In T.D. 9903, the IRS issued final regulations reinstituting fees for obtaining and renewing preparer tax identification numbers (PTINs) for tax return preparers in 2021. The new fee is $21 plus a $14.95 fee paid directly to a third party for processing applications and renewals. The fee was $33 before a district court held in 2017 that the IRS was not authorized to charge a fee for PTINs and issued an injunction to bar it from doing so (see Steele, 260 F. Supp. 3d 52 (D.D.C. 2017)).
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.
When the government appealed the Steele decision to the D.C. Circuit, the appeals court held that the IRS has authority to charge a user fee for PTINs, paving the way for the agency to reinstate a fee for obtaining and renewing a PTIN (Montrois, 916 F.3d 1056 (D.C. Cir. 2019)). However, the D.C. Circuit remanded the case to the District Court for the District of Columbia to determine if the amount of the fee unreasonably exceeded the costs to the IRS to issue and maintain PTINs. The case is still on remand, and the IRS has not been charging a fee in the interim.
According to the IRS, PTINs expire on Dec. 31 of the year for which they are issued. PTINs generally can be renewed beginning in mid-October and are valid for the following calendar year. Tax return preparers can renew online at the IRS website or file a paper Form W-12, IRS Paid Preparer Tax Identification Number (PTIN) Application and Renewal.
The final regulations adopt proposed regulations issued in April (REG-117138-17) after holding a public hearing and receiving 18 comments, which are summarized in the preamble to the final regulations. The comments ranged from objecting to charging a user fee at all to suggesting charging a lower fee for credentialed return preparers or low-volume preparers. The IRS did not adopt any of these comments.
The regulations are effective 30 days after they are published in the Federal Register, which is scheduled for July 17.
— Sally P. Schreiber, J.D., (Sally.Schreiber@aicpa-cima.com) is a Tax Adviser senior editor.