Tax return preparer registration for 2012 to start soon

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By Nick Fiore

For more than a year now, all paid tax return preparers have been required to obtain a preparer tax identification number (PTIN). Renewals for 2012 are expected to start in October 2011.

The PTIN Process


Practitioners who haven't done so already can apply for a PTIN relatively easily:

1.                  Creating an Account. The preparer must first create an account by providing his or her name, e-mail address and security question information. The system will then e-mail a temporary password, which the preparer will change when he or she goes back to enter information in the PTIN application. (Note that the IRS PTIN sign-up system is generally unavailable from midnight until approximately 8:00 AM ET each Sunday morning while regular system maintenance is performed.)

2.                  Applying for a PTIN. The preparer will complete the online application by providing personal information, information about his or her previous year's tax return and professional credentials. This information includes:

  • Social security number
  • Personal information (name, mailing address, date of birth)
  • Business information (name, mailing address, telephone number)
  • Previous year's individual tax return (name, address, filing status)
  • Explanations for any felony convictions
  • Explanations for problems with a preparer's U.S. individual or corporate tax obligations
  • Credit or debit card for the $64.25 PTIN user fee
  • If applicable, any U.S.-based professional certification information (CPA, attorney, enrolled agent, enrolled retirement plan agent, enrolled actuary, certified acceptance agent, or state license), including certification number and state of issuance

A preparer who already has a PTIN will NOT be asked to enter it in this new application. Note that a preparer may or may not get the same PTIN at the end of the sign-up process.

What does this mean?
PTINs that were obtained for the 2011 filing season will expire on December 31, 2011. Renewal will be available in mid-October 2011. Preparers who applied for their PTINs on paper will be able to renew either online or on paper. Paper renewal will take 4-6 weeks to process. All preparers must renew their PTINs before January 1, 2012.

After obtaining a PTIN, the preparer will receive information about next steps, including any applicable testing and continuing education requirements.

3.                  Payment of the Applicable Fee. The application will transfer the preparer to the Service's partner bank, where he or she will make payment (currently, $64.25) by credit card or direct debit.

4.                  Get the Actual PTIN. After the bank confirms payment, the preparer's PTIN is provided online. The preparer will also receive a welcome letter providing additional guidance. Note: This PTIN and account information should be kept in a safe place for future reference.

It only takes about 15 minutes to sign up online and receive a PTIN. Preparers that opt to use the paper application (Form W-12, IRS Paid Preparer Tax Identification Number (PTIN) Application) should understand that the application will take 4-6 weeks to process.

Background Checks, Testing, and Education Requirements for Some Preparers


Some preparers will have additional requirements in the future.

  • Attorneys, CPAs, and Enrolled Agents (EAs) who are active and in good standing with their licensing agencies have no additional requirements, other than to renew their PTINs annually
  • Supervised preparers and non-1040 preparers will need to:

              *    Renew their PTINs annually

              *    Submit fingerprints for a background check

"Supervised preparers" are those who do not sign returns and who are employed by attorney, CPA or EA firms and are supervised by an attorney, CPA or EA.

Non-1040 preparers are those who do not prepare any Form 1040 series returns. Note: Forms 1040-PR and 1040-SS are not considered Form 1040 series returns for this purpose

  • All other preparers will need to:

              *    Renew their PTINs annually

              *    Submit fingerprints for a background check

              *    Pass a competency test

              *    Take continuing education courses annually

The IRS expects to begin offering the exam and fingerprinting in approximately October 2011. (While a vendor has been selected to develop and administer the competency exam, it is not yet available.) Those who already have PTINs will have until the end of 2013 to take and pass the exam and to pass the background check.

The continuing education requirement is expected to start in 2012.

Penalties for Noncompliance


While most preparers easily registered and received their PTINs, there were approximately 100,000 who failed to do so. These preparers recently received letters from the IRS, informing them of their noncompliance.

The Service has noted that these recent letters are part of its ongoing effort to ensure tax return preparers are following the new rules. In addition, the IRS is working to identify those tax return preparers who make repeated errors, and IRS personnel have met face-to-face with thousands of these preparers over the past two years.

As part of this new tax return preparer initiative, and based on an extensive study and review of preparers (the IRS's Return Preparer Review (December 2009)), the Service has noted that, in order for the increased oversight of return preparers to be effective, a strong enforcement mechanism must also exist. Therefore, it has recommended several new enforcement strategies.

First and foremost, the Service recognized that it would have to significantly increase the resources used in return preparer compliance, so as to establish a "strong enforcement mechanism."

The IRS has stated that it will look to enhance and expand traditional enforcement tools (i.e., preparer and promoter penalties, program action cases, injunctions); return preparer penalties will be given higher priority and the Service will recommend that the period during which it may assess penalties will be extended. At the same time, it intends to incorporate new nontraditional tools into its enforcement activities. For example, it will consider targeted notices that call on preparers to correct noncompliance; if the preparer self-corrects the situation, the IRS might not then pursue penalties. The Service also intends to expand the use of preparer visits (which are currently only used in limited situations), and increase the staff that can investigate preparer misconduct.


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