New from the IRS: Reduced fee for PTINs, updates to Tax Pro Accounts

The IRS has reduced the fees for the application and renewal of preparer tax identification numbers (PTINs) from $30.75 to $19.75 in interim final regulations (T.D. 9980) and proposed regulations (REG-106203-23) issued Friday. The new charge consists of an $11 IRS user fee plus an $8.75 fee payable directly to a third-party contractor.

In addition, the IRS said Friday that it added features to Tax Pro Account, its digital self-service portal, that allow tax professionals to access new services to help their clients, including new features to help them manage their active client authorizations on file with the Centralized Authorization File (CAF) database.

PTIN fees

In February, in Steele, No. 1:14-cv-1523-RCL (D.D.C. 2/21/23), a district court held that the PTIN fees the IRS was charging were excessive. In accordance with the biennial review requirement for the PTIN fees in OMB Circular A-25 and taking into account the district court’s decision in Steele, the IRS recalculated the amounts of the user fee and the third-party contractor fee.

The IRS arrived at the $11 fee by estimating that the cost of providing PTINs for fiscal year 2024 through fiscal year 2026 is $27.4 million, including labor and benefits, travel, training, supplies, and overhead. With the number of applicants over those three years estimated at 2.5 million, the cost per application comes out to $10.79.

The $8.75 third-party contractor fee may change in 2026 when the current contract expires and the amount is recomputed, the IRS said. The contractor issues, renews, and maintains PTINs, the IRS said. The 2023 PTIN fee of $30.75 included a contractor fee of $9.75.

The IRS requires that anyone who, for compensation, prepares or assists in the preparation of any federal tax return or claim for refund submitted to the IRS obtain a PTIN.

The annual PTIN application and renewal period for the 2024 filing season will begin shortly, the IRS said.

The text of the interim final regulations also serves as the text of the proposed regulations set forth in the notice of proposed rulemaking in the Federal Register.

The regulations take effect Oct. 19.

Tax Pro Accounts

Regarding the changes to Tax Pro Accounts, updates include letting tax professionals view their client’s tax information, including balance due amounts. Tax Pro Account users can now also withdraw from their active authorizations online in real time.

“As part of our transformation efforts, we will be working to add new technology and expand our relationship with the tax professional community,” IRS Commissioner Danny Werfel said in a statement. “The ongoing improvements to the Tax Pro Account are just part of a larger effort.”

To use a Tax Pro Account, a CAF number is needed, and it cannot be requested through the account for security reasons. As of now, the digital authorization process is available for individual taxpayers, not for businesses or other entities.

Tax professionals can now use their Tax Pro Account to send power of attorney and tax information authorization requests directly to a taxpayer’s individual IRS online account. After the taxpayer approves, and the information is validated, the authorization is recorded immediately in the CAF database.

This means there is no longer a need to fax, mail, and upload the information.

— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.