A PTIN is a Preparer Tax Identification Number. Paid preparers of most federal returns must have one and include it on the return along with their signature in order to avoid penalties. The IRS can use the PTIN to track returns prepared by particular individuals (years ago they had to use the preparer’s SSN). PTINs are part of a system rolled out in 2010 where the IRS planned to regulate all preparers of individual returns and a few others. The system was found contrary to Section 330 of Title 31.
Basically, the IRS cannot regulate preparers who do not represent clients before the IRS and preparing a return is not considered representation before the IRS.
Recent News
The annual fee to obtain or renew a PTIN has been reduced from $50 to $33 starting on September 9, 2016. This likely presents the fact that the IRS does not need as much money if it will not be regulating about half of preparers—the roughly 350,000 preparers who are not attorneys, Enrolled Agents, or CPAs. [TD 9781 (8/10/16) + IRS preparer stats]
Preparers need to protect their PTIN. On August 11, the IRS alerted people of phishing schemes where someone pretending to be from a tax software company would try to get the preparer’s PTIN.
More work is needed by the IRS and Congress to get all paid return preparers subject to rules of conduct (beyond penalty provisions of the law). I think that is what most taxpayers expect. The law is complex, even for Form 1040EZ. Preparers need to keep up to date with changes (there were over 120 statutory changes in 2015!).
How this is to be done remains a topic of discussion.
What do you think?
Annette Nellen, CPA, Esq., is a professor in and director of San Jose State University’s graduate tax program (MST), teaching courses in tax research, accounting methods, property transactions, state taxation, employment tax, ethics, tax policy, tax reform, and high technology tax issues.
Annette is the immediate past chair of the AICPA Individual Taxation Technical Resource Panel and a current member of the Executive Committee of the Tax Section of the California Bar. Annette is a regular contributor to the AICPA Tax Insider and Corporate Taxation Insider e-newsletters. She is the author of BNA Portfolio #533, Amortization of Intangibles.
Annette has testified before the House Ways & Means Committee, Senate Finance Committee, California Assembly Revenue & Taxation Committee, and tax reform commissions and committees on various aspects of federal and state tax reform.
Prior to joining SJSU, Annette was with Ernst & Young and the IRS.
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