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A Gift Idea for the Tax Advisor Who has Everything

Are you struggling with what to get your hard-to-buy-for tax advisor for an upcoming birthday or holiday?  Struggle no more, as I have the perfect gift idea.  A PTIN.  Why?  Every tax return preparer needs one, and best of all, they are currently free.

PTIN stands for preparer tax identification number.  In 2010, the Treasury Department passed regulations that required all individuals other than attorneys and CPAs to (1) pass a competency test, (2) pass a suitability test, and (3) obtain a PTIN after paying a user fee.  The dual goal was to provide some assurance to taxpayers that their tax return (which includes the information return that is required to be filed in respect of an issue of tax-exempt bonds) was being prepared by a competent individual (for the benefit of those taxpayers) and to improve the accuracy of tax returns (for the benefit of the IRS).

Apparently, tax return preparers found this outside verification of their competency to be overrated.  A few years ago, three tax return preparers challenged the IRS’ ability to regulate tax return preparers, and they won.  In Loving v. IRS, 742 F.3d 1013 (D.C. Cir. 2014), the D.C. Circuit held that although the Secretary of the Treasury Department (“Treasury”) has statutory authority to regulate representatives that “practice before” Treasury, tax return preparation did not rise to the level of practicing before Treasury.  Accordingly, the D.C. Circuit invalidated the PTIN regulations requiring competency and suitability testing.  Post-Loving, only the requirement to pay a fee to obtain the required PTIN remained in place.

Earlier this summer, however, the U.S. District Court for the District of Columbia further limited the regulations by finding that although the IRS has the authority to require the use of PTINs by tax return preparers, it does not have the authority to charge fees for issuing PTINs. (See Adam Steele v. United States, Case No: 14-cv-1523-RCL ).   Thus, one would think that PTINs would forever be free.  However, on September 6, 2017, the IRS appealed the district court’s decision to the U.S. Court of Appeals for the District of Columbia Circuit.   In the interim, an article in the Daily Tax Report on September 7, 2017, reports that the IRS is not currently charging for PTINs.   Thus, you may want to get a jump on that holiday shopping now.

© Copyright 2017 Squire Patton Boggs (US) LLP

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About this Author

Cynthia Mog, Finance Attorney, Squire Patton Boggs Law Firm
Senior Attorney

Cynthia Mog focuses her practice on federal income tax matters. She has experience working on corporate, partnership and real estate transactions including acquisitions, reorganizations, restructurings and tax-free exchanges. She has also been involved with IRS audits and tax-exempt financing transactions.

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