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Changing Tax Preparer Procedures and Fees

The Internal Revenue Service (IRS) has announced new filing procedures, fees and regulations for people who prepare tax returns for compensation. Any person who is paid to prepare part or all of an income tax return or claim for tax refund after December 31, 2010 must complete an application and file for a Preparer Tax Identification Number (PTIN).  These special “Social Security Numbers” are assigned by the IRS and appear on tax returns completed by the tax preparer.  They provide personal identity protection to the tax preparer and now greater quality assurance to both the IRS and consumer.

Compensated tax preparers will have to pay a $64.25 service fee for the PTIN.  These charges include $50 according to the IRS “per user to pay for outreach, technology, and compliance efforts associated with the new program.”  The additional $14.25 is charged by third-parties for operation of an “online system” and customer support.  Tax preparers in the past have accessed “preparer services” through IRS.gov online for free.   Proposed procedures changes and signup apply to all tax preparers of federal tax returns; whether new in 2010 or previous PTIN holders. The new regulations require that these compensated preparers annually renew their PTIN and obviously pay any associated fees… in addition to their personal income taxes on preparation fees! No discount for working for the Feds!  Fortunately, the online application system will be accessible through the same Tax Professional page on IRS.gov. Tax code is confusing enough, the Feds don’t want to make this new “improved” application process for the compensated tax preparer too complicated…

It is important to note that the existing PTIN application process, using either e-services or IRS Form W-7P, Application for Preparer Tax Identification Number, will cease operations effective August 22, 2010.  The message on the webpage for the form tells you so!!!  Happy Tax Season…

Consult a qualified tax preparer.

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