IRS PROPOSES PTIN FEES
The IRS proposed (REG-139343-08, issued July 23, 2010) to begin charging all authorized tax preparers a $50 user fee to obtain or renew annually a preparer tax identification number (PTIN). The fee would be on top of a fee charged by a third-party vendor that will administer the application and renewal process. On Aug. 19, the IRS said (IR-2010-91) the additional fee will be $14.25.
The vendor, Accenture National Security Services, will administer the PTIN application and renewal process and maintain a Web-based database that individuals will use to apply for and renew PTINs.
The proposed regulations were part of the IRS’ push to establish a comprehensive regulatory regime applicable to all paid preparers by the beginning of next tax filing season. For taxpayers who are not CPAs, attorneys or enrolled agents, the requirements will include testing and continuing education. For the IRS’ plan, see Publication 4832, Return Preparer Review, at irs.gov. Both signing and nonsigning preparers will be required to use a PTIN, which will be issued only to CPAs, attorneys, enrolled agents and preparers who qualify under the new category of registered return preparers.
The AICPA’s advocacy team and member- based committees have held numerous meetings and filed extensive comments with the IRS and are in the process of reviewing the proposed regulations.
Current law and regulations require only that paid preparers signing a tax return include an identifying number, which may be either a PTIN or a Social Security number. Currently, PTINs are obtained directly from the IRS without any fee and may be used indefinitely without renewal.
TIGTA: ACCURACY-RELATED PENALTIES NEGLECTED
Accuracy-related penalties as part of IRS correspondence tax audits could increase after the Treasury Inspector General for Tax Administration found that examiners seldom assessed penalties they could have or documented that they considered doing so (audit report 2010-30-059, June 4, 2010).
In 92% of the correspondence audits TIGTA sampled, examiners did not follow IRS policies and procedures indicating they should have at least considered assessing an accuracy-related penalty. TIGTA estimated that the government thus may have failed to assess an estimated $3.5 million in penalties and interest from the 1,851 taxpayers included in the review sample.
The section 6662 accuracy-related penalty may be assessed when a taxpayer’s negligence or disregard of rules or regulations results in a tax deficiency, or when the underpayment is substantial. The penalty amount is 20% of the understatement.
In response, the IRS said it would train examiners in imposing the penalty and emphasize it in managerial reviews.
LAST CHANCE FOR SMALL CHARITIES
The IRS has offered relief to small nonprofit organizations facing revocation of their tax-exempt status because they had not filed required information returns for the past three years.
Affected organizations must act by Oct. 15, 2010, to take advantage of the one-time offer to file required information or past-due returns, the IRS announced July 26, 2010 (IR-2010-87). The smallest organizations, which must file Form 990-N, Electronic Notice (“e-Postcard”), may simply go to the IRS website (tinyurl.com/352coqa) and fill in the eight current items of basic information required (including a certification that their annual gross receipts are normally $25,000 or less and they are thus eligible to file by e-Postcard) and submit it electronically without penalty. Organizations eligible to file Form 990-EZ must do so for the past three years and pay a compliance fee on a sliding scale based on 2009 gross receipts. (For eligibility thresholds, which changed each year from 2007 to 2010, see tinyurl.com/43s3kf.) Relief is not available for larger organizations required to file the full Form 990 or for private foundations.
More from the JofA: