Because some return preparers are having trouble with the IRS’ new online preparer tax identification number (PTIN) application, the IRS on January 24 announced that it is providing relief for preparers who make a good-faith effort to comply with the new PTIN requirement (Notice 2011-11).
The IRS will permit preparers who meet criteria specified in Notice 2011-11 and who receive notification from the IRS that it was unable to process their online PTIN application or who receive an acknowledgment of receipt of Form W-12 to prepare and file tax returns or claims for refund for compensation after the tax return preparer complies with all instructions provided in the notification or acknowledgment letter.
All paid tax return preparers, including CPAs, now must use a PTIN when signing all tax returns, forms or claims for refund (except for certain specified returns and forms—see Notice 2011-6), and must have obtained or renewed an existing PTIN to prepare returns after December 31, 2010. The IRS launched an online PTIN application system on Sept. 28, but many practitioners have reported having trouble renewing or obtaining a PTIN using the system. See “PTINs a Pain for Some CPAs.”
Notice 2011-11 says that tax return preparers who are unsuccessful in obtaining a PTIN using the online system will be notified that their application was not processed and will receive “appropriate instructions.” They must comply with those instructions to establish that they are making a good-faith effort to comply. For individuals who do not attempt to use the online PTIN application system, the notice says the submission of a processable paper Form W-12, IRS Paid Preparer Tax Identification Number (PTIN) Application, and payment will generally constitute a good-faith attempt to comply with the requirement.
Return preparers who have established that they have made a good-faith attempt to comply with the PTIN requirement can use a PTIN issued before September 28, 2010, or their Social Security number if they do not have a previously issued PTIN, during the 2011 filing season or until they receive a new PTIN, whichever is earlier. After they receive a new PTIN, they must use the new PTIN. They must also pay the $64.25 PTIN application fee for the 2011 filing season even though processing of their application may be delayed.