available information, e.g., preparer continuing education records, will be displayed in online PTIN accounts.
And, IRS updated its PTIN FAQs regarding another matter. IRS also added the following to its regular PTIN FAQ webpage: If a preparer’s PTIN has been expired for more than a full calendar year, he must renew for each previously expired year during which he prepared returns or was an enrolled agent. (If a preparer’s PTIN has been inactive or expired for more than three consecutive years, he must submit a new registration application to obtain an active PTIN.)
A preparer can renew online via his online PTIN account. Alternatively, he may submit a paper Form W-12 (IRS Paid Preparer Tax Identification Number (PTIN) Application and Renewal) for prior-year renewals. Online renewal takes about 15 minutes to process, while paper renewals take 4-6 weeks to process.
References: For PTINs, see FTC 2d/FIN ¶ S-1522; United States Tax Reporter ¶ 61,094.