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Review: Fall IRS Update Seminar
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Registered Tax Return Preparers
Registered Tax Return Preparers
As the preparer community well knows, last year IRS instituted a Registered Tax Return
Preparer system. Under this system, a tax preparer, other than a Tax Attorney, CPA, or an
EA, will be required to complete 15 hours of continuing education, pass a background check,
and pass a competency test. Last year, all tax preparers were required to obtain a Preparer
Tax Identification Number (PTIN). This number will have to be renewed each year. For
preparers not in the above three categories, the PTIN is provisionary. To obtain a permanent
number, un-enrolled preparers will need to pass the test by December 31, 2013. As of this
writing, IRS has released the specifications for the test, but not the test itself. IRS estimates
that it will begin offering the test in November 2011.
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PTIN
PTIN
Renewal of PTIN for the upcoming tax season began on 19th October. All tax preparers are
required to obtain/renew their PTIN by December 31st 2011. PTIN registration can be done
either online or by filing Form W-12. IRS has set a fee of $63 for this service. Un-enrolled
prepares will be able to obtain/renew a provisionary PTIN; once they pass the Registered Tax
Return Preparer Test by December 31, 2013, they will be assigned a permanent PTIN. However, every preparer will need to annually renew their PTIN.
Also, all preparers will need to satisfy minimum continuing education (CE) requirements. Supervised Preparers (those who are employed by a registered preparer and do not sign
returns) and Non-1040 Prepares will not be required to meet the CE requirements; however,
they will need to annually renew their PTIN.
It is most efficient, not to mention faster, to obtain/renew the PTIN online. Please visit
www.irs.gov/taxpros to receive your PTIN online.
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E-Filing Requirements
E-Filing Requirements
IRS started accepting electronically filed tax returns in 1986. In that year, approximately
25,000 returns were filed electronically by five tax preparers. In the ensuing quarter century,
the number of e-filed returns has mushroomed to over 100 million! The e-filing system has
been a winner for all concerned parties: taxpayers, tax preparers, and the revenue collection
services such as the IRS. In fact, the IRS likes the system so much that, with the 2011 filing
season it has made e-filing mandatory for most practitioners. Preparers filing 100 or more tax
returns will be required to file them electronically. The noose gets tighter next year when
preparers of 10 or more returns will be required to file all returns electronically!
As with all rules, there are exceptions: should a client vehemently object filing
electronically, the return can be sent by mail. However, the preparers will need to include a
statement, stating the client's preference and signed by the client, with the mailed-in return. IRS has released two forms related to exceptions to e-filing: Form 8944--Preparer e-file
Hardship Waiver Request and Form 8948--Preparer Explanation for Not Filing Electronically.
If you are not already registered with the e-file system, you may do so online by visiting the
IRS website. Here is the link to get started.
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What's New for 2011?
What's New for 2011?
Although most tax laws remain unchanged for the 2011 tax season, there are several new
requirements of interest to the practitioner community:
- Form W-2 has an option of showing a 2D Barcode (similar to what we have seen in Schedules K-1 for the past few years).
- As a result of Section 9002 of the Affordable Care Act of 2009, Employer provided health insurance benefit will have to be reported in Box 12 of the W-2. Please use code DD to report this amount. NOTE: The amount reported using this code is for information purpose only; it is not taxable to the taxpayer.
- Starting 2011, brokerage houses will need to include cost basis information on Forms 1099-B. Unfortunately, this requirement pertains only to securities purchased starting January 1, 2011. Preparers still will have to get the bases for purchases made prior to this date from their clients.
- An addition has been made in the 1099 family: Form 1099-K. A payment settlement entity (usually a credit card processing company) must file Form 1099-K, Merchant Card and Third Party Network Payments, each year by January 31st of the following year. There are a few exceptions; however, most entities that accept credit cards should brace themselves for receiving 1099-K next January.
- The highly egregious mandate for issuance of Form 1099-MISC to almost anyone and everyone that was part of the Affordable Care Act was repealed by the Congress earlier this year. However, the old requirements remain: Forms 1099-MISC must be issued to all non-corporate entities that were paid $600 or more for labor, services, rents, royalties, etc.
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Hidden Gems
Hidden Gems
IRS offers a great deal of resources to tax preparers as well taxpayers in general. The
website is extremely well-organized and is a great resource for most tax-related issues.
The IRS speakers strongly urged the seminar attendees to use a couple of services that are
not as well utilized as they would like. I call them the Hidden Gems:
- E-Services: Several years ago, IRS created e-services for tax professionals. It is a
tremendous resource for many activities that ordinarily take a significant amount
of time by mail. Upon registering for e-services, a tax professional can order
transcripts for clients for whom they have a POA; register a POA for a client,
expedite account resolution by using the Electronic Account Resolutions feature,
match TINs with names, etc. Also, in order to register for e-filing, you have to
establish an e-services account. If you are not already registered, please do so
before you get busy with the tax season.
- Taxpayer Advocate Service: IRS is the nation's tax collector. In course of
executing this function, their agents often become difficult to deal with. Taxpayer
Advocate Service (TAS) was created in 1998 to afford a voice to taxpayers within
that organization. Although a part of the IRS, it is an independent entity with the
mission to help taxpayers resolve problems within the agency, and recommend
changes to prevent problems. The central office of this department is located in
Washington DC; however, there are 75 local offices, including one in Colorado.
Tax professionals who have not been able to resolve conflicts through the normal
channels should make themselves familiar with this service.
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Tax Preparer Resources
Tax Preparer Resources
Here is a short list of resources for busy tax professionals:
| IRS Website: |
www.irs.gov (awesome!) |
| Publication 17: |
Your Federal Income Tax (the Bible!) |
| Circular 230: |
Regulations Governing Practice before the
Internal Revenue Service ( a must read in order to stay in this business) |
| e-News for Tax
Professionals: |
Subscribe by clicking
here! |
| PTIN Application: |
Click here to apply online.... |
| e-Help Desk: |
866-255-0654 |
| Practitioner Priority
Service: |
866-860-4259 |
| Income Tax Questions: |
800-829-1040 for Individuals
800-829-4933 for Businesses
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| Taxpayer Advocate
Service: |
303-603-4600 (Denver) |
News:
Resources for Tax Preparers:
E-File News:
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