FAQs on PTIN Application

Anybody who prepares or aids in the preparation of filing federal tax returns for a fee must possess a valid PTIN renewed for the current year. All enrolled tax return agents must also have a valid PTIN. With respect to obtaining a PTIN, there are several questions that come to mind.

In this article, we have listed some of the very important questions on PTIN across sub-domains, while trying to answer them as correctly as possible. In case you do not find answer to your questions below, please feel free to contact us.

Frequently Asked Questions on Preparer Tax Identification Number (PTIN)

1. Who would need a Preparer Tax Identification Number (PTIN)?

   A Preparer Tax Identification Number (PTIN) should be obtained by any and every enrolled agent and tax preparers who aid in the preparation of U.S. federal tax returns, refunds, claims, or tax forms submitted to the IRS, and are duly compensated for the same. At the same time, an agent does is not required by law to obtain a PTIN if he/she is working on the below mentioned documents -

   • Form 3115
   • Form 8717
   • Form 906
   • Form 8508
   • Form 2848
   • Form 8288-A
   • Form SS-16
   • Form 8288-B
   • Form SS-4
   • Form 8027
   • Form SS-8
   • Form 4419
   • Form 5307
   • Form 4361
   • Form 5300
   • Form 4029
   • Form 5310
   • Form 872
   • Form 8942
   • Form 870
   • Form 8821
   • Form W-8BEN
   • Form 8809
   • Form W-7

2. Are only active attorneys and public accountants (who are certified) supposed to get a PTIN, in a scenario where they don't prepare all or any tax return?

   Certified public accountants, as well as attorneys are not required to get a PTIN. They will need it only if they take undertake the process for compensation of a federal tax return file or claim for a refund.

3. Do agents, who are enrolled as retirement plan agents, need to get a PTIN?

   Usually, agents who are "enrolled retirement plan agents" need to obtain a Preparer Tax Identification Number, only if they prepare or aid in the preparation of all or substantially all those items that are not present on the list of forms which are exempt from the PTIN requirement.

4. Is it possible for many individuals or one office to share a single PTIN?

   No. Every individual person who prepares or aids in the preparing of a tax return or claim for refund, for compensation of course, must have his / her own PTIN. It is necessary to keep in mind that every preparer of tax return can obtain only one PTIN, which cannot be shared with other preparers.

5. I do not have a PTIN. Will I still be able to prepare tax returns for compensation?

   No. You first need to obtain a PTIN to prepare tax returns for compensation.

6. Are there any limitations on the age for obtaining a preparer tax identification number?

   Yes, there is an age limit of 18 years. An applicant must be aged 18 years or above to obtain a PTIN.

7. What are the different consequences that one needs to face when they file tax returns for compensation without a current PTIN?

   Non-availability of a current PTIN may lead to the strict imposition of Internal Revenue Code section 6695 penalties, as well as injunctions, and/or a disciplinary action by the IRS Office of Professional Responsibility.

8. Is there any difference between a PTIN and an EFIN? Is it essential for a preparer to have both?

   There are quite a few differences between PTIN and EFIN. The IRS issues a Preparer Tax Identification Number (PTIN) to preparers of paid tax returns. It is referenced to as the identification number of a tax preparer, which is should be entered in the "Paid Preparer" section of a tax return form. An annual fee of $50.00 has to be borne by the preparer for securing a PTIN.

   On the other hand, an EFIN stands for an Electronic Filing Identification Number. This is also issued by the IRS. However, it is issued to those firms or individuals who have been recognized or approved as authorized IRS e-file service providers. This number is applicable when an electronic return is filed. The data of the preparer and filing individual or firm is transmitted to the IRS.

   You must note that there is no fee involved for securing an EFIN. Another thing to note in PTIN vs. EFIN is that a PTIN is issued to individuals only, whereas an EFIN is issued to individuals as well as firms.

9. In case an employee of an organization or business is preparing the tax returns for the organization, as part of his/her job responsibility, then does the employee need to secure a PTIN?

   No, there is no need for an employee to obtain a PTIN, because an employee is not required to sign as a paid preparer when filing the federal tax returns for his employer or organization. However, if the same employee prepares and files federal tax returns for other companies, for a fee, then the employee has to register and obtain a PTIN for the same.

10. There are some e-file transmitters or intermediate service providers in the market who usually do not prepare returns. Are they also supposed to obtain a PTIN or are they exempted from obtaining a PTIN?

    No, they are not required to get a PTIN because they only assist in the formatting and transmission of federal tax returns in an electronic format. They cannot prepare a federal tax return file, or even file a claim for refund for a fee.

11. Does the IRS share a preparer's information in a PTIN application with others?

    Those who obtain a PTIN cannot claim to conceal their contact information or refuse to disclose their information with others because as per the laws of the Freedom of Information Act (FOIA), all their information is public. For more details, a preparer with a PTIN can refer to the Privacy Policy of a PTIN application on the IRS website.

12. Other than the Form 1040 series, what are the other requirements for people who prepare federal tax returns?

    Preparers of Non-1040 returns usually are required to obtain a PTIN, unless they fall in one of the categories as mentioned in the first question.

13. In a scenario where many paid preparers are involved in the preparation of a return, or the review of a return, who has the authority to sign the returns?

    As per the existing Treasury regulations under sections 1.6695-1(b) and 301.7701-15(b)(1), every individual tax return preparer, who has the primary role of being responsible for the overall preparation and accuracy of a return, is the signing tax return preparer. As per the requirements of the PTIN, all the preparers must have or obtain a PTIN.

14. In case of many preparers who are involved in preparing returns, is the information of non-signing preparers disclosed for each return?

    The names and information of non-signing preparers are never disclosed. However, they are required to have a PTIN.

15. If an individual does not prepare Form 1040 returns, but prepares returns for Schedules K-1 for Forms 1065 or 1120S, then is that individual perceived to be preparing Form 1040 series tax returns?

    No.

FAQs on Different PTIN Scenarios

1. In the event of a company hiring a bookkeeper who gathers receipts and invoices and records all the necessary information in one place, despite the presence of a tax return preparer, would the bookkeeper need to obtain a PTIN?

   Since the bookkeeper is only assisting the tax return preparer, he/she does not need to obtain a PTIN.

2. During every tax filing season, a tax return preparer employs two interns from a local college to help with various activities like performing data entry tasks, and assembling and processing all the information of clients. In such a case, do the interns need to obtain a PTIN?

   No, they do not need a PTIN since they are not preparing the tax returns.

3. In a similar scenario like the previous one, the tax preparer asks the interns to perform tasks such as preparing the Form 1040-EZ. However, the interns do not sign the returns. Do they still need to obtain a PTIN?

   Yes, the interns should obtain a PTIN because this time around they are preparing tax returns, even though they are not signing the returns. One must have a PTIN to prepare tax returns.

4. If there is an administrative assistant who performs tasks like data entry during a tax filing season, as well as records all the information in the system, but does not sign the returns; does the administrative assistant still need to obtain a PTIN?

   No, since the administrative assistant is not preparing the tax returns, there is no need to obtain a PTIN.

5. A retired tax professional volunteers to help during the tax filing season by preparing individual tax returns for lower-income individuals without charging a fee. Does he need to obtain a PTIN?

   No

6. In a small software-based tax return preparation firm, 4 associates are hired to help taxpayers by taking them through a step-by-step software program to draft a tax return. They do not check and sign the final returns. Do these 4 associates need to obtain a PTIN?

   Further analysis of this situation is required to ascertain whether the 4 associates need to obtain a PTIN or not. It depends on the circumstances prevalent in the firm. At the same time, one must remember that in case an individual prepares or aids in preparing all or substantially all of a tax return, then that individual must obtain a PTIN.

7. A reporting agent prepares Forms 94X series returns for clients for a fee. However, he does not exercise discretion or judgment on the underlying tax positions of clients. He also does not provide any tax advice to clients. Does the reporting agent need to obtain a PTIN?

   No. As per the PTIN regulations, the definition of a tax return preparer is clearly carved out. Reporting agents who do not exercise any discretion or judgment on their clients' underlying tax positions, are not tax return preparers. Hence, they do not need to obtain a PTIN.

8. A reporting agent prepares Forms 94X series returns for clients for a fee. Occasionally, the reporting agent also helps clients address issues related to determining whether the clients' workers are employees or independent contractors. Does the reporting agent need to obtain a PTIN?

   Yes. As per the PTIN regulations, all preparers of tax returns, who do it for a fee, even if it is only for assisting in the preparation of tax returns or refunds, have to obtain a PTIN.

9. A retirement plan administrator prepares Forms 5500 and the associated schedules for clients. He also prepares Forms 8955-SSA and Form 5558. The Form 5500 series returns belong to the list of forms that are exempt from the PTIN requirements. So, in this case, would the retirement plan administrator need to obtain a PTIN?

   No, because Form 5558, Application for Extension of Time to File Certain Employee Plan Returns, and Form 8955-SSA, Annual Registration Statement Identifying Separated Participants with Deferred Vested Participants, are for the purposes of Notice 2011-6, part of the "Form 5500 series" of tax returns.

10. Does a certified public accountant or an attorney should get a PTIN in a scenario where they only advise a client on an issue related to a claim or refund?

    Yes, certified public accountants or attorneys do need to get a PTIN if they are preparing all or substantially all a return or a tax refund. However, it is important to note that as per the authority of section 1.6109-2(h), an attorney or certified public accountant will not be required to obtain a PTIN if they only advise a client regarding a claim for refund.

11. A firm prepares only Forms 2290 for its clients for a fee. In this scenario, would the employees of the firm need to be subjected to any of the new regulations?

    Yes, any individual who prepares Forms 2290 for a fee or compensation has to register with the IRS in order to get a PTIN.

12. If an individual only prepares or aids in preparing Form 1023 for a fee, then should he/she apply for PTIN?

    In most cases the answer is yes. For more information please have a look at the exemptions answered in Question 1.

13. An individual who owns a tax preparation firm, reviews and signs all the returns prepared by the employees of the firm. Do the employees need to obtain a PTIN?

    Yes, they need to obtain a PTIN because anyone who is hired to prepare tax returns needs to have a PTIN.

Outsource Financial and Tax Services to Outsource2india

At O2I, we have helped thousands of businesses both large and small file for tax returns with the help of our extensive Tax Preparation Services. These FAQs on Preparer Tax Identification Number (PTIN) is a small indication of the expertise we have in the field of tax preparation and tax filing. Our team of experts can assist you in various stages of the tax cycle, while ensuring complete in-house servicing of your finance and accounting requirements.

Also, read FAQs Frequently Asked Questions on SSN Requirements for Obtaining a PTIN. Contact us to outsource your accounting requirements and benefit from our bespoke services.