Plaintiffs say the $64.25 first-time fee and $63 annual renewal provide no special benefit under federal law.
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 PTINs. The plaintiffs are asking for class certification for all return preparers who are required to pay the user fee, which they estimate includes between 700,000 and 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. Section 9701, user fees may be imposed only 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, nor, they contend, should it be done. No registration cards have been sent, the IRS does not normally charge to issue other tax forms and instructions, and the IRS 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 birthdate, email address, any 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.
- Steele, No. 1:cv-14-1523 (D.D.C.) (complaint filed)
By Sally P. Schreiber, J.D., a JofA senior editor.