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March 5, 2019


What does the PTIN case holding mean for tax professionals?

The Internal Revenue Service (IRS) requires tax preparation professionals use a Preparer Tax Identification Number (PTIN). The number serves in a similar manner as a Social Security Number, providing a tax preparer with a unique identifier. The IRS states these numbers help tax preparers avoid using their own Social Security numbers when serving clients. Tax preparers take issue with these numbers as they are costly.

The dispute resulted in a recent court case that challenged whether or not the IRS should continue using and charging for PTINs.

A bit of history: In the past, the IRS provided tax prep professionals these numbers free of charge. This began in 1999.

A bit of greed: This changed in 2010. At that time, the IRS started to require tax preparers to get a PTIN. In addition to paying for the number, tax preparers also had to pay an annual fee. This could add up to hundreds of dollars to the IRS every year.

The IRS stated the fees were needed to help pay for the manpower used to monitor PTINs. Tax preparers argue the fees are excessive and just another way the IRS is unfairly scrutinizing their profession.

A lawsuit ensues: Over 700,000 tax preparation professionals took on the IRS, filing suit against the federal agency stating the fees were unlawful.

The tax preparers won their argument in the lower courts, the IRS appealed. The United States Court of Appeals for the District of Columbia Circuit heard the appeal. It ruled in favor of the IRS, stating the agency has authority to charge PTIN fees.

Impact on tax preparers: For now, the IRS has reinstated PTINs — fees and all.

Tax Controversy