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Court: IRS Can Charge PTIN Fees

IRSThe Internal Revenue Service has the right to charge Preparer Tax Identification Numbers, a federal appeals court has ruled. However, the U.S Court of Appeals for the District of Columbia recently remanded the issue of how much can be charged for issuing those numbers to a lower court

The IRS had faced a class action suit about the fees charged for PTINs, which must be placed on all tax returns by professional tax preparers. The appeals court ruled the agency had the right to charge fees to cover direct costs of the program.

The iRS' right to impose the fee was challenged by a class action suit, filed in 2014, as violating the courts' decision in Loving vs the IRS, in which the agency's plan to regulate professional tax preparers was thrown out by the same court in 2013. The court ruled the court lacked authority based on law for regulating preparers--including requiring continuing education courses.

In the wake o the Loving decision, the IRS reduced the PTIN fee from $50 to $30, which it said reflected the cost of the proposed registered tax return preparer program, which the court had invalidated. The  District court ruled the IRS also lacked the authority to impose the PTIN fee, which led to the IRS' appeal to the next level.

However, the appeals court found the use of the PTINs helps protect professional tax preparers by enabling them use numbers on multiple tax returns, other than their own Social Security Numbers. It noted no court had ruled on whether the amount of the fees fairly reflected the cost of the IRS program, the issue it sent back to the lower court.

 

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