New PTIN Requirement

[Andy the Actuary]

ASPPA ASA indicated:

"A tax return preparer is any individual who is compensated to prepare, or assist in preparing, all or

substantially all of a tax return or claim for refund.

This includes Form 5500 preparers

."

In reviewing IRS announcements regarding who will need to obtain a PTIN, I do not note where 5500s are mentioned. If I have overlooked the obvious, would appreciate someone pointing out where. The 5500 is an information, and not a tax return.

[pmacduff]

Andy - It's almost as if they are deliberately not mentioning...did you see this in the most recent IRS Plans News (note the "revised" date):

"8. Does the PTIN requirement apply to individuals who only prepare payroll or other non-1040 series returns? (revised 9/28/10)

Yes. All paid tax return preparers are required to obtain a PTIN."

I was thinking today that perhaps although it is an informational return the 5500 series still falls in the "tax return" category? Who knows.

It would be nice if the IRS and/or DOL would post something definitive with regard to the 5500 series of forms in relation to the PTIN requirements!!

:angry:

(the emphasis is mine)

[Belgarath]

The only place I ever saw it stated "definitively" was in IRS Notice 2008-13. You might want to read it if you want your blood pressure to rise. Two excerpts below. Mind you, as in my other posts on this subject, I think it is ridiculous.

Until further guidance is issued, solely for purposes of section 6694, an information return listed on Exhibit 2 that includes information that is or may be reported on a taxpayer's tax return or claim for refund is a return to which section 6694 could apply if the information reported constitutes a substantial portion of that taxpayer's tax return or claim for refund. A person who for compensation prepares any of the forms listed on Exhibit 2, which form does not report a tax liability but affects an entry or entries on a tax return and constitutes a substantial portion of the tax return or claim for refund that does report a tax liability, is a tax return preparer who is subject to section 6694.

Exhibit 2 - Information Returns That Report Information That is or May be Reported on Another Tax Return That May Subject a Tax Return Preparer to the Section 6694(a) Penalty if the Information Reported Constitutes a Substantial Portion of the Other Tax Return

Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding;

Form 1065, U.S. Return of Partnership Income (including Schedules K-1);

Form 1120S, U.S. Income Tax Return for an S Corporation (including Schedules K-1);

Form 5500, Annual Return/Report of Employee Benefit Plan;

Form 8038, Information Return for Tax-Exempt Private Activity Bond Issues;

Form 8038-G, Information Return for Government Purpose Tax-Exempt Bond Issues; and

Form 8038-GC, Consolidated Information Return for Small Tax-Exempt Government Bond Issues.

[pmacduff]

Although I agree about the "ridiculousness" I do admit I wasn't thinking of the tie-in between the 5500 and the client's deduction on the 1120 - I suppose that make some miniscule amount of sense to me now but it is Friday afternoon.....

[Andy the Actuary]

Don't understand the tie-in. Actuary performs valuation and determines maximum deductible but client does not submit 5500. Is the deduction invalid even though actuary shows development of maximum in report (which also shows development of minimum)?

[BeanCounterBlues]

AICPA prepared an excellent and lengthy comment letter to IRS on this very subject (I am a CPA) and is requesting IRS exempt 5500 preparers from the requirement (amongst a lot of other comments). Makes zero sense for a 5500 only preparer to have to pass a 1040 competency exam, but right now those are the rules. Hopefully they will be changed. I feel for the 5500 community (as someone whose practice is mostly 5500).