IRS Updates FAQs On New Tax Return Preparer Identifying Number Requirements

IRS has updated its online FAQs explaining the new post-2010 requirement for tax return preparers to obtain and furnish a preparer tax identification number (PTIN) on tax returns and claims for refund of tax that they prepare. The FAQs supplement final regs issued on the PTIN requirement and the application process (see Final Regs Explain New Tax Return Preparer Identifying Number Requirements and Regs Set User Fee To Apply For Or Renew Preparer Tax ID; Online Registration Up And Running), and update FAQs issued earlier this year. Among the subjects covered are how applicants are "compliant" with their federal tax obligations, and whether fingerprints will be required.

Background. Under new final regs, for tax returns or refund claims filed after Dec. 31, 2010, the identifying number that a domestic or foreign tax return preparer must include with the preparer's signature on tax returns and refund claims is his PTIN or such other number as IRS prescribes in forms, instructions, or other guidance. Tax return preparers won't be able to use a SSN as a preparer identifying number unless specifically prescribed by IRS in forms, instructions, or other guidance. The regs also explain who may obtain a PTIN and who is a tax return preparer. (Preamble to TD 9501, 09/28/2010, Reg. 1.6109-2; see Final Regs Explain New Tax Return Preparer Identifying Number Requirements for details)

Separate new regs establish a new annual user fee for individuals who apply for or renew a tax return preparer tax identification number (PTIN), and a new information release explains the online PTIN registration process. (T.D. 9503, 09/28/2010; Reg. 300.9; IR 2010-99, see Regs Set User Fee To Apply For Or Renew Preparer Tax ID; Online Registration Up And Running)

Supplemental guidance on PTIN application process. The new FAQs provide additional guidance on a number of different aspects of the PTIN application process for tax return preparers, including the following information:

• All PTIN applicants must attest that they are compliant with their personal and business tax obligations, or provide an explanation if they are not. Being in tax compliance means all returns that are due have been filed (or an extension requested), and all taxes that are due have been paid (or acceptable payment arrangements have been established). (Online PTIN System, FAQ 18)

• IRS is not currently conducting fingerprint checks as part of the PTIN application process, but may do so for certain applicants in the future. (New PTIN Requirements, FAQ 11)

• Obtaining a PTIN through the new registration system does not trigger any new continuing education requirement (the beginning date for CPE has not been determined). Once the CPE requirement begins, affected preparers will have a full twelve months to meet their first year's requirement. (Attorneys, CPAs, enrolled agents, enrolled actuaries, or enrolled retirement plan agents won't need to meet the new CPE requirements due to their existing education requirements.) (CPE Requirements, FAQ 1)

• Every PTIN holder must have his or her own e-mail account. Thus an organization can't use one e-mail account to create accounts for all of its employees.

• The name to use when applying for a PTIN should be the name used on the applicant's most recent Form 1040. If applicants are married filing jointly and both spouses apply for a PTIN, each must create a user account under different mail addresses and file a separate PTIN application. Each spouse must each enter his or her own information on separate applications (name, social security number and address). The spouse's name or social security number should not be entered. (Online PTIN System, FAQ 8)

Research References: For who is a tax return preparer, see FTC 2d/FIN ¶S-1117; United States Tax Reporter ¶77,014.24; TaxDesk ¶867,002. For the return preparer penalty, see FTC 2d/FIN ¶V-2631; United States Tax Reporter ¶66,944; TaxDesk ¶867,019.