Does Every Income Tax Preparer Need A Preparer Tax Identification Number?
The new IRS code governing preparer tax identification numbers (PTINs) can be confusing, even for experienced prep workers who are used to dealing with the complexities of the IRS. One of the main difficulties many employees and owners face is determining who exactly needs to obtain a PTIN. Although in most cases the answer is yes, you need one, there are some cases where it just isn't necessary, and avoiding unnecessary certifications can save your office time and money.
Enrolled Agents Always Need One
Enrolled agents have long been familiar with the IRS demands for scrutiny and oversight. Thus, few are surprised to learn that they are required to obtain this new certification. It is not expected to present any difficulty for these professionals. They are already used to dealing with complex issues and even representing clients in procedures such as audits. The simple tests required for certification here are likely to be little more than a scheduling hassle.
Lawyers And CPAs Do Not
Lawyers and Certified Public Accountants (CPAs) are exempt from the requirement in most situations. The exception to that is if the lawyer or CPA acts essentially as an income tax preparer. This is fairly uncommon for attorneys and CPAs, who usually focus more on representing individuals in audits or other tasks that happen after returns have already been filed. However, if your practice is particularly broad or far-reaching, it might be wise to complete the steps and obtain a preparer tax identification number just in case you are called upon to complete and file a return.
Other Paid Income Tax Preparer Positions
When you move beyond the realm of enrolled agents, the criteria becomes more complex and the position more uncertain. If you are uncertain, it is always better to err on the side of being too cautious. It is better to apply for one needlessly rather than unintentionally preparing without one.
The IRS requires that any worker who receives compensation for prep work to complete or strongly assist with the completion of a document needs to have a PTIN. The key here is compensation. Unpaid volunteers who work for programs providing help to the needy are exempted from this requirement. However, the vast majority of the community dedicated to providing services for employees and businesses nationwide will be required to register.
Interns And PTINs
Regardless of whether or not your interns receive compensation, if you receive compensation for their work and they have any substantial role in completing forms, then they will need to have an id number. If they are restricted to data entry, they are not required to have one. This distinction can be somewhat subtle, but it is generally wise to err on the side of caution whenever possible, requiring PTINs rather than not. Whether you're working in New York or Arizona, tax offices might see it as more of a burden, but it helps ensure compliance and can be necessary.
Enrolled Agents Always Need One
Enrolled agents have long been familiar with the IRS demands for scrutiny and oversight. Thus, few are surprised to learn that they are required to obtain this new certification. It is not expected to present any difficulty for these professionals. They are already used to dealing with complex issues and even representing clients in procedures such as audits. The simple tests required for certification here are likely to be little more than a scheduling hassle.
Lawyers And CPAs Do Not
Lawyers and Certified Public Accountants (CPAs) are exempt from the requirement in most situations. The exception to that is if the lawyer or CPA acts essentially as an income tax preparer. This is fairly uncommon for attorneys and CPAs, who usually focus more on representing individuals in audits or other tasks that happen after returns have already been filed. However, if your practice is particularly broad or far-reaching, it might be wise to complete the steps and obtain a preparer tax identification number just in case you are called upon to complete and file a return.
Other Paid Income Tax Preparer Positions
When you move beyond the realm of enrolled agents, the criteria becomes more complex and the position more uncertain. If you are uncertain, it is always better to err on the side of being too cautious. It is better to apply for one needlessly rather than unintentionally preparing without one.
The IRS requires that any worker who receives compensation for prep work to complete or strongly assist with the completion of a document needs to have a PTIN. The key here is compensation. Unpaid volunteers who work for programs providing help to the needy are exempted from this requirement. However, the vast majority of the community dedicated to providing services for employees and businesses nationwide will be required to register.
Interns And PTINs
Regardless of whether or not your interns receive compensation, if you receive compensation for their work and they have any substantial role in completing forms, then they will need to have an id number. If they are restricted to data entry, they are not required to have one. This distinction can be somewhat subtle, but it is generally wise to err on the side of caution whenever possible, requiring PTINs rather than not. Whether you're working in New York or Arizona, tax offices might see it as more of a burden, but it helps ensure compliance and can be necessary.
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