In late summer of 2010 the Internal Revenue Service put out notice regarding its new electronic application system for professional tax preparers going online in mid-September. Originally, in Spring of the same year, the agency had put out draft regulations that would require professional tax preparers or those receiving payment to prepare taxes would need to apply for certification and licensing from the IRS via a Preparer Tax Identification Number (PTIN) program.
Within the rules of the new program, the professional tax preparer must maintain a PTIN when working, and renew the PTIN as necessary, paying appropriate filing and update fees. In turn, the PTIN allows the IRS to track transactions and records associated with a specific preparer by cross-referencing the PTIN number on file.
The fees associated with the PTIN are per the IRS with a graduated approach. The first year of PTIN for a preparer will cost $64.25 per filing. This charge includes $50 associated with system cost recovery from a new entry. The remaining cost goes to the vendor the IRS has contracted with to maintain the electronic PTIN system to be used. The renewal fee for prepares is to be charged annually and will fluctuate, depending on what the IRS determines is necessary for cost recovery.
There will be no distinction between preparers who already work electronically with the IRS and those starting up for the first time. All preparers will be required to apply for a PTIN to be able to submit a compensated tax filing for another party. This rule will apply even to those who only occasionally prepare compensated tax filings and are not required to maintain ongoing professional development or education.
The paper format of obtaining a PTIN ended on August 22, 2010, in anticipation of the electronic conversion. While the W-7P form was still accepted for stragglers prior to this date and still coming through the mail, the bulk of preparers are now directed to the electronic PTIN process now. For those who applied prior to August 22, 2010, re-application through the electronic system is now required.