PTIN fiasco

[Belgarath]

Has anyone heard anything from "contacts" at either ASPPA or the IRS as to whether the IRS is going to return to sanity on this issue, and not have it apply to 5500 preparers?

[Andy the Actuary]

Please advise -- I'd like my $64.25 back

[Bird]

There's a new reg that says - I think - that EAs and ERPAs will be required to get PTINs and that the fee is reduced to$30 since part of the PTIN fee is for background checking that is done on the EA/ERPA registration/renewal process.

But they haven't said anything about not requiring it for 5500s and I'd be surprised if they did. The best hope is that they will limit it to those primarily responsible.

[Andy the Actuary]

There's a new reg that says - I think - that EAs and ERPAs will be required to get PTINs and that the fee is reduced to$30 since part of the PTIN fee is for background checking that is done on the EA/ERPA registration/renewal process.

But they haven't said anything about not requiring it for 5500s and I'd be surprised if they did. The best hope is that they will limit it to those primarily responsible.

Great, where do I get my $34.25 refund?

[GMK]

Down near the end of this it says:

Individuals who obtained a PTIN prior to Sept. 28, 2010, need to reapply under the new system but generally will be reassigned the same number.

Don't know about getting your $34.25 back though.

From IRS NEWSWIRE

Issue Number: IR-2010-121

Inside This Issue

--------------------------------------------------------------------------------

IRS Releases Proposed Regulations that Would Reduce Enrolled Agent Fees

WASHINGTON — The Internal Revenue Service today released proposed regulations that would reduce fees related to application and renewal for enrolled agents and enrolled retirement plan agents. The reduction is related to the preparer tax identification number requirements implemented last month which establish a new registration process and fee for all return preparers.

The proposed regulations (REG-124018-10) would reduce the fee for application and renewal for enrolled agents and enrolled retirement plan agents from $125 to $30. The reduction reflects the fact that the processes used to review enrollment and renewal of enrollment applications are partially duplicative of the new process for reviewing a PTIN application, which costs $64.25.

Individuals granted status as an enrolled agent or enrolled retirement plan agent must renew enrollment every three years. The renewal schedule is based on the last digit of the individual’s social security number or tax identification number.

Tax professionals and other interested parties have until Jan. 10 to submit comments regarding the proposed regulations.

Delay of Renewal Period for Certain Enrolled Agents

In anticipation of these proposed regulations, the IRS recently announced in Announcement 2010-81 a delay of the renewal period for enrolled agents whose tax identification numbers end in 4, 5, or 6. The IRS is not accepting or processing applications for renewal of enrollment until further guidance is issued.

Individuals who have successfully completed the special enrollment examination may submit an application for enrollment, but the current user fee of $125 must be paid with the application until final regulations reducing the user fee are published in the Federal Register. These individuals also may choose to delay filing an application for enrollment until the user fee is reduced. Individuals who delay filing an application for enrollment may not practice before the IRS until the application is submitted and the Office of Professional Responsibility has granted enrollment.

Reminder of New Registration Requirement for All Return Preparers

The IRS recently launched a new online application system to obtain a PTIN. All paid tax return preparers who prepare all or substantially all of a tax return are required to use the new registration system to obtain a PTIN. Individuals who obtained a PTIN prior to Sept. 28, 2010, need to reapply under the new system but generally will be reassigned the same number.

Applicants must pay $64.25 to obtain or renew a PTIN. Access to the online system is available through the Tax Professionals page on this website. Receipt of a PTIN will be immediate after successful online registration. Or a paper application may be submitted on Form W-12, IRS Paid Preparer Tax Identification Number Application, with a response time of four to six weeks.

For more, see the Tax Professionals page on this website, which features step-by-step instructions and multiple FAQs on the new registration system.

[Guest Sieve]

ATA -- I'll chip in $1. You only have to worry about $33.25 now. If the Blues make the playoffs, I'll pay $2.00.

[Kevin C]

The proposed regulations (REG-124018-10) would reduce the fee for application and renewal for enrolled agents and enrolled retirement plan agents from $125 to $30. The reduction reflects the fact that the processes used to review enrollment and renewal of enrollment applications are partially duplicative of the new process for reviewing a PTIN application, which costs $64.25.

That is saying the ERPA enrollment fee is being reduced because of the new PTIN fee, not the other way around. It doesn't look like that will help actuaries.

[david rigby]

All nonsense. A 5500 is not a "tax return". The IRS should use some common sense.

[Andy the Actuary]

All nonsense. A 5500 is not a "tax return". The IRS should use some common sense.

Yes, but then they wouldn't have contracted with me for a $64.25 annuity!!!

[John Feldt ERPA CPC QPA]

Kevin's right, EA means enrolled agent, not enrolled actuary. So even if they finalize this discount, you may still be on the hook for the full $64.25, at least until retiring from preparing tax returns. This was only proposed, so be sure to properly discount the info until final word is given on the discount.

[Belgarath]

Ok, so down to nuts and bolts. For a preparer that isn't signing the return, such as a TPA preparing a 5500, what are the specific 6694 penalties? It seems to me that it is the greater of $1,000 or 50% of the compensation the firm will receive for the preparation of the form? (I'm discounting willful and reckless.) Is that amount correct? Also, any "feeling" as to how the IRS is going to enforce this? I mean, if there's an incorrect entry on a 5500 form, which doesn't even affect the tax return or claim for refund, then it isn't a "substantial portion" and shouldn't even be subject to the penalty at all, right? I guess what I'm trying to get at is that in spite of all the hoopla about us being SUBJECT to the regulations (which is a rant I've made several times already) it seems that it would only be the rarest circumstance where the penalty COULD even be reasonably applied?

Example - client gives you income - you calculate 25% maximum - turns out client gave you wrong income - you are not then liable for the penalty, right?