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January 2011

IRS TO PROVIDE RELIEF ON PTIN DUE TO APPLICATION ISSUES

Due to some tax return preparers having trouble with the new online preparer tax identification number (PTIN) application, the IRS last week announced it is providing relief for preparers who make a good-faith effort to comply with the new PTIN requirement.

Notice 2011-11 says that tax return preparers who are unsuccessful in obtaining a PTIN using the online system will be notified that their application was not processed and will receive “appropriate instructions.” They must comply with those instructions to establish that they are making a good-faith effort to comply.

For individuals who do not attempt to use the online PTIN application system, the notice says the submission of Form W-12, IRS Paid Preparer Tax Identification Number (PTIN) Application, and payment will generally constitute a good-faith attempt to comply with the requirement.

The number of PTINs issued now exceeds 620,000 with average daily additions still around 3,500.  

Notice 2011-11.


STATUS OF 1099 MANDATE LEGISLATION

It was announced earlier this month that Rep. Dan Lungren (R-Calif.) reintroduced his effort to repeal the healthcare reform law’s 1099 tax provision in the new Congress. House Republicans have bumped his proposed legislation from H.R. 144 to H.R. 4 (The Small Business Paperwork Mandate Elimination Act of 2011), signaling this controversial provision to be one of their first pieces of business.

The bill has been referred to the Ways and Means Committee with 246 co-sponsors, including 12 Democrats. Senators Mike Johanns (R-Neb.) and Joe Manchin (D-W.Va.) also plan to introduce 1099 repeal legislation on January 25, the first available day for offering new bills in the Senate. Word is that the President will sign a repeal of the 1099 rule just as soon as Congress can find some clever, politically painless way to offset the cost. TSCPA will continue to monitor the proposed legislation for any opportunity to chime-in.


IRS RELEASES GUIDANCE ON NON-SIGNING PREPAPERS OF CPA FIRMS

IRS recently released Notice 2011-6 that exempts a non-signing preparer of a CPA firm (and certain other professional firms) from the exam and education requirements of the preparer tax identification number (PTIN). It does not, however, change the requirement that a non-signing preparer may need to obtain a PTIN and pay the user fee. A non-CPA intern or staff who prepares “all or substantially all” of a tax return that the supervising CPA signs must still register for a PTIN before beginning the 2011 filing season.

Notice 2011-6 also clarifies that the preparation of certain forms does not trigger the requirement to register for a PTIN. Among those are Form SS-4; Application for Employer Identification Number; Form W-2; Form 1098 series; and Form 1099 series. See the notice for a complete list.

http://www.irs.gov/pub/irs-drop/n-11-06.pdf