PTIN for Tax Practitioners

Paid preparers are required to include either their SSN or Preparer Tax Identification Number (PTIN) in the signature block of returns they prepare.  The original purpose of the PTIN was to eliminate the need for the preparer to include his or her SSN on the return and eliminate the potential for identity theft.

With the advent of the new national tax preparer registration, the PTIN will take on a new role; that of the registration number for tax preparers.  The SSN can no longer be used as the ID number for a preparer after the close of 2010.

Beginning approximately September 1, 2010, ALL tax preparers including CPAs, Enrolled Agents (EAs) and Attorneys will be required to register with the IRS.  It is anticipated that a notice and instructions for registration will be sent to all known preparers during August.  As part of that registration, the IRS will assign each successful registrant a PTIN if they do not already have one.  If the registrant already has a PTIN, they will include it with registration and it will be assigned as the registration number.  One would assume those PTINs already issued but not included in the new registration process will be cancelled.  At the conclusion of the registration process, only preparers with registered PTINs will be allowed to legally prepare a tax return.

The question arises whether a preparer who does not already have a PTIN should acquire one before the registration process begins.  A concern when applying for the PTIN now is if it will be timely issued or will your registration be delayed waiting for the PTIN.  Sources indicate it take about 6 weeks to obtain a PTIN using form W-7P or through e-services.  If this is true, then theoretically, one could apply for a PTIN between now and July 15 and have it in time to register at the beginning of the initial September through December 31, 2010 registration period.  On the other hand, it may be appropriate to simply wait and have the number assigned during the registration process. The following Q&A was posted on the IRS website (dated 5/26/2010):

Question - Because a Preparer Tax Identification Number (PTIN) is going to be mandatory in the future, can I go ahead and get one now?

IRS Website Answer - Yes, you may obtain a PTIN if you do not already have one and begin using it now. However, once the new online preparer registration system becomes available, you will still need to register and pay a fee. The system will ask if you already have a PTIN and it will reassign you the same number.  To apply for a PTIN now, you can apply by using e-Services – Online Tools for Tax Professionals or by filing Form W-7P, Application for Preparer Tax Identification Number. Online applications are processed faster, and return preparers are encouraged to apply online.

So that none of you CPAs, EAs or Attorneys who read this article get too excited...although you will be required to register (and pay a registration fee estimated between $100 and $200), you will not be subject to the examination unlicensed preparers will have to pass sometime before they can register at the end of the 3-year registration cycle.  Neither will you be subject to the CPE requirement for unlicensed preparers but will continue to meet the CPE requirements of your professional designation.