IRS Tax Preparer Requirements for The Coming Tax Season
Tax Preparers are seeing significant changes in their requirements for the coming tax season and for the future of the industry as a whole. The past year and a half has brought about considerable regulation into the tax preparation industry. Most notably has been the recent requirements relating to obtaining and maintaining a Preparers Tax Identification Number, better known as a PTIN. In past tax seasons the IRS did not have a standardized tracking system in place to determine who is actually preparing tax returns and a disciplinary policy that allowed for adverse action to be taken against preparers who continually file fraudulent returns and abuse the e-file system. That has all been changed, and this year if becomes official.
All tax preparers are required to register and then re-register their PTIN on an annual basis. The PTIN application process opened the end of October for registering and renewing PTINs for the coming tax season beginning on January 17th, 2012. This process can be completed online through the IRS' website. There are several pieces of information that you will need to complete the application and/or renewal process:
• Your Name as listed on your prior year's tax return
• Your address EXACTLY as it was entered from one of your prior 2 years tax returns
• Your filing status from one of your prior 2 years tax returns
• Your current mailing address
• Your supervisors PTIN, if you meet the classification of a "supervised preparer"
• Your tax business information, if you own your own tax business
• Information on any prior felony convictions
The fee for obtaining a new PTIN, if you have never had one before, is $64.25, and the fee for renewing a PTIN that was registered last year is $63.00. The IRS states that preparers should renew their PTIN for the coming year prior to December 31st, 2011.
The IRS plans to use the new PTIN tracking process as a way to ensure preparers are accountable for operating with due diligence on the returns they file. The IRS has stated that annual payouts for fraudulent or erroneous Earned Income Tax Claims are in the Billions of dollars. They are hoping that the new preparer policies will help better educate the preparers and in turn lower error rates and also flush out those preparers that are consciously assisting their clients file fraudulent returns. To oversee the administration of the PTIN process, preparer regulation, education and testing, and preparer discipline, the IRS has created the Return Preparers' Office, headed by David Williams. This unit within the IRS will handle just about everything to do with registered tax return preparers from this point forward.
If you are feeling overwhelmed with the new tax preparer oversight and regulation, please visit Federal Direct Tax Services at www.federaldirecttax.com. We assist setting up your tax business and making sure that you and all of your preparers are properly registered for the coming season. Starting a tax preparation business can be intimidating, but with Federal Direct, we take care of the red tape and let you focus on growing your business.
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