We’ve all heard that the more things change, the more they stay the same, and the only constant is change.
Both of these likely will apply to the IRS regulations, already implemented and those proposed, for paid tax preparers who file federal tax forms. Anyone who prepares a federal return after December 31, 2010, and gets paid for it, will be subject to these new rules and regs.
Preparers must secure a Preparer Tax Identification Number (PTIN) from the IRS, actually a third-party vendor, who will process the application after securing a payment of $64.25. The IRS has stated this process will begin in mid-September, and will be accessible by going to the IRS web site – use Tax Professionals tab at the top of the home page.
Most preparers who are Enrolled Agents, CPAs or attorneys, will likely already possess a PTIN. No matter, all return preparers (January 1, 2011) are required to pony up the $64.25 to get an initial PTIN or “refresh” the number already assigned to them.
HINT: It is important you secure a PTIN immediately when they become available in mid-September, and before the certification exam becomes available. No specific date has been given, but estimates are for exam release during the Spring of 2011. If you miss this window and apply for a PTIN after the exam is available, you must first pass the exam to qualify for a PTIN.
Getting your PTIN before the testing is available, allows you to prepare returns until December 31, 2013 without taking any exam. You still must meet the 15 hour annual requirements for continuing professional education (CPE).
What Does It Mean To Me – The Taxpayer
Probably won’t have a noticeable effect initially. It will take years to get this off the ground, and accomplish all of the benefits the IRS envisions. If you are using a paid preparer now, all that can happen by January 1, 2011 is they should have applied for and received a PTIN. If they don’t secure one, they should not be preparing returns after December 31, 2010. When your 2010 return is prepared, look at the return copy for the preparers name and PTIN in the preparer section at the bottom of your tax return. If these two things aren’t there, it may be a sign that the preparer is not in compliance with IRS regs. Any return completed for you by a paid preparer is required by IRS regs to have that preparers name, and PTIN on it
It’s possible your tax preparer hasn’t been to a tax seminar, annual update on new or revised tax law for years or maybe never. Tax law is evolving so fast that it’s a challenge to the Enrolled Agents, CPAs and tax attorneys who diligently spend many hours each year to keep current with the constant changes. The new IRS regs require every paid preparer to acquire a minimum of fifteen hours of CPE annually. Enrolled Agents, and CPAs have CPE requirements that far exceed this minimum. This requirement, over a period of time, should raise the quality level and accuracy of returns, especially those who previously, have made no attempt to keep abreast of tax law changes.
New requirements generally entail additional expenses, and that’s likely to be the case here. Each year the PTINs will have to be re-registered, and CPE will have to be acquired. CPE may require travel, hotel and meal expenses, time away from the office, plus the cost of the seminar. You can expect these costs to be passed on to the consumer, a/k/a as the taxpayer.
An upcoming article will address the impact on preparers.