IRS Proposes Application Fees for Preparer Tax Identification Numbers

The IRS today released proposed regulations for establishing a fee of $50 for individuals who apply for a preparer tax identification number (PTIN). Certain tax preparers would be required to obtain a PTIN, according to the IRS.

The proposed regulations are the first of a series of steps planned to increase oversight of federal tax return preparation, the IRS said in a statement. The fee would be payable to the IRS and would cover technology costs, as well as compliance and outreach efforts associated with the new PTIN program. An additional fee, lower than $50, would also be charged by the third-party vendor selected to operate the new online application system.

“These fees could change in future years as program costs are reevaluated,” the IRS noted.

If you are a CPA, lawyer or enrolled agent who gets paid to prepare a business or another individual’s tax return, this fee would apply to you, the IRS said in a video (see video at the bottom of the entry). Only volunteer or uncompensated preparers would be exempt from the fee.

The new proposed regulation would require paid tax preparers to register with the IRS, obtain a PTIN and pay the user fee, the IRS said in a statement. Registration must be renewed every three years and another user fee payment must be made at the time of renewal.

The earliest effective date of this new regulation is next filing season.

Currently, the IRS does not require paid tax preparers to register with the IRS but they must sign the returns they prepare and provide their Social Security Number (SSN) or PTIN. Acquiring a PTIN was optional for people who did not want to disclose their SSN.

The Office of Management and Budget advised federal agencies to charge user fees to recover the cost of services that convey special benefits beyond those available to the general public, which includes the authority to prepare federal tax returns for compensation.

More than 80 percent of American households use a tax preparer or tax software to help them prepare and file their taxes. Tax professionals and other interested parties have until Aug. 23 to submit comments regarding the proposed regulations.

This summer, tax professionals can learn more by attending one of six IRS-sponsored tax forums -- three-day events detailing the most up-to-date information on federal and state tax issues.