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Change Coming for PTIN User Fees?

Paid tax return professionals may soon have to pay $21 to apply for a PTIN.

In the “Don’t have a PTIN and need to obtain one?” section of the “PTIN Requirements for Tax Return Preparers” page on IRS.gov, there is a key phrase that may be about to change: “There is no fee to obtain a PTIN.” The Federal Register from Thursday, April 16 included proposed rulemaking that would reduce the cost of applying for and renewing a Paid Tax Identification Number from $33 with a $17 third-party fee to $21 with a $14.95 third-party fee.

While a price reduction would normally be the key takeaway, this is the first time that tax professionals would be required to pay for their PTIN application since the DC District Court ordered the IRS to stop charging applicants back in 2017. In 2019, the DC District Court of Appeals reversed that decision, reinstating the IRS’s ability to charge a user fee for administering the PTIN program.

Why is the IRS able to charge a fee to issue PTINs?

The IRS cites the Independent Offices Appropriations Act of 1952, which it argues grants them the authority to charge user fees for provided services. This authority is further governed by the circulars issued by the Office of Management and Budget (OMB).

Why is the IRS proposing a lower PTIN fee?

The IRS says that the OMB places limits on the user fees it can charge: “Federal agencies that provide services that confer benefits on identifiable recipients are to establish user fees that recover the full cost of providing the service.” As when the agency previously reduced fees in 2015, the IRS says that a recent review of the cost for administering the PTIN program is now lower than in prior years.

When will the new PTIN fees go into effect?

The new PTIN fees would normally go into effect sometime after the agency closes public comments on May 18, 2020 and agrees to a finalized amount—presumably in time for 2021 PTIN applications and renewals. However, the IRS noted in the Federal Register posting that the case is currently “on remand.” That could mean a new round of litigation and, ultimately, injunctions.

Source: Federal Register Doc. 2020-08055

Ryan Norton

Whether designing superheroes, penciling caricatures, or just doodling, I always knew I was going to earn some sort of art degree while in college. That was my goal before I decided to trade Edgar Degas for Edgar Allan Poe during a Freshman English class. The BA in English soon morphed into a double-major in English and Philosophy, eventually becoming an MA in English. It only makes sense that I learned of a writing opportunity for a local marketing firm while teaching a first-year college English course. Before I knew it, I was writing and editing tax-related articles for Taxing Subjects, and this has been my home since 2014.

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