I am attaching some information regarding PTIN numbers for tax preparers and also some information about the expanded 1099 requirement for 2012

The first item under IRS updates is the latest information on the fee to be charged to apply for or renew a PTIN. The “new” information is that the fee will be $50 and the renewal will be on an annual basis. CAUTION: the $50 is just the IRS fee. The vendor will charge an additional amount. That amount has not been announced.

Gregory A Thompson

Senior Stakeholder Liaison

IRS Communications, Liaison & Disclosure

Ph 206.220.5309

gregory.a.thompson@irs.gov

IRS Updates and News Releases

IRS Releases Proposed Regulations Related to Fees for Preparer Tax Identification Numbers

The Internal Revenue Service today released Proposed Regulations (REG-139343-08) that would establish a fee for individuals who apply for a preparer tax identification number (PTIN). Proposed regulations that were issued in March would require certain tax return preparers to obtain a PTIN. The IRS is working to finalize those proposed regulations, which are the first of a series of steps planned to increase oversight of federal tax return preparation.

The proposed regulations (REG-139343-08) would establish a fee of $50, payable to the IRS, to cover technology costs, as well as compliance and outreach efforts associated with the new PTIN program. The proposed regulations would also provide for an additional fee (expected to be substantially lower than $50) to be charged by the third-party vendor chosen to operate the new online system. That fee amount is expected to be announced soon, as well as additional details about the launch of a new online application system. These fees could change in future years as program costs are reevaluated. Agencies are directed by the Office of Management and Budget (OMB) to charge user fees to recover the cost of services that convey special benefits beyond those available to the general public, such as the authority to prepare federal tax returns for compensation.

Tax professionals and other interested parties have until Aug. 23, 2010, to submit comments regarding the proposed regulations. The official publication date of these proposed regulations is July 23.

Here are a couple of updated FAQs posted to IRS.gov.

Will the recommendations apply to individuals who only prepare payroll or other non-1040 series returns? (revised 7/20/10)

All paid tax return preparers will be required to obtain a preparer tax identification number (PTIN). If the preparer is not an attorney, certified public accountant, or enrolled agent, the preparer will need to satisfy the competency test and continuing education requirements. The initial two tests will be for individuals who prepare Form 1040 series returns. Additional guidance for individuals who do not prepare any Form 1040 series returns and who are not an attorney, CPA, or enrolled agent will be provided when testing is implemented.

The two competency tests are described as covering: 1) Wage & non business 1040 and 2) Wage and Small Business 1040. What does small business include? And how would this impact those who prepare other business returns? (posted 7/20/10)

For competency testing purposes, small business will include Form 1040 Schedules C, E and F and various other 1040 related forms. Appendix I of the Return Preparer Review report contains a detailed list. Additional guidance for individuals who do not prepare any Form 1040 series returns and who are not an attorney, CPA, or enrolled agent will be provided when testing is implemented. The IRS plans to add a third test with regard to business tax rules after the three-year implementation phase is completed.

IRS Requests Public Input on Expanded 1099 Information Reporting Requirement.

The Internal Revenue Service today invited public comment on how to most effectively carry out a law change that, starting in 2012, will require businesses to report a wider range of payments to contractors, vendors and others, usually on Form 1099. These comments will help the IRS issue guidance that implements this provision in a manner that minimizes burden and avoids duplicate reporting. Under a proposed regulation, many business purchases made with credit or debit cards would be exempt from the new reporting requirement because they are already reported by banks and other payment processors. The IRS seeks comments on additional circumstances in which duplicate reporting might otherwise occur and on rules that would prevent such duplicate reporting.

The change, enacted in March but not effective until 2012, expanded existing reporting requirements to include a business’s payments related to goods and other property, and payments to most corporations. With some exceptions, payments to corporations are currently exempt from this requirement.

There are three ways to submit comments.

Email to: Notice.Comments@irscounsel.treas.gov. Include “Notice 2010-51" in the subject line.
Mail to: Internal Revenue Service, CC:PA:LPD:PR ( Notice 2010-51), Room 5203, P.O. Box 7604 , Ben Franklin Station, Washington , DC 20044 .
Hand deliver to: CC:PA:LPD:PR ( Notice 2010-51), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue NW, Washington, DC, between 8 a.m. and 4 p.m., Monday through Friday.

The deadline is Sept. 29, 2010. Further details are in Notice 2010-51, posted today on IRS.gov.