Nervous entrepreneurs seeking to start a tax preparation business can now breathe a sigh of relief; the IRS has finally released the fee structure connected with the new mandated tax preparer registration. The full total fee for this will be $64.25 per individual for the initial year of registration. $50 of the fee covers the IRS’costs for administering the new PTIN program, and $14.25 goes to a third-party vendor to work the online system and provide customer support. Going forward out of this first year’s registration or re-registration process, preparers will soon be needed to renew their PTINs annually and pay the $14.25 user fee annually because of this renewal process.
All people who want to preparer tax returns this season will need to either register. New preparers will need to get yourself a PTIN (Preparer Tax Identification Number) and experienced preparers, who already have a PTIN, will soon be needed to re-register their existing PTIN. There are many aspects of this new requirement that effects tax business owners.
• Increased cost of operation
• This relates to the typical cost of maintaining employees for your tax practice. As your tax business grows, inevitably capacity issues will dictate that you generate more tax preparers. Which means you will in all probability have to foot the bill because of their registration and renewals.
• If preparers leave your tax business and choose to go benefit a competitor’s firm, their PTIN goes with them. Even although you purchase their registration, you the tax business owner don’t have any ownership of the preparer’s PTIN.
• Increased difficulty of staffing
• There will be a suitability test for a PTIN to be issues to a tax preparer. This test carries a criminal background check and tax compliance check. Which means if a new employee features a criminal felony history or if they’ve not filed their personal taxes before they might not be approved to be always a registered tax return preparer. This can inevitably narrow the field of potential candidates for employees.
• You won’t manage to hire a brand new tax preparer on the fly or mid tax season and immediately put them to work preparing return. You must go through the registration process first.
The big new effect that lots of tax business owners are discussing is the dismissal of the old preparer adage “I recently imputed what the tax payer told me tax.” Now that tax return preparers will fall beneath the supervision of and be susceptible to disciplinary actions by the Office of Professional Responsibility, preparers are held accountable for submitting returns with frivolous tax positions.
For Example: if a taxpayer approaches your company and wishes to claim their family dog as a dependent, and knowingly your tax preparer goes along with this; there could be disciplinary actions taken at the tax preparer level, not just at the taxpayer level as was the case in the past. As a tax business owner or someone considering starting a tax preparation business, you need to be conscious of the newest IRS regulations affecting your company and your employees.