Preparer Tax Identification Number (“PTIN”) – Attention: Estate, elder care and other attorneys

If you expect to sign any (and I do mean ANY – there is no de minimus rule) Federal tax return for which you receive compensation, you need a PTIN (Preparer Tax Identification Number) from the Internal Revenue Service (“IRS”). If your answer is ‘no,’ you can skip the rest of this alert.
Certified Public Accoun­tants and non-licensed storefront tax preparers seem to be aware of this new IRS initiative but my experience over the last month from speaking with fellow attorneys is that many never have heard about a PTIN (which has been in existence for many years but was not required for tax preparation) and the rules announced by the IRS on September 28, 2010 requiring all compensated tax preparers (and, in many cases, many of their employees such as paralegals) to register with the IRS before the tax preparer signs and files his/her first tax return on or after January 1, 2011.

This author has had a PTIN for many years from the time that it replaced the need to include a tax preparer’s social security number on the income tax return. There is no telling how many clients have their tax preparer’s social security number on tax returns prepared in the pre-internet age. You still may be using your social security number when you sign off on the Federal Estate Tax Return (706) or Federal Gift tax Return (709) prepared by you or someone in your office. Well, that era is closing fast.

While you are encouraged to continue reading this article, here is the IRS link for you to obtain your first (and only) PTIN or ‘refresh’ (a new IRS term) an existing PTIN. You are not required to enter your current PTIN when registering but ‘refreshing’ professionals will be assigned the same number they have had providing all of the newly submitted information matches what the IRS already has on file. article/0,,id=210909,00.html

Since you can’t copy and paste the above unless you’re reading an online version of this article, you can go you; click on the tab that says “Tax Professionals;” and drill down and around until you find the “Sign Up Now” information. I’ll call some oddities to your attention later in this article but otherwise it’s a pretty easy procedure. You will need to have certain information available before you go through the process but you’ll be alerted to that fact before you begin. If you choose not to file online, you can access new form W-12 (IRS Paid Preparer Tax Identification Number (PTIN) Application) which was issued in September and (already) revised in October. Make sure to use the October 2010 edition if you are doing a paper application. Did I mention that I have four inches of material since this process began? That’s the thickness as I write what you are reading. The IRS alerts you that a paper application will take 4-6 weeks to process. For some readers, that may be too long to wait. I registered on the first day that it could be done online – September 28th. The online process should be instantaneous although for me, who was ‘refreshing’, it took the IRS six days to compare my submission to what it already had on file for me. My approval arrived, via email, on Sunday, October 3rd. I suspect that length of time to dissipate as the process evolves. On October 15th, I received a postcard from the IRS (not that envelope with the eagle on the front connoting an audit or unexpected assessment) saying that if it wasn’t me who created my PTIN online account, I should immediately contact the PTIN telephone hotline (see below). This is just an IRS precaution to make sure that it was really me who applied for the PTIN and not some nefarious prankster who had all of the necessary information to apply in my name. Well, I’m all set come January 1st. Now let me help you get set.

Here is what you’ll need to begin:
Your Social Security Number.
Personal information (name, mailing address, date of birth).
Business information (name, mailing address, telephone number). This line is completed only by self-employed practitioners or individuals who are owners, partners or officers of a tax preparation business.
Your name, address, and filing status EXACTLY as it appears on the most recent individual income tax return filed by you.
Explanations for any felony convictions in the past 10 years (Hopefully you can check ‘none’).
Explanations for problems with your U.S. individual or corporate tax obligations.
Credit or debit card for the $64.251 PTIN user fee (When the author applied, AMEX was not accepted. That still may be the case when you apply. Have your Visa, MasterCard, or Discover or debit card available.)
Your CAF (Central Authorized File) number. That’s the number that you put on tax powers of attorney. If you do not know this number, it should not prevent you from obtaining a PTIN but if you think that you have one, it’s best to include it.
If applicable, any U.S.-based professional certification information (CPA, attorney, enrolled agent, enrolled retirement plan agent, enrolled actuary, certified acceptance agent, or state license) including certification number and state of issuance. If you don’t list your professional license number, you will be treated as a tax preparer who is subject to the new IRS test-taking and continuing education requirements. If you have dual licenses (e.g., attorney and CPA), each is to be entered on the application.
If you still have a question, you can call an IRS PTIN specialist at 1-877-613-PTIN (7846)

Why Compensated Tax Preparers Need a PTIN
All tax preparers are governed by Treasury Department Circular 230 “Regulations Governing the Practice of Attorneys, Certified Public Accountants, Enrolled Agents, Enrolled Actuaries, Enrolled Retirement Plan Agents, and Appraisers before the Internal Revenue Service” ( Failure to comply with Circular 230 can lead to suspension from practice before the Internal Revenue Service and penalties. The final PTIN regulations were published in the Federal register on September 30, 2010.2 The aforementioned regulations expand the reach of Circular 230 to all compensated tax preparers.

Your Employees Who Are Not Attorneys, CPAs, or Enrolled Agents
It’s back to test-taking3 for these people. Initially (but not until sometime in 2011) two types of tests will be offered. One test will cover wage and 1040 non-business tax returns and the second type will cover wage and 1040 small business tax returns. There is no mention in the regulations about a test for estate (assuming that Congress refreshes the estate tax) and gift tax returns. Nevertheless a PTIN will be required. In Frequently Asked Questions, the IRS has said that “The IRS will issue additional guidance or instructions for other tax returns.”4 There is some discussion of possibly changing the PTIN requirement for non-signing employees who work for a law firm or accounting firm under the direction of an attorney or CPA.5 In addition to the test, ‘registered tax return preparers’ will be required to take 15 hours of continuing education courses in each ‘registration’ year.6 This is not the same as a calendar year. Three of those 15 hours must be for a federal tax law update and two of those hours must be for tax-related ethics topics. Just as we (attorneys) do, Registered Tax Return Preparers must keep records (proof) of their compliance with the continuing education rule. Attorneys, CPAs, and enrolled agents are exempted from the Circular 230 continuing education requirement. Whew! New York Attorneys already need 12 hours per year and New York CPAs need 24 specialty hours or 40 non-specialty hours of continuing education each year.

Any “…individual who is compensated for preparing, or assisting in the preparation of, all or substantially all of a tax return or claim for refund of tax…7 must have a PTIN. The word substantially is troubling. It lacks definition although the regulations do give some examples. Observation: If in doubt, register. The preamble to the regulations states that the employer identification number (not the PTIN) of others who were relied on “for the … substantive accuracy of the preparation of the tax return or claim for refund” (e.g., subcontracted work) must be included on the tax return8 (possibly resulting in a new form to be associated with the client’s tax return). That leads to an interesting observation. Where an accounting firm retains a law firm (or a law firm retains an accounting firm) to provide specialized tax advice for a tax return that the accounting (or law) firm is preparing, how will it look to the client, fee wise, when he, she or it sees one or more such listings? Currently, it will not be necessary to list, on the tax return, the PTINs of all of your employees who work on a tax return but as has been stated, they all need a PTIN.

A piece of trivia: I started preparing payroll and simple income tax returns at age 13 for my CPA father. Under the upcoming PTIN rules, I could not substantially help him since a PTIN cannot be issued to anyone under the age of 18.

Special PTIN application rules apply to foreign (non U.S.) tax preparers who do not have a U.S. social security number, and to conscientious religious objectors without a social security number.9 There will be a public database of return preparers. Currently, a PTIN will need to be renewed annually, and a user fee paid, on the anniversary date of the issuance of the PTIN.10

If you walk away from your computer during the registration process (as I did to attend to another business matter for 15 minutes), you will get knocked off the site. The good news is that when you sign back in, you won’t need to re-enter information previously entered. It will have been saved.

On the online application under “Addresses,” the Permanent Mailing Address area accepted my 9 digit zip code but in the area for the Address used on my U.S. Individual Tax Return, the 9 digit zip code was rejected and only my 5 digit zip code was accepted (even though my tax return includes my 9 digit zip code).

For those thirsting for more detailed information, you can visit Google, Bing, Wikipedia, or your favorite search engine.

Alan E. Weiner, CPA, JD, LL.M. is Partner Emeritus of the CPA firm of Holtz Rubenstein Reminick LLP, with offices in New York City and Melville, Long Island.

S1. $50 is the IRS portion of the user fee and $14.25 will go to the third party vendor (Accenture) administering the program. The total fee may change in the future as the program matures.
2. Federal Register/Vol. 75, No. 189, Page 60309
3. See Frequently Asked Questions on the IRS website. Testing is expected to begin in mid-2011; al-though an applicant can take the test an unlimited number of times, a fee will be charged each time; applicants who have a valid PTIN when testing begins will have until December 31, 2013 to pass the test; the test is taken at a designated testing site.,,id=218611,00.html PTIN FAQs are updated frequently.