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What Is a Preparer Tax Identification Number?
A preparer tax identification number (PTIN) is an Internal Revenue Service (IRS) identifier implemented in 1999 that has required all paid federal tax return preparers to register with the federal government and obtain a unique number since 2010. Tax preparers are any individuals who prepare, calculate, and file income tax returns on behalf of individuals or businesses. Preparer tax identification number applicants must provide satisfactory answers to several suitability questions to receive a preparer tax identification number. Tax preparers must renew their preparer tax identification numbers each calendar year.
KEY TAKEAWAYS
How a Preparer Tax Identification Number (PTIN) Works
In addition to obtaining a preparer tax identification number (PTIN), the IRS requires enrolled agents to pass a test and complete continuing education requirements.4 5 These additional requirements do not apply to attorneys and certified public accountants (CPAs) in good standing, or to supervised preparers and non-1040 preparers, whose work is overseen by an enrolled agent, attorney or a CPA.
Preparer tax identification numbers were created in 1999 to protect the privacy of tax preparers.7 From 1999 to 2010, preparers were given the option of providing their number or their Social Security number when signing tax returns. In September 2010, the IRS created a new electronic preparer tax identification system.8 Since then approximately 1.65 million preparer tax identification numbers have been issued and 753,884 individuals held current numbers as of March 18, 2020. CPAs represent the largest credentialed group, with 206,166 individuals currently holding preparer tax identification numbers.
Preparers were originally charged a registration fee of $64.25 and annual renewal fees similar to the registration fee. The fee was reduced to $50 in 2016 after a class action lawsuit commenced against the IRS. In 2017, the fee was eliminated following a ruling on the class-action lawsuit. The fee had been the same for every preparer, regardless of how many returns the preparer filed.
In June 2017, U.S. District Court Judge Royce Lamberth ruled that collecting fees for issuing tax preparer identification numbers was illegal and that the IRS had exceeded its authority by collecting these fees. The case was Steele, et al. v. the United States, and was a class action representing all individuals and entities who have paid in order to receive a tax preparer identification number. The Judge concluded that while the IRS could continue to issue the numbers, the fees were illegal because they were not a “service or thing of value” provided by the agency.
Following the ruling, the IRS suspended the tax preparer identification number system but reinstated it without requiring fees later in June. Taxpayers can search for a registered tax preparer and verify that their tax preparer is registered by checking the IRS’ directory.
Preparer tax identification numbers have been required since the 2011 filing year and the IRS has collected fees estimated in excess of $175 million. Unless this case is reversed on appeal, the IRS will have to refund that money.
A preparer tax identification number (PTIN) is an Internal Revenue Service (IRS) identifier implemented in 1999 that has required all paid federal tax return preparers to register with the federal government and obtain a unique number since 2010. Tax preparers are any individuals who prepare, calculate, and file income tax returns on behalf of individuals or businesses. Preparer tax identification number applicants must provide satisfactory answers to several suitability questions to receive a preparer tax identification number. Tax preparers must renew their preparer tax identification numbers each calendar year.
KEY TAKEAWAYS
- A preparer tax identification number (PTIN) is an Internal Revenue Service (IRS) identifier implemented in 1999 that has required all paid federal tax return preparers to register with the federal government and obtain a unique number since 2010.
- Preparer tax identification numbers were created in 1999 to protect the privacy of tax preparers.
- Certified Public Accountants (CPAs) represent the largest credentialed group, with 206,166 individuals currently holding preparer tax identification numbers.
How a Preparer Tax Identification Number (PTIN) Works
In addition to obtaining a preparer tax identification number (PTIN), the IRS requires enrolled agents to pass a test and complete continuing education requirements.4 5 These additional requirements do not apply to attorneys and certified public accountants (CPAs) in good standing, or to supervised preparers and non-1040 preparers, whose work is overseen by an enrolled agent, attorney or a CPA.
Preparer tax identification numbers were created in 1999 to protect the privacy of tax preparers.7 From 1999 to 2010, preparers were given the option of providing their number or their Social Security number when signing tax returns. In September 2010, the IRS created a new electronic preparer tax identification system.8 Since then approximately 1.65 million preparer tax identification numbers have been issued and 753,884 individuals held current numbers as of March 18, 2020. CPAs represent the largest credentialed group, with 206,166 individuals currently holding preparer tax identification numbers.
Preparers were originally charged a registration fee of $64.25 and annual renewal fees similar to the registration fee. The fee was reduced to $50 in 2016 after a class action lawsuit commenced against the IRS. In 2017, the fee was eliminated following a ruling on the class-action lawsuit. The fee had been the same for every preparer, regardless of how many returns the preparer filed.
In June 2017, U.S. District Court Judge Royce Lamberth ruled that collecting fees for issuing tax preparer identification numbers was illegal and that the IRS had exceeded its authority by collecting these fees. The case was Steele, et al. v. the United States, and was a class action representing all individuals and entities who have paid in order to receive a tax preparer identification number. The Judge concluded that while the IRS could continue to issue the numbers, the fees were illegal because they were not a “service or thing of value” provided by the agency.
Following the ruling, the IRS suspended the tax preparer identification number system but reinstated it without requiring fees later in June. Taxpayers can search for a registered tax preparer and verify that their tax preparer is registered by checking the IRS’ directory.
Preparer tax identification numbers have been required since the 2011 filing year and the IRS has collected fees estimated in excess of $175 million. Unless this case is reversed on appeal, the IRS will have to refund that money.