The IRS issued proposed regulations on February 14 regarding the availability of preparer tax identification numbers (PTINs) for supervised nonsigning preparers and for preparers of forms other than Form 1040. They also address what tax forms are considered returns for purposes of the PTIN rules (REG-124791-11). The proposed regulations do not introduce any new rules, but would formalize rules introduced by the IRS in Notice 2011-6.
While Regs. Sec. 1.6109-2(d) limits the tax return preparers who are eligible to obtain a PTIN (and thus prepare tax returns) to CPAs, attorneys, enrolled agents, and registered tax return preparers, the proposed regulations carve out an exception for certain nonsigning preparers in certain circumstances. Specifically, the proposed regulations would allow “[a]n individual 18 years of age or older who is supervised, in the manner the Internal Revenue Service prescribes . . . by an attorney, certified public accountant, enrolled agent, enrolled retirement plan agent, or enrolled actuary” to obtain a PTIN (Prop. Regs. Sec. 1.6109-2(d)(2)(v)).
The preamble to the proposed regulations specifies that “in the manner the [IRS] prescribes” means in accordance with the rules set forth in Notice 2011-6. The requirements set out in the notice include:
- The supervising Circular 230 practitioner must sign the tax returns or claims for refund prepared by the individual;
- The individual must be employed at the law firm, CPA firm, or other recognized firm of the tax return preparer who signs the tax return or claim for refund; and
- The individual must pass the required tax compliance check and suitability check.
The proposed regulations would also allow an individual who certifies that he or she prepares only “tax returns and claims for refund of tax that are not covered, at the time the tax return preparer applies for or renews the number, by a minimum competency examination prescribed by” the IRS to obtain a PTIN (Prop. Regs. Sec. 1.6109-2(d)(2)(vi)).
Again, the individual must comply with any requirements that the IRS prescribes, and the proposed regulations’ preamble says that the requirements are those in Notice 2011-6. Notice 2011-6 requires such individuals to certify that:
- They do not prepare, or assist in the preparation of, all or substantially all of any tax return or claim for refund covered by the competency examination(s) for registered tax return preparers administered under IRS oversight (meaning the Form 1040 series until further notice); and
- They pass the required tax compliance check and suitability check.
For purposes of the PTIN rules, the proposed regulations adopt a broad definition of tax return or claim for refund as “all tax forms submitted to the Internal Revenue Service unless specifically excluded by the Internal Revenue Service in other appropriate guidance” (Prop. Regs. Sec. 1.6109-2(a)(1)). The preamble affirms that the list of 28 excluded forms and series of forms in Notice 2011-6 is the current list.
The proposed regulations would apply to tax return preparers when they are finalized, but in the meantime the rules of Notice 2011-6 continue to apply.