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Tax Preparers Would Pay Fee for ID Number Under IRS Rules (2)

April 15, 2020, 12:48 PMUpdated: April 15, 2020, 4:40 PM

Paid tax returns preparers would again have to pay an annual fee to obtain or renew mandatory ID numbers under proposed IRS regulations.

The proposal follows the D.C. Circuit’s 2019 ruling in Montrois v. United States, which held that the agency could reinstate fees for preparer tax identification number. That ruling resolved a class action brought by a group of tax preparers who challenged the fee.

The IRS in proposed regulations (REG-117138-17) released Wednesday suggested an annual fee of $21, plus an additional processing charge for third-party vendors. The last time preparers had to pay a fee it cost them $33, plus the processing charge.

The IRS requires PTINs for all enrolled agents and paid tax return preparers. Preparers without active PTINs can face penalties under tax code Section 6695.

Under the law and federal guidelines, agencies that provide beneficial services to identifiable recipients can establish user fees to recover the full cost—direct and indirect—of providing those services, the IRS said in the regulations. PTINs allow tax return preparers to use a number other than their Social Security number on tax forms and to prepare returns for compensation, the agency said.

The IRS estimated that the program will cost the agency a total of about $49 million for fiscal years 2020 through 2022. That amount is less than it has been historically for several reasons, including lower contract support costs, the agency said.

Robert Kerr, executive vice president of the National Association of Enrolled Agents, questioned the math the agency used to support the proposed fee. The IRS proposal implies that the agency would need about 120 full-time staffers to oversee the PTIN program, Kerr said.

“Does this make any sense at all?” Kerr, who disagrees with the fee, told Bloomberg Tax.

Preparers have previously said the fee doesn’t make sense because PTINs benefit the IRS as much as they benefit tax professionals by helping the agency monitor preparer compliance.

(Updates with comment from Kerr beginning in the seventh paragraph. A previous version added additional information from the regulations.)

To contact the reporter on this story: Allyson Versprille in Washington at aversprille@bloombergtax.com

To contact the editors responsible for this story: Patrick Ambrosio at pambrosio@bloombergtax.com; Colleen Murphy at cmurphy@bloombergtax.com

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