CPA practitioners sue to stop PTIN fees


Two CPAs have filed suit in the U.S. district court for the District of Columbia, asking the court to stop the IRS from charging fees for issuing preparer tax identification numbers (PTINs), to obtain refunds of fees paid in the past, and to enjoin the IRS from asking for more information than needed to issue preparer tax identification numbers (PTINs) (Steele, No. 1:cv-14-1523 (D.D.C.) (complaint filed). The plaintiffs are asking for class certification for all return preparers who are required to pay the user fee, which they estimate ranges from 700,000 to 1.2 million people.

The plaintiffs claim that the IRS is not authorized to charge a user fee at all because, under 31 U.S.C. §9701, user fees may only be imposed to provide a special benefit. If the IRS is permitted to charge a fee, the plaintiffs argue, it should be limited to the amount it costs the IRS to provide the PTIN—the $14.25 it pays to a third party to provide the number or the $13 it pays for the third party to renew the number, rather than the $64.25 the IRS currently charges for a new PTIN and the $63 it charges for renewals.

Although the IRS claims that the excess fees are intended to be used to pay the costs of the registration cards sent to each preparer, the costs of forms and other guidance provided to preparers, and the costs of tax compliance and suitability checks, the plaintiffs point out that none of this has been done or should be done. No registration cards have been sent, the IRS does not normally charge to issue other tax forms and instructions, and it has not conducted suitability checks because attorneys and CPAs are not subject to those requirements. In fact, CPAs are subject to their own requirements to prove that they are fit and competent.

The plaintiffs also asked the court to enjoin the IRS from asking for more information than is necessary to obtain a PTIN, which they claim should be only the preparer’s name, address, and Social Security number. Currently, Form W-12, IRS Paid Preparer Tax Identification Number (PTIN) Application and Renewal, asks for the preparer’s birth date, email address, felony convictions, his or her federal tax compliance status, professional credentials, and whether the preparer prepares Form 1040, U.S. Individual Income Tax Return, is supervised by someone, and is self-employed or owns a tax preparation business.
Sally P. Schreiber ( ) is a JofA senior editor.


Year-end tax planning and what’s new for 2016

Practitioners need to consider several tax planning opportunities to review with their clients before the end of the year. This report offers strategies for individuals and businesses, as well as recent federal tax law changes affecting this year’s tax returns.


News quiz: Retirement planning, tax practice, and fraud risk

Recent reports focused on a survey that gauges the worries about retirement among CPA financial planners’ clients, a suit that affects tax practitioners, and a guide that offers advice on fraud risk. See how much you know with this short quiz.


Bolster your data defenses

As you weather the dog days of summer, it’s a good time to make sure your cybersecurity structure can stand up to the heat of external and internal threats. Here are six steps to help shore up your systems.