Thursday, April 21, 2011

IRS Has Reinstated Previously Delayed Renewal Period For Certain Enrolled Agents

Ann. 2011-29, 2011-18 IRB

Previously, IRS delayed the renewal period for enrolled agents whose Social Security Numbers or tax identification numbers end in 4, 5, or 6. IRS has now announced the reinstatement of the renewal period for affected enrolled agents beginning June 1, 2011.

Background. Circular 230 requires that to maintain active enrollment to practice before IRS, enrolled agents must renew enrollment every third year after their initial enrollment is granted. An enrolled agent's renewal schedule is determined by the last digit of the individual's Social Security or tax identification number. (Circular 230 §10.6(d), governing practice before IRS) The renewal schedules are staggered with approximately one third of enrolled agents renewing every year. Individuals file a Form 8554, Application for Renewal of Enrollment to Practice Before the Internal Revenue Service, between November 1 and January 31 of the applicable year, and renewal is effective on April 1. The renewal period for enrolled agents whose Social Security Numbers or tax identification numbers end in 4, 5, or 6 was scheduled to begin on Nov. 1, 2010, and end on Jan. 31, 2011.

Recently issued Reg. §1.6109-2(a)(2) provides that for tax returns or refund claims filed after Dec. 31, 2010, the identifying number that a tax return preparer must include with the preparer's signature on tax returns and refund claims is his preparer tax identification number (PTIN) or such other number as IRS prescribes in forms, instructions, or other guidance. Tax return preparers won't be able to use a Social Security Number as a preparer identifying number unless specifically prescribed by IRS in forms, instructions, or other guidance.

A PTIN may be obtained through a new online registration system on the Tax Professionals page of https://www.irs.gov. Alternatively, paid tax return preparers may submit a paper application on Form W-12. There's a new annual user fee for individuals who apply for or renew a PTIN. Applicants will pay a $64.25 fee to obtain a PTIN ($50 user fee + $14.25 for the third-party vendor to operate the online system and provide customer support).

On Apr. 19, 2011, IRS issued final regs reducing the enrolled agent and enrolled retirement plan agent initial enrollment and renewal of enrollment user fees to $30 (¶10). The reduction in these user fees is because of the reallocation of portions of the enrolled agent and enrolled retirement plan agent initial enrollment and renewal of enrollment processes to the PTIN application and renewal process, which are recovered by the $50 user fee to the IRS to apply for a PTIN.

Renewal period delayed. To ensure that the revised user fee to renew enrollment as an enrolled agent or enrolled retirement plan agent was effective before the start of the next renewal period, IRS announced in Ann. 2010-81, 2010-45 IRB 638, that it would delay until further notice the renewal period under Circular 230 §10.6(d) for enrolled agents with Social Security Numbers or tax identification numbers ending in 4, 5, or 6. IRS said that when a date for the renewal period was determined, it would publish a schedule for affected enrolled agents to renew their enrollment in the Internal Revenue Bulletin and on the IRS Office of Professional Responsibility (OPR) webpage.

Renewal period reinstated. In Ann. 2011-29, IRS announces that the renewal period for enrolled agents is reinstated beginning June 1, 2011, which is thirty days after the publication of Ann. 2011-29. The renewal period will conclude 90 days later on Aug. 30, 2011. Enrolled agents whose Social Security number or tax identification number ends in 4, 5, or 6 must submit their application for renewal of enrollment, along with the $30 renewal fee, to IRS during this period. IRS expects to process these applications and issue enrollment cards before Nov. 28, 2011, 90 days after the end of the enrollment period.

Ann. 2011-29 provides that the enrollment status of enrolled agents who come within the provisions of Ann. 2010-81 isn't affected due to the delay announced there. Renewal of enrollment will be retroactive to Apr. 1, 2011, for enrolled agents who come within the provisions of Ann. 2010-81 and who properly renew their enrollment before Aug. 31, 2011. These enrolled agents must still complete all continuing professional education hours as provided in Circular 230 §10.6(e).

Ann. 2011-29 says that enrolled agents not affected by Ann. 2010-81 should refer to Circular 230 §10.6(d)(2) and §10.6(d)(3) to determine their renewal of enrollment periods. Enrolled agents whose Social Security numbers do not end in 4, 5, or 6; whose renewal of enrollment period was before Jan. 31, 2011; and who are delinquent in renewing their enrollment must pay the $125 renewal fee.

References: For preparers' identification number, see FTC 2d/FIN ¶S-1522.3; United States Tax Reporter ¶61,094.02; TaxDesk ¶867,012; TG ¶71006.1.

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