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"Nonsigning" Tax Return Preparers Required to Register with the IRS to Obtain a PTIN

January 2011

In recent months, tax return preparers currently registered with a Preparer Tax Identification Number (PTIN) have been contacted by the Internal Revenue Service regarding the mandatory registration renewal requirement. The IRS had set a deadline of January 1, 2011, for all tax return preparers to register or reregister with the agency to obtain a PTIN. Practitioners may still register with the IRS if they have not done so already, but if practitioners do not currently have a PTIN, they may not file returns.

 

The impact of the amended registration requirements is not limited to those currently required to register. The definition of "tax preparer" has been broadened such that CPA firms must ascertain whether nonsigning members of their staffs are required to register for their own PTINs under the new regulations.

 

An individual must register if he or she is compensated for preparing, or assisting in the preparation of, all or substantially all of a tax return or claim for refund. This includes CPAs, attorneys, enrolled agents and even individuals who do not sign tax returns, so long as they are involved in the preparation of tax returns in a substantial manner. In addition to PTIN registration, beginning in mid-2011, nonsigning individuals who are not CPAs, attorneys or enrolled agents, but who are involved substantially in the preparation of returns, must also pass a competency test to officially become "registered tax preparers." Also, the registered tax preparers who are not CPAs, attorneys or enrolled agents must take 15 hours of continuing education each year to maintain their registered tax preparer status.

 

Similarly, in New York state, tax return preparers who are not CPAs, Public Accountants or attorneys must obtain a New York Tax Preparer Identification Number (NYTPRIN) by registering electronically with the New York State Department of Taxation and Finance. This requirement applies to employees of a tax return preparer or commercial tax return business who will prepare a substantial portion of at least one New York state tax return in a calendar year for compensation, without direct, on-site supervision by a CPA or attorney.

 

Our experience suggests that many firms have not fully considered the new registration and education requirements for their non-CPA, nonsigning staff. Similarly, many firms seem to have taken little notice of the new requirements in New York. The new regulations reach more of an accounting firm's staff than ever before, so care must be exercised to avoid costly violations.

 

For more information, please contact:

 

Thomas R. Manisero
Partner

White Plains
914.872.7229
thomas.manisero@wilsonelser.com

 

Peter J. Larkin
Partner
White Plains
914.872.7847
peter.larkin@wilsonelser.com

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