What Is a Preparer Tax Identification Number (PTIN)?
Demystify the PTIN: your essential guide to this mandatory IRS identification number for all paid tax preparers, ensuring professional accountability.
A Preparer Tax Identification Number (PTIN) is a unique identification number issued by the Internal Revenue Service (IRS) to all individuals who prepare federal tax returns for compensation. This number is a mandatory requirement for anyone who receives payment for preparing or assisting in federal tax returns. It serves as a fundamental identifier for paid tax preparers, establishing a clear link between the preparer and the tax returns they handle.
Understanding the PTIN
The PTIN functions as a distinct identification number for tax preparation purposes, separate from an individual’s Social Security Number (SSN) or an Employer Identification Number (EIN). Its role is to enhance accountability by ensuring that all paid preparers are identifiable by the IRS. This unique identifier helps the IRS track preparer activities and maintain compliance. The PTIN also provides a layer of personal privacy for tax preparers, as it eliminates the need to disclose their SSN directly on tax returns.
Who Must Obtain a PTIN
A PTIN is required for individuals who prepare federal tax returns for compensation. This includes certified public accountants (CPAs), enrolled agents, tax attorneys, and any other individual who prepares or assists in preparing federal tax returns for a fee. This requirement extends to individuals working in tax preparation firms, self-employed preparers, and volunteer tax preparers who receive compensation. Individuals who prepare their own tax returns, joint returns with a spouse, or returns for friends and relatives without compensation do not need a PTIN. Employees who only gather information or perform routine data entry without making tax determinations are not required to have a PTIN.
Applying for a PTIN
Obtaining a PTIN involves a structured process, primarily conducted through the IRS online system. Before beginning the application, individuals should gather necessary information for identity verification. This includes their Social Security Number, personal details, business information, and information from their previous year’s tax return. Applicants also need to provide details about any felony convictions or issues with U.S. tax obligations, and professional certification information.
The online application takes about 15 minutes and involves creating an account on the IRS website. After creating an account, applicants log in to complete the online application by providing the gathered personal and professional details. A non-refundable fee of $19.75 is required, payable by credit, debit, ATM card, or eCheck. The PTIN is provided immediately upon completion and payment. A paper application (Form W-12) is available, though it can take four to six weeks for processing.
PTIN Renewal
A PTIN must be renewed annually to remain valid, as all PTINs expire on December 31st of the year they are issued. The renewal period typically begins in mid-October for the upcoming tax season. The renewal process is similar to the initial application and can be completed online through the IRS PTIN system.
To renew, individuals log into their existing online PTIN account. The process involves verifying personal information, updating any changed details, and answering a few questions. The renewal fee for a PTIN is $19.75, which covers an $11 user fee and an $8.75 fee payable to a third-party contractor. This fee is non-refundable and can be paid using a credit, debit, ATM card, or eCheck. Renewing online takes about 15 minutes, ensuring tax preparers are ready for the upcoming filing season. Failure to renew a PTIN may result in penalties and impact the ability to prepare federal tax returns for compensation.