PTIN System remains in Limbo

[Koss]

As noted in an earlier thread, the IRS has filed a motion to suspend the injunction that bars the IRS from enforcing the RTRP regulatory scheme.

Here's some news published by the tax education program at The Ohio State University:

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UPDATE ON RTRP COURT CASE:

By Larry R. Gearhardt, OSU Field Specialist in Taxation and Director of Tax Schools

On Thursday, January 24, Preston Benoit, Deputy Director, Return Preparer Office, spoke at the NPL Liaison meeting. He indicated that the IRS filed a motion to suspend the injunction... A timetable for a decision by the Court is unknown. If that motion is denied, the IRS intends to pursue other means of overturning the injunction.

Mr. Benoit noted that the IRS has suspended the PTIN program as well as the testing and continuing education requirements for RTRPs. Even though the Court’s opinion does not directly address the PTIN issue, the IRS suspended the PTIN program because IRC Sec. 6109 and regulations demonstrate the complex tie-in between the injunction and PTINs. There is currently no guidance to tell preparers whether to use old PTIN numbers or no numbers at all. Hopefully, some guidance will be issued before January 30, the beginning of filing season.
- - - - -

Here’s the issue:

The treasury regulations (26 CFR 1.6109-2) say that tax return preparers must have a PTIN, and must enter the PTIN on any return they prepare after 12/31/2010.

The same regulations also say that in order to obtain a PTIN, a tax return preparer must be an attorney, CPA, enrolled agent, or registered tax return preparer.

The federal district court’s injunction bars the IRS from regulating tax return preparers. The ruling means, among other things, that a person does not have to be a “registered tax return preparer” in order to prepare tax returns. The very definition of this term has been declared invalid. Right now, there is no such thing as a registered tax return preparer.

It would seem, therefore, that unless the injunction is stayed during the appeals process, the IRS will have to change the regulations, and do one of three things:

(1) begin issuing PTINs to anyone, without the application of the testing and CE requirements, or

(2) allow tax return preparers to prepare and file returns without an “identifying number,” or

(3) allow tax return preparers to prepare and file returns without a PTIN, and use their SSN as an identifying number

or some combination of the above.

The court’s decision has rendered invalid the treasury regulations that determine who is allowed to have a PTIN. And they haven’t figured out how to address this yet.

BMK

[Bees Knees]

It would seem, therefore, that unless the injunction is stayed during the appeals process, the IRS will have to change the regulations, and do one of three things:

(1) begin issuing PTINs to anyone, without the application of the testing and CE requirements, or

(2) allow tax return preparers to prepare and file returns without an “identifying number,” or

(3) allow tax return preparers to prepare and file returns without a PTIN, and use their SSN as an identifying number

or some combination of the above.

IRS is not going to walk away from the PTIN requirement. The IRS already has the statutory authority to require tax return preparers to use a Preparer Tax Identification Number (PTIN) when signing a return. IRC §6109(a)(4) says: "When required by regulations prescribed by the Secretary...Any return or claim for refund prepared by a tax return preparer shall bear such identifying number for securing proper identification of such preparer, his employer, or both, as may be prescribed..." The code says a taxpayer can use his Social Security number as his identifying number, but does not say the same for a tax preparer. Thus, the code clearly allows the IRS to issue regulations concerning the use of PTINs by paid preparers. In Brannen, 11th Cir., June 7, 2012, the Court of Appeals cited this statute when it ruled the law authorizes the IRS to require that a tax return preparer use a PTIN assigned by the IRS, and that the IRS can charge a user fee for obtaining such a number.

Thus the only logical solution if they can’t overrule the court is #1, allow preparers to obtain PTINs without any testing or CE requirements.

[Koss]

PTIN Regulations

The IRS certainly has the authority to require preparers to obtain and use a PTIN.

I am familiar with the Brannen case. In principle, I agree that the IRS can charge a fee for issuing and renewing a PTIN.

However, the IRS only began to charge fees for the PTIN when they rolled out the "regulatory scheme" for RTRPs.

If the fee is part of a larger scheme that is unlawful, then the fee itself may be unlawful. The IRS can charge a fee, but it can't be arbitrary and capricious. When the appeals court issued its ruling in Brannen, the RTRP regulations had not been declared invalid.

If the fee was imposed for the purpose of funding the RTRP regulatory scheme, then the IRS no longer has any reasonable basis for collecting the fee.

If the injunction in the Loving case is suspended during the appeal, the IRS will have the whole system back up and running very quickly. I think they're really just waiting to see what happens.

The IRS has asked the District Court--Judge Boasberg--to suspend its own injunction while they appeal. If Boasberg refuses to do that, the IRS can then ask the appeals court to suspend the injunction. If that fails, they can go to the US Supreme Court--just on the issue of whether the injunction is suspended while they pursue an appeal.

As we observed in earlier threads, in practice, the IRS was already issuing PTINs without enforcing the CE or testing requirements. They don't have to pass the test until 12/31/13, and the IRS recently announced that those who had not complied with the CE requirement in 2012 would still be allowed to renew their PTIN and prepare returns in 2013. This is likely to influence the courts as they decide whether to suspend the injunction.

BMK

[taxxcpa]

Ptin

I hadn't realized it until someone mentioned it the other day, but there is NO place on the Form 1040 for a preparer to enter his SSN. The only ID to be entered is the PTIN

[LCP]

What's the latest?

.... particularly with regard to CPE requirements ??

[taxea]

Lets correct a misstatement...the PTIN system is not in limbo...just the the testing and continuing education requirements for RTRP portion. We are all still required to have a PTiN in order to ELF.

[Bees Knees]

Lets correct a misstatement...the PTIN system is not in limbo...

At the time the original post was posted, the PTIN system was in fact in limbo, so it was no misstatement. If you recall (or perhaps not), the PTIN system was taken off line by the IRS after the court ruling, around the time Koss started this thread.

You need to put some historical perspective in your comments before going back in time to comment on an old thread.

[DonPriebe]

Not exactly

Lets correct a misstatement...the PTIN system is not in limbo...just the the testing and continuing education requirements for RTRP portion. We are all still required to have a PTiN in order to ELF.

We are required to have a PTIN in order to prepare a return for compensation, even if that return is eventually mailed in.

[taxea]

At the time the original post was posted, the PTIN system was in fact in limbo, so it was no misstatement. If you recall (or perhaps not), the PTIN system was taken off line by the IRS after the court ruling, around the time Koss started this thread.

You need to put some historical perspective in your comments before going back in time to comment on an old thread.

I base my posts on research I have done....if you disagree with my post....do the research. I stand by the PTIN requirement was never in limbo, only the RTPR was.

[Bees Knees]

I base my posts on research I have done....if you disagree with my post....do the research. I stand by the PTIN requirement was never in limbo, only the RTPR was.

From the original post by Koss:

Mr. Benoit noted that the IRS has suspended the PTIN program as well as the testing and continuing education requirements for RTRPs. Even though the Court’s opinion does not directly address the PTIN issue, the IRS suspended the PTIN program because IRC Sec. 6109 and regulations demonstrate the complex tie-in between the injunction and PTINs. There is currently no guidance to tell preparers whether to use old PTIN numbers or no numbers at all. Hopefully, some guidance will be issued before January 30, the beginning of filing season.

• PTIN suspended by IRS….
• No guidance to tell preparers whether to use old PTIN numbers or no numbers at all...

Suspension is another word for limbo.
No guidance is another way to say something is in limbo.

Seems to me you are the one that should be doing the research.

[LCP]

Limbo schmimbo ......

..... anybody got anything on CPE requirements?

[Bees Knees]

..... anybody got anything on CPE requirements?

Its in limbo.

[Gary2]

Its in limbo.

I've hurt my back, and can't do the limbo anymore. Is there an ADA exemption?

[JohnH]

The only ADA exemption I'm aware of in this case is for those who are "circumferentially challenged"

[AZ-Tax]

Yet the IRS still have this website active

Its in limbo.

Yet the IRS still has this website active as least for now.

http://www.irs.gov/Tax-Professionals/Overview-of-Tax-Return-Preparer-Requirements