CPAs Claim IRS Not Authorized to Charge PTIN Fees, Seek Return of Past Payments

Miscellaneous

Two CPAs filed suit in the U.S. District Court for the District of Columbia, asking the court to stop the IRS from charging fees for issuing preparer tax identification numbers (PTINs), to obtain refunds of fees paid in the past, and to enjoin the IRS from asking for more information than needed to issue PTINs (Steele, No. 1:cv-14-1523 (D.D.C.) (complaint filed). The plaintiffs are asking for class certification for all return preparers who are required to pay the user fee, which they estimate ranges from 700,000 to 1.2 million people.

The plaintiffs claim that the IRS is not authorized to charge a user fee at all because, under 31 U.S.C. Section 9701, user fees may only be imposed to provide a special benefit. If the IRS is permitted to charge a fee, the plaintiffs argue, it should be limited to the amount it costs the IRS to provide the PTIN—the $14.25 it pays to a third party to provide the number or the $13 it pays the third party to renew the number, rather than the $64.25 the IRS currently charges for a new PTIN and the $63 it charges for renewals.

Although the IRS claims that the excess fees are intended to be used to pay the costs of the registration cards sent to each preparer, the costs of forms and other guidance provided to preparers, and the costs of tax compliance and suitability checks, the plaintiffs point out that none of this has been done or should be done. No registration cards have been sent, the IRS does not normally charge to issue other tax forms and instructions, and it has not conducted suitability checks because attorneys and CPAs are not subject to those requirements. In fact, CPAs are subject to their own requirements to prove that they are fit and competent.

The plaintiffs also asked the court to enjoin the IRS from asking for more information than is necessary to obtain a PTIN, which they claim should be only the preparer’s name, address, and Social Security number. Currently, Form W-12, IRS Paid Preparer Tax Identification Number (PTIN) Application and Renewal, asks for the preparer’s birthdate, email address, felony convictions, federal tax compliance status, professional credentials, and whether the preparer prepares Form 1040, U.S. Individual Income Tax Return, is supervised by someone, and is self-employed or owns a tax preparation business.