IRS Opens PTIN Season

The Internal Revenue Service has announced that Preparer tax identification number (PTIN) applications and renewals are now being processed. PTINs generally can be renewed beginning in mid-October and are valid for the following calendar year until December 31. A valid PTIN must be obtained by anyone who prepares or substantially helps prepare a federal tax return or claim for refund for compensation. The PTIN system provides tax return preparers an identifying number that is not a Social Security number to include on tax returns.

Currently, anyone who receives compensation in exchange for preparing or assisting in preparing all or substantially all of any U.S. federal tax return, claim for refund, or other tax form, must have a valid PTIN. That includes attorneys, certified public accountants, and enrolled agents. Failure to prepare tax returns without a valid or current PTIN could place you on the receiving end of Section 6695 penalties, injunction, and disciplinary action by the IRS Office of Professional Responsibility.

The Cost of the PTIN

Unfortunately the IRS has reinstated PTIN fee's for the 2021 tax season. 

In July 2020, the IRS had set a $21 fee per PTIN application or renewal plus a $14.95 fee payable to a contractor. This amount includes costs relating to PTIN misuse and maintaining the integrity of PTINs. The IRS has justified the third-party contractor fee, $14.95 as paying for several functions that include the processing of applications, renewals and operating a call center.

PTIN Requirements for Tax Return Preparers

Most first-time PTIN applicants can obtain a PTIN online in about 15 minutes. There is no fee to obtain a PTIN. There is a paper option if you prefer to use this option to apply. In order to complete the requirements, applicants need to fill in a Form W-12, IRS Paid Preparer Tax Identification Number (PTIN) Application PDF

Why You Need to Get a PTIN

The annual renewal of PTINs ensures the IRS has up-to-date identifying information about each return preparer, which is essential for timely communication of important information. Important information in this case could relate to the IRS current legal matter involving its regulatory authority to offer PTIN’s numbers. The latest appellate court ruling of 2019 affirmed the IRS’ authority to charge fees for PTIN’s - this is why fees remain in place. At the time, the plaintiffs appealed to the Supreme Court, but the Supreme Court declined to hear the matter. At the time, the IRS did not issue a public comment.

As of now, having a PTIN number also guarantees inclusion in the tax return preparers Public Directory. This comes with free marketing as potential clients in every state can search for your services. It also gives you limited representation rights for your clients.

How to Get Your PTIN

In order to complete the PTIN Application, the following is needed:

  • 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 felony convictions (if any)
  • Explanations for problems with your U.S. individual or business tax obligations (if any)
  • 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, jurisdiction of issuance, and expiration date

Once you gather all of your information, just follow these easy steps to obtain your PTIN:

  • Create Your Account Here — first, you must create an account by providing your name, email address and security question information. The system will then email your temporary password, which you will change when you go back to enter your information in the PTIN application.
  • Apply for Your PTIN — you will complete the online application by providing personal information, information about your previous year’s tax return, professional credentials, and more as shown above.
  • Get Your PTIN — after completion of the online application, your PTIN is provided online.

Renewing Your PTIN

Renewing your PTIN is an easy three step process, which happens on the same platform where you register for an account. The application to renew can be accessed here.  After you sign up or renew your PTIN number you will have fulfilled one of the essential requirements of the Annual Filing Season Program (AFSP) program as well. Check out our three different IRS approved courses on fulfilling your AFSP requirement’s here