Contact Us   |   Your Cart   |   Sign In   |   Join NIPA
Community Search
News from, March 16, 2011
Share |
NIPA's bi-weekly e-newsletter, News from, delivers the most up-to-date industry and association news.

News from archives

PTIN Exception for TPAs

By Kristina Kananen, APA

On September 30, 2010, the Internal Revenue Service took a step toward their goal for increased oversight of the paid tax return preparer industry when they published final regulations under section 6109. At first, these final regulations were applied with a very broad brush that included the retirement plan industry and included the definition of tax return preparer as an individual who prepares for compensation, or assists in preparing all, or substantially all, of a tax return or claim for refund of tax.

All tax return preparers would have to obtain a preparer tax identification number (PTIN). Obtaining the PTIN would mean fees totaling $64.25 per individual. Keeping the PTIN would mean passing a competency exam written for those preparing 1040 returns and continuing education requirements. For some TPA firms, these costs could be substantial.

The IRS received many comments as to the financial burden placed on TPA firms due to the requirements. It was also pointed out that the competency exam and the continuing education requirements placed unreasonable demands on those in the retirement plan industry as they will cover information not used in tax return preparation by TPA firms.

Fortunately, reason prevailed and an exception for the fees, competency exam and continuing education was granted for anyone who does not prepare any individual tax returns (such as 1040 returns), but does prepare any of the returns listed in the New Requirements for Tax Return Preparers: Frequently Asked Questions. The following returns commonly used by the retirement plan industry are included in the exception list:

Form SS-4, Application for Employer Identification Number;
Form 1099 series
Form 2848, Power of Attorney and Declaration of Representative;
Form 4419
, Application for Filing Information Returns Electronically;
Form 5300
, Application for Determination for Employee Benefit Plan;
Form 5307, Application for Determination for Adopters of Master or Prototype or Volume Submitter Plans;
Form 5310
, Application for Determination for Terminating Plans;
Form 5500 Series;
Form 8717, User Fee for Employee Plan Determination, Opinion, and Advisory Letter Request; and
Form 8821, Tax Information Authorization.

The IRS recently added Q & A 9 in the Scenarios section of the New Requirements for Tax Return Preparers: Frequently Asked Questions, which effectively added the following forms to the list:

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 Benefits

Individuals preparing the listed forms are still required to obtain a PTIN but will not be required to pay the registration fees or meet the competency exam and continuing education requirements. PTIN applications can be made online, or on a Form W-12, IRS Paid Preparer Tax Identification Number (PTIN) Application. The online applicant will, of course, receive a PTIN much quicker than the applicant who files the Form W-12, which can take weeks. Each individual must have their own email address to receive a PTIN, so a firm email address can not be used for all employees.

Since the exceptions were issued in January, it is possible that many practitioners obtained their PTINs between 9/30/2010 and 12/31/10, or may have obtained PTINs that they no longer need, and paid a fee. Now that they are no longer required to pay the fee, they may a request a refund, and they may cancel a PTIN, by sending a signed, written explanation to:

IRS Tax Professional PTIN Processing Center
104 Brookeridge Dr. #5000
Waterloo IA 50702

The IRS adds to the New Requirements for Tax Return Preparers: Frequently Asked Questions, so it is a good idea to read through those if you have any questions about your scenario, any new forms added to the exception list or difficulties with the application process. The FAQs are easy to access by going to and clicking on Tax Professionals. PTIN requirements are shown under Tax Professionals Topics on the left.

Before celebrating too much over the exception, you should notice that Form 945, Annual Return of Withheld Federal Income Tax and Form 5330, Return of Excise Taxes Related to Employee Benefit Plans, are not included on the above list. Therefore, if you are preparing these forms, you are required to meet all the requirements for the PTIN. Also, remember it is the intention of the IRS to include the retirement plan industry in its oversight under section 6109, so the exception is not considered to be permanent.

About Kristina Kananen
Kristina Kananen started in the retirement plan industry in December 1974 and until March 2000 designed, installed, administeres and terminated defined contribution and defined benefit plans when she joined DATAIR Employee Benefit Systems, Inc.. In her current position, she is primarily responsible for the DATAIR Pension Reporter program for government forms and assists clients in using the program as well as helping them stay current with filing requirements.  She serves on the NIPA Designation Committee for APA Course 1.

Have a comment on a recent NIPA News story?
Keep the conversation going and visit us on LinkedIn!

Association Management Software Powered by YourMembership  ::  Legal