Monday, November 21, 2011

IRS to Delay Fingerprinting Requirement for Certain PTIN Applicants

IRS Commissioner Douglas H. Shulman told tax professionals on November 8 that the IRS has delayed its plan to fingerprint certain preparers who apply for preparer tax identification numbers (PTIN) (IRS News Release IR-2011-108). Shulman spoke at the national tax conference of the American Institute of Certified Public Accountants (AICPA) in Washington, D.C.

Effective January 1, 2011, all return preparers who prepare returns for compensation, subject to certain exceptions, must obtain or renew a PTIN. The IRS launched an online PTIN registration system in 2010. "Sixty percent of the preparers who have registered for a PTIN are not CPAs, enrolled agents or attorneys," Shulman reported. The IRS has also posted PTIN troubling-shooting tips on its website.

The IRS indicated that certain preparers would be required to submit their fingerprints when applying for a PTIN. At an October 7 hearing, the AICPA and other professional organizations asked the IRS to revisit the fingerprinting proposal.

Shulman announced that the IRS has delayed the fingerprinting proposal. "We have decided to hold off on fingerprinting as we consider the issues that have been raised, and have further discussions with interested parties," Shulman said.

"The AICPA welcomes the development," Edward Karl, CPA, vice president, taxation, AICPA, said. "The IRS heard a chorus of concern about the proposal on October 7," Karl added.

Individuals who are not CPAs, EAs [enrolled agents], attorneys and certain other preparers are exempt at this time from the registered tax return preparer examination. "From the beginning, we planned to exempt CPAs, EAs and attorneys from the testing requirements," Shulman said. He noted that the CPA community has extensive testing and continuing education requirements in place. On its website, the IRS reported that the registered tax return preparer examination is expected to be available in late November.

"Beginning soon, the IRS will send letters to tax return preparers who have been identified as high risk," Shulman said. "The letters are not sent randomly. They are based on real data where we see compliance issues." The IRS also will increase in-person visits to preparers. Additionally, the IRS will beef up the resources available to the IRS Office of Professional Responsibility (OPR).

Reference: PTE §41,515.05

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