The PTIN or Preparer Tax Identification number was created by the U.S. Internal Revenue Service in 1999 to protect the privacy of professionals who prepare tax returns. Earlier, tax preparers were only supposed to sign their tax forms along with their social security numbers, leaving them vulnerable to privacy attacks. Starting from the year 2000, tax preparers were then given the option to use either their SSNs or PTINs. Thereafter, by 2011, all federal tax preparation agents had to register with a small fee to obtain a unique PTIN identification number. Today, PTIN renewal is a necessity if a tax preparer wants to legally complete tax returns, and has to be done every year by paying the same amount as the registration fee.
Today, the IRS pays strict attention during auditing, and the need of a PTIN is amplified by the fact that the IRS has complete authority to disbar any tax preparers who file fraudulent tax returns, and professionals who do not sign with their PTINs are be default targeted to find out fraud transactions.
To keep tax submission a fair and easy process, the IRS has set up many conditions which ones need to be aware of while submitting tax returns. We will try to answer the most important questions on PTIN so you can be ready to submit your tax returns while complying with all regulations.
Why is PTIN needed?
All professional tax preparers and enrolled agents who either prepare or assist in the preparation of a U.S. federal tax return, refund, or claim must register for a PTIN. There are a few exceptions to this rule, and the full list of exceptions can be easily found in the IRS website.
How can I apply for a PTIN?
You can either apply for a PTIN online or complete a paper application and then post it to the IRS. The processing time for a PTIN application is generally between 4-6 weeks.
What is the fee for a PTIN?
You can pay $64.25 as a PTIN fee via either credit or debit card.
Do I need to renew my PTIN?
Yes, you need to renew your PTIN every year by paying the $63 renewal fee.
If I am an active attorney or a public accountant who does not prepare tax returns, then do I need to obtain a PTIN?
PTIN registration is not required by anyone who is not involved, partially or fully, in the preparation and submission of a federal tax return.
Do enrolled retirement plan agents need to apply for a PTIN?
ERPAs once again are only required to obtain a PTIN if they are preparing or assisting in the preparation of a tax return on behalf of their clients. So if, as part of your job as an Enrolled Retirement Plan Agent, you are preparing only Form 5300 or 5500 series, then you do not need to secure a PTIN.
Can multiple individuals or an office business space share one PTIN?
No. Every individual who is taking part in the preparation of a US tax return, claim, or refund, needs to apply for a PTIN separately. A single PTIN is therefore linked to only one person, which leads to better visibility and lesser confusions during auditing.
Can I prepare tax returns for compensation if I don't have a PTIN or have applied for it recently?
Unless you do not have your PTIN with you, you cannot prepare any tax returns legally. This stand for all those professionals who have already applied, but are yet to get their PTIN application processed.
What are the age requirements for obtaining a PTIN?
A PTIN applicant must be over 18 years of age to be considered for PTIN approval.
What sort of penalties can be imposed to tax preparers who do not have a PTIN?
All individuals found to be in violation and not having a valid PTIN will be subjected to the penalties, disciplinary actions, and injunctions mentioned in IRS code section 6695.
What are the differences between PTIN and EFIN? As a tax preparer, do I need both?
There are quite a few differences between PTIN vs EFIN, the biggest one being that while Preparer Tax Identification Numbers are only assigned to individuals, EFINs or Electronic Filing Identification Numbers can be assigned to both individuals as well as firms.
An EFIN is a standard number issued to all those who are authorized and are approved IRS e-filing providers. One the other hand, as explained previously, a PTIN is a unique identification number for a single tax preparer.
Finally, while PTINs have a registration and renewal cost attached to them, EFINs are free.
If, as an employee or a business I prepare tax returns as part of my job responsibilities, then do I need to obtain a PTIN?
No, if you are preparing your employer's tax returns, then you are not required by law to have a PTIN. But, if you prepare other tax returns for compensation along with your employer's, then you need a PTIN.
If I am an intermediate service provider or e-file transmitter who does not prepare returns then do I need to apply for a PTIN?
If, as a part of your job description, you only assist in the formatting and eventual transmission of a tax return, then you do not need a PTIN. At the same time, if you are working on tax returns for compensation and prepare it manually, then you do need a PTIN.
Can the IRS share my PTIN information with other agencies or people?
By law, vendors and other individuals can obtain a PTIN holders listing. This is because under the FOIA (Freedom of Information Act), you cannot opt out of disclosing your personal details. At the same time, if you think you are receiving solicitations either electronically or by mail due to this disclosure, you can approach the Bureau of Consumer Protection for further action. An in-depth PTIN privacy policy is available on the IRS website as well for your perusal.
What happens if I prepare tax returns other than the form 1040 series?
Even non-1040 tax preparers generally need a PTIN. For an exhaustive list of exclusions, please visit the IRS site.
If multiple tax preparers are involved in the preparation for a tax return, then who is required to sign the final tax return along with PTIN?
Under the existing US treasury regulations - Sections 1.6695-1(b) and 301.7701-15(b)(1), an individual tax preparer who holds the primary responsibility for the final tax preparation needs to provide his/her PTIN with the form.
Do non-signing preparers need to disclose even if the returns are finally prepared and reviewed by another individual?
No, non-signing individuals do not need to disclose on the final form. At the same time, such non-signing individuals are still required to have a PTIN, and are helpful if the return on hand is being audited by the IRS.
I do not prepare any Form 1040 returns, but prepare returns which eventually flow through to Form 1040, such as K1 schedules for Forms 1120S and 1065. In this case, how do I answer the question "Do you prepare Form 1040 series tax returns?"
Since your work entails preparing forms which might or might not lead to form 1040, your answer should be No.
If I volunteer during the tax return season as a retired tax professional to help file the returns for low income families, then do I need a PTIN?
No, in such a case, you are not required to obtain a PTIN.
Do I need a Social Security Number to apply for a PTIN?
Ideally, individuals are required to serve up their SSNs while applying for a PTIN. However, in certain cases, wherein due to religion or citizenship status, you might not want to have an SSN, you can provide supplementary documentation to verify your identity and prove your eligibility for a PTIN.
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