IRS Slashes PTIN Application and Renewal Fee to $11

The Internal Revenue Service (IRS) has reduced the user fee for applying for or renewing a Preparer Tax Identification Number (PTIN) from $21 to $11, affecting approximately 800,000 active tax return preparers who must renew their PTINs annually. This fee reduction, effective immediately, aims to increase accessibility and affordability of tax preparation services for millions of American taxpayers, with the IRS citing the Independent Offices Appropriation Act of 1952 as the authority for charging user fees. This description focuses on the primary topic (PTIN fee reduction), main entities (IRS, tax return preparers, and American taxpayers), context (tax preparation industry), significant actions (fee reduction), and objective details (fee amounts, affected population) that will guide the AI in creating an accurate visual representation of the article's content.

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Bijay Laxmi
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IRS Slashes PTIN Application and Renewal Fee to $11

IRS Slashes PTIN Application and Renewal Fee to $11

The Internal Revenue Service (IRS) has announced a significant reduction in the user fee for applying for or renewing a Preparer Tax Identification Number (PTIN). Effective immediately, the fee has been slashed from $21 to just $11, providing much-needed relief to the approximately 800,000 active tax return preparers who are required to renew their PTINs annually.

Why this matters: This reduction in fee will have a direct impact on the cost of tax preparation services for millions of American taxpayers, potentially leading to increased accessibility and affordability of these services. Furthermore, this move may also encourage more individuals to become tax return preparers, increasing the overall capacity of the tax preparation industry.

The IRS released final regulations adopting the reduced fee, which was previously proposed in interim final and proposed regulations. The agency cited the Independent Offices Appropriation Act of 1952 as the authority for charging user fees.

A PTIN is mandatory for anyone who is paid to prepare or assist in preparing a federal tax return, claim for refund, or certain other IRS tax forms. PTINs must be renewed each year and expire on December 31 of the calendar year in which they are issued. Failure to obtain and use a valid PTIN can result in penalties for paid tax return preparers.

The reduced PTIN fee for 2024 is $11 per application or renewal, in addition to an $8.75 fee payable to the third-party contractor that administers the PTIN system on behalf of the IRS. Tax return preparers with PTINs expiring on December 31, 2023, are encouraged to use the online renewal process, which typically takes about 15 minutes to complete.

Enrolled agents, attorneys, and certified public accountants must obtain PTINs if they are compensated for preparing or aiding in the preparation of all or substantially all of a federal tax return or claim for refund. Enrolled retirement plan agents may also need a PTIN, depending on the types of forms they prepare for compensation.

The online PTIN application and renewal process can be completed through the IRS's Tax Professional PTIN System in approximately 15 minutes. Alternatively, applicants can submit a paper Form W-12, IRS Paid Preparer Tax Identification Number (PTIN) Application and Renewal, although this method usually takes about six weeks to process. All PTIN correspondence is delivered through secure online messaging within the tax preparer's PTIN account.

The IRS's decision to reduce the PTIN fee comes as a welcome relief to the hundreds of thousands of tax professionals who are required to maintain a valid PTIN. By lowering the cost barrier, the agency is making it easier for preparers to comply with the PTIN requirement and continue providing vital tax preparation services to millions of American taxpayers.

Key Takeaways

  • IRS reduces PTIN user fee from $21 to $11, effective immediately.
  • Lower fee may increase accessibility and affordability of tax prep services.
  • PTINs are required for paid tax return preparers and must be renewed annually.
  • Total PTIN fee for 2024 is $19.75 ($11 IRS fee + $8.75 contractor fee).
  • Online PTIN renewal process takes about 15 minutes to complete.