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Why did the IRS shut down, then reopen the PTIN system?

 

Effective June 21st, 2017 the IRS resumed the issuance of Preparer Tax ID Numbers (PTIN) without charge. You read that right:  new PTINs are now FREE!  The normal fee to obtain or renew a PTIN was $50 prior to the recent court ruling.

As this lawsuit works its way though the course system, the IRS may be allowed to start charging PTIN fees again.

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Effective June 1st, 2017 the IRS shut down the PTIN system in response to a recent court ruling. Why?

Federal district court ruled the IRS does not have the right to charge fees

IRS Statement on Suspending PTIN Renewals and Issuances

The following statement is posted on the irs.gov site under the Tax Professionals tab:

On June 1, 2017, the United States District Court for the District of Columbia upheld the Internal Revenue Service’s authority to require the use of a Preparer Tax Identification Number (PTIN), but enjoined the IRS from charging a user fee for the issuance and renewal of PTINs. As a result of this order, PTIN registration and renewal is currently suspended.

The IRS, working with the Department of Justice, is considering how to proceed. As additional information becomes available, it will be posted on our Tax Pros page.

Will the IRS refund the PTIN fees paid?

Maybe.  The lawsuit related to this shutdown was brought by 2 CPAs in 2014, who sued the IRS over the PTIN fees on behalf of the over 700,000 tax preparers who pay PTIN fees annually.  Estimates are as high as $245 million in fees charged since the initial 2010 regulations issued for registering tax preparers with PTINS (remember the RTRP program?).

Who is affected by the PTIN system?

Enrolled Agents (EA) are required to maintain a current PTIN, and can use the system to check on the reporting of CPE courses completed.

Annual Filing Season Program (AFSP) participants must also have a current PTIN, and can check on the reporting of CPE courses completed.  

All Tax Preparers:  Anyone who prepares or assists in preparing federal tax returns for compensation must have a valid PTIN before preparing retuns.

CPE Providers approved by the IRS, such as FunCPE who report completed courses to the PTIN system.

What is the PTIN fee used for?

Although originally there was no charge to obtain or renew a PTIN, the fee was as high as $64.25/$64 to obtain/renew a PTIN just prior to November 1, 2015.  As of Novemeber 1, 2015 the annual fee was reduced to $50 for both new and renewed numbers.

The IRS stated that of this $50 fee, $33 is "a user fee to support program costs" and a third party vendor gets the remaining $17 to operate the online system and provide customer support.

Renewing your Enrollled Agent status

No need to be concerned about your EA renewal status, as long as you renew it by your renewal deadline on the Renewal Form 8554.

Renewing your PTIN

Preparers do not need any CE to renew their PTIN. The AFSP program is completely optional, although it does provide some benefits in client represenation.

You should be able to renew your PTIN during the normal renewal period starting November 1st.

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Hope this clarifies the situation, and as usual feel free to contact us if you have any questions about this.  We will update this page if any news comes out from the IRS about the status of the renewal process and fees.

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