The IRS has finalized regulations to set the PTIN fee at $21 plus a $14.95 third-party contractor fee as the agency begins to resume collection of this annual fee from paid tax preparers.[1] The final regulations retain the same fees as were found in the proposed regulations originally announced on April 15, 2020.

The IRS had ceased collection of the PTIN user fee following an initial loss in the US District Court for the District of Columbia in the case of Steele v. United States, 260 F. Supp. 3d 52 (D.D.C. 2017)[2] that found the IRS did not have the authority to charge such a fee. However, the Court of Appeals for District of Columbia found that the IRS did have the authority to charge such a fee, reversing that earlier decision of the lower court in Montrois v. United States, 916 F.3d 1056 (D.C. Cir. 2019).[3]

The Court of Appeals for the District of Columbia reversed a prior lower court ruling that barred the IRS from charging a fee to issue or renew Preparer Tax Identification Numbers (PTINs) in the case of Montrois, et al v. United States, Case No. 17-5204, CA DC.

In June of 2017 the U.S. District Court for the District of Columbia ruled in this case that the IRS, following a ruling in the case of Loving v. IRS, 742 F.3d 1013 (D.C. Cir. 2014), lacked the authority to impose a fee on tax preparers to obtain and renew PTINs.  The original case argued that the fee violated the provisions of the Independent Offices Appropriations Act that the IRS used to justify the fee.

The Eleventh Circuit panel hearing the appeal in the case of Kardash, Sr. v. Commissioner, Case No. 16-14254, CA11 agreed that Mr. Kardash was not a villain and, in many ways, was a victim along with the IRS of a “the fraud conducted by his friends and coworkers at FECP, Ralph Hughes and John Stanton.”

But the Court found that, ultimately, Mr. Kardash ended up with funds that rightly belonged to the IRS and that IRC §6109, relying on applicable Florida state law, required him to pay those funds over to the IRS under the law of transferee liability.

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The IRS has begun again issuing PTINs after suspending such issuance immediately losing the ability to charge fees for PTINs in the case of Steele, et al v. United States, (US DC District of Columbia).  The announcement, along with a series of Q&As on the issue, was posted to the IRS website (“IRS Reopening Preparer Tax Identification Number (PTIN) System”).

The IRS is not charging for a PTIN issuance at this time, but the Q&As reserve the possibility that those receiving a “free” PTIN at this time might be required to pay for it later.

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The IRS has issued guidance on how it deal with the new rules on Individual Taxpayer Identification Numbers (ITINs) that were contained in the Protecting Americans Against Tax Hikes Act of 2015 (PATH) in Notice 2016-48.

The IRS is authorized under IRC §6109 to issue identification numbers for taxpayers and request information from such taxpayers.  Generally these ITINs are issued to taxpayers who are not eligible to receive a social security number (SSN) and are used for tax matters in lieu of the social security number.

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The cost of doing tax preparation business decreased in a minor amount due to new temporary regulations issued by the IRS (TD 9742).