IRS: Tax Return Preparers Required to Use PTINs

On March 24, 2010, the IRS issued regulations (REG-134235-08) that would require any paid tax return preparer to use a preparer tax identification number (PTIN) on all tax returns after December 31, 2010. This IRS regulation comes after the early January announcement by the IRS that mandatory registration of all paid, signing tax return preparers would be required, as well as continuous Continuing Professional Education (CPE) requirements more closely monitored. The IRS's end goal seems to be to enforce ethical treatment of taxes through preparers and to strengthen the bond that preparers have with the government. Accounting scandals and cover-ups have become more and more prevalent over the last several years, and this new requirement (or series of requirements) may be an attempt at controlling any abuse of the system.

Paid preparers are required to obtain a PTIN from the IRS in accordance with what might be a series of new regulations proposed by the Internal Revenue Service. Currently, preparers may use a PTIN or their own social security number (Treas. Reg. § 1.6109-2(a)(1)). This IRS regulation prevents individual preparers from citing their own social security number on someone else's tax documentation and requires that each individual who prepares tax returns acquire a special PTIN that will be used on all tax returns that are prepared by them but are not their own.

Interestingly, the IRS does not include in these regulations how to become a registered tax return preparer though it might be assumed that CPAs and accountants, who are the main group targeted with these regulations, will receive more information quickly as it becomes available. It should be noted that with the PTIN comes a fee; the IRS will likely charge a so far undisclosed amount of money to issue PTINs.

In addition to a fee to obtain or renew a PTIN, tax preparers will be highly scrutinized by the IRS including a review of the individual's own timely tax processing and filing history.

The issued Internal Revenue Service regulations will take effect on January 1, 2011 and will include Form 1040 for 2010.

The latest update from the IRS does not include any other recommendations thus far though it is likely that the public will hear more updates soon as the IRS continues to try to encourage positive ethical choices among tax preparers.

"IRS Issues Prop Regs on Use of PTINs After 2010". Journal of Accountancy. http://www.journalofaccountancy.com/Web/20102735.htm

"IRS Proposes New Requirements for Return Preparers". Journal of Accountancy. http://www.journalofaccountancy.com/Web/20102463.htm

"Internal Revenue Service Return Preparer Review". IRS. http://www.irs.gov/pub/irs-utl/54419l09.pdf