Two CPA’s have slapped the IRS with a class action lawsuit. The IRS has required anyone who prepares or assists in preparing tax returns for payment to have a PTIN, and to renew that PTIN each year. The fees that the IRS collects for PTIN registration and renewal are paid to a 3rd party, however the actual fee amount the 3rd party charges for these services is very minimal. The plaintiffs are contesting that the IRS does not have the authority to charge these fees at all, as well as the authority to keep the remainder of the overpayment of the fees for the registration process. The overpayment alone for these fees is approximately $50 for both the new and renewal fees.
The amount of restitution requested totals over $150 million, which is all of the PTIN fees the IRS has accumulated since the regulation was issued in 2010. Tax pros also have to re-register annually and pay another registration fee. Without paying renewing and paying these fees, the PTIN will be invalid and preparers will not be able to file returns.
The fuel for this fire started with the Loving vs. Commissioner case which ruled that the IRS does not have the authority to license tax preparers. The ruling didn’t have any weight on PTIN registration fees or requirements at that time.
The IRS is claiming that the $50 overage per transaction pays for:
- Administering PTIN Registration Cards
- Costs associated with guidance, instructions and assisting preparers in completing forms
- Suitability and compliance checks
However, there are no registration cards or guidance in this process.
PTIN Numbers are assigned and sent via a letter in the mail. We are curious to see how the IRS will back up these claims.