80 FR 66851 - Preparer Tax Identification Number (PTIN) User Fee Update

DEPARTMENT OF THE TREASURY
Internal Revenue Service

Federal Register Volume 80, Issue 210 (October 30, 2015)

In the Rules and Regulations section of this issue of the Federal Register, the IRS is issuing temporary regulations that will amend regulations (TD 9503) relating to the imposition of certain user fees on tax return preparers. The temporary regulations reduce the amount of the user fee to apply for or renew a preparer tax identification number (PTIN). The text of the temporary regulations also serves as the text of these proposed regulations.

[Federal Register Volume 80, Number 210 (Friday, October 30, 2015)]
[Proposed Rules]
[Pages 66851-66853]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-27791]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 300

[REG-121496-15]
RIN 1545-BN02


Preparer Tax Identification Number (PTIN) User Fee Update

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking by cross-reference to temporary 
regulations.

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SUMMARY: In the Rules and Regulations section of this issue of the 
Federal Register, the IRS is issuing temporary regulations that will 
amend regulations (TD 9503) relating to the imposition of certain user 
fees on tax return preparers. The temporary regulations reduce the 
amount of the user fee to apply for or renew a preparer tax 
identification number (PTIN). The text of the temporary regulations 
also serves as the text of these proposed regulations.

DATES: Written or electronic comments and requests for a public hearing 
must be received by January 28, 2016.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-121496-15), Room 
5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, 
Washington, DC 20044. Submissions may be hand-delivered Monday through 
Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-
121496-15), Courier's Desk, Internal Revenue Service, 1111 Constitution 
Avenue NW., Washington, DC 20224 or sent electronically via the Federal 
eRulemaking Portal at http://

[[Page 66852]]

www.regulations.gov (IRS REG-121496-15). The public hearing will be 
held in the Auditorium of the Internal Revenue Building, 1111 
Constitution Avenue NW., Washington, DC

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Hollie M. Marx at (202) 317-6844; concerning cost methodology, Eva J. 
Williams at (202) 803-9728; concerning submission of comments and/or 
requests for a public hearing, Oluwafunmilayo Taylor, (202) 317-6901 
(not toll-free numbers).

SUPPLEMENTARY INFORMATION: 

Background and Explanation of Provisions

    Temporary regulations in the Rules and Regulations section of this 
issue of the Federal Register amend regulations under 26 CFR part 300 
setting a user fee for individuals who apply for or renew a PTIN. The 
text of the temporary regulations also serves as the text of these 
proposed regulations. The preamble to the temporary regulations 
explains the temporary regulations and these proposed regulations.

Special Analyses

    It has been determined that this notice of proposed rulemaking is 
not a significant regulatory action as defined in Executive Order 
12866, as supplemented by Executive Order 13563.
    It has been determined that an initial regulatory flexibility 
analysis is required for this notice of proposed rulemaking under 5 
U.S.C. 603. This analysis is set forth under the heading ``Initial 
Regulatory Flexibility Analysis.''
    Pursuant to section 7805(f), this notice of proposed rulemaking has 
been submitted to the Chief Counsel for Advocacy of the Small Business 
Administration for comment on its impact on small business.

Initial Regulatory Flexibility Analysis

    When an agency issues a rulemaking proposal, the Regulatory 
Flexibility Act (5 U.S.C. chapter 6) (RFA) requires the agency ``to 
prepare and make available for public comment an initial regulatory 
flexibility analysis'' that will ``describe the impact of the proposed 
rule on small entities.'' See 5 U.S.C. 603(a). Section 605 of the RFA 
provides an exception to this requirement if the agency certifies that 
the proposed rulemaking will not have a significant economic impact on 
a substantial number of small entities. A small entity is defined as a 
small business, small nonprofit organization, or small governmental 
jurisdiction. See 5 U.S.C. 601(3) through (6). The IRS and the Treasury 
Department conclude that the proposed rule, if promulgated, may have a 
significant economic impact on a substantial number of small entities. 
As a result, an initial regulatory flexibility analysis is required.

Description of the Reasons Why Action by the Agency Is Being Considered

    The IRS and the Treasury Department implemented regulatory changes 
in 2010 that required any individual who prepares or who assists in 
preparing all or substantially all of a tax return or claim for refund 
for compensation to obtain a PTIN. Pursuant to the PTIN regulations, 
only those individuals who apply for and maintain a current PTIN may 
prepare tax returns and claims for refund for compensation. Because the 
ability to prepare tax returns and claims for refund for compensation 
is limited to individuals who have a PTIN, the provision of a PTIN 
confers a special benefit. The IRS incurs costs associated with 
processing a PTIN application and providing the special benefit 
associated with the PTIN. The IRS and Treasury Department initially 
determined that the full cost of providing the special benefit 
conferred by a PTIN was $50 for each original application and each 
annual renewal. In accordance with OMB Circular A-25, the IRS and 
Treasury conducted a biennial review of the PTIN user fee amount in 
2015 and determined that the full cost of providing the special benefit 
conferred by a PTIN had been reduced to $33 for each original 
application and each annual renewal.

A Succinct Statement of the Objectives of, and Legal Basis for, the 
Proposed Rule

    The objective of the proposed regulations is to recover the costs 
to the government associated with providing the special benefit that an 
individual receives upon applying for or renewing a PTIN. These costs 
include activities, processes, and procedures related to the electronic 
and paper registration and renewal submissions; tax compliance and 
background checks; professional designation checks; foreign preparer 
processing; compliance and complaint activities; information technology 
and contract-related expenses; and communications. The PTIN user fee 
also takes into account various indirect program costs, including 
management and support costs. OMB Circular A-25 encourages user fees 
when special benefits are conferred on identifiable recipients. 
Individuals who obtain a PTIN receive the ability to prepare or assist 
in preparing all or substantially all of a tax return or claim for 
refund for compensation. The ability to prepare or assist in preparing 
all or substantially all of a tax return or claim for refund for 
compensation is a special benefit.
    The legal basis for the PTIN user fee is contained in section 9701 
of title 31.

A Description of and, Where Feasible, an Estimate of the Number of 
Small Entities to Which the Proposed Rule Will Apply

    The proposed regulations affect all individuals who prepare or 
assist in preparing all or substantially all of a tax return or claim 
for refund for compensation. Only individuals, not businesses, can 
apply for or renew a PTIN. Thus, the economic impact of these 
regulations on any small entity generally will be a result of an 
individual tax return preparer who is required to apply for or renew a 
PTIN owning a small business or a small business otherwise employing an 
individual tax return preparer who is required to apply for or renew a 
PTIN.
    The appropriate NAICS codes for PTINs are those that relate to tax 
preparation services (NAICS code 541213), offices of certified public 
accountants (NAICS code 541211), other accounting services (NAICS code 
541219), and offices of lawyers (NAICS code 541110). Entities 
identified as tax preparation services, offices of certified public 
accountants, and other accounting services are considered small under 
the Small Business Administration size standards (13 CFR 121.201) if 
their annual revenue is less than $20.5 million. Entities identified as 
offices of lawyers are considered small under the Small Business 
Administration size standards if their annual revenue is less than $11 
million. The IRS estimates that approximately 70 to 80 percent of the 
individuals subject to these proposed regulations are tax return 
preparers operating as or employed by small entities.

A Description of the Projected Reporting, Recordkeeping and Other 
Compliance Requirements of the Proposed Rule, Including an Estimate of 
the Classes of Small Entities Which Will be Subject to the Requirement 
and the Type of Professional Skills Necessary for Preparation of the 
Report or Record

    No reporting or recordkeeping requirements are projected to be 
associated with this proposed regulation.

An Identification, to the Extent Practicable, of all Relevant Federal 
Rules Which May Duplicate, Overlap, or Conflict With the Proposed Rule

    The IRS is not aware of any Federal rules that duplicate, overlap, 
or conflict with the proposed rule.

[[Page 66853]]

A Description of Any Significant Alternatives to the Proposed Rule 
Which Accomplish the Stated Objectives of Applicable Statutes and Which 
Minimize Any Significant Economic Impact of the Proposed Rule on Small 
Entities

    The IOAA authorizes the charging of user fees for agency services, 
subject to policies designated by the President. OMB Circular A-25 
implements presidential policies regarding user fees and encourages 
user fees when a government agency provides a special benefit to a 
member of the public. In the IOAA, Congress has stated a preference 
that special benefits be self-sustaining.
    A PTIN is required for an individual to prepare or assist in 
preparing all or substantially all of a tax return or claim for refund 
for compensation. PTINs are used by the IRS to collect and track data 
on tax return preparers. This data allows the IRS to track the number 
of persons who prepare or assist in preparing returns and claims for 
refund, the qualifications of those persons who prepare or assist in 
preparing returns and claims for refund, the number of returns each 
person prepares, and, when instances of misconduct or potential 
misconduct are detected, locate and review returns and claims for 
refund prepared by a specific tax return preparer. PTINs must be 
renewed annually to ensure that the identifying information associated 
with a PTIN is current.
    Due to the costs to the government to process the application for a 
PTIN, the requirement to include a PTIN on tax returns and claims for 
refund, and the expressed preference in the IOAA that special benefits 
be self-sustaining, there is no viable alternative to imposing a user 
fee.

Comments and Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any written (a signed original and eight 
(8) copies) or electronic comments that are submitted timely to the 
IRS. The IRS and Treasury Department request comments on all aspects of 
these proposed regulations. All comments that are submitted by the 
public will be made available for public inspection and copying. A 
public hearing will be scheduled if requested in writing by any person 
who timely submits written comments. If a public hearing is scheduled, 
notice of the date, time, and place for the public hearing will be 
published in the Federal Register.

Drafting Information

    The principal author of these regulations is Hollie M. Marx, Office 
of the Associate Chief Counsel (Procedure and Administration).

List of Subjects in 26 CFR Part 300

    Reporting and recordkeeping requirements, User fees.

Proposed Amendments to the Regulations

    Accordingly, 26 CFR part 300 is proposed to be amended as follows:

0
Paragraph 1. The authority citation for part 300 continues to read as 
follows:

    Authority: 31 U.S.C. 9701.

0
Par. 2. Section 300.13 is amended by revising paragraphs (b) and (d) to 
read as follows:


Sec.  300.13  Fee for obtaining a preparer tax identification number.

* * * * *
    (b) [The text of proposed Sec.  300.13(b) is the same as the text 
of Sec.  300.13T(b) published elsewhere in this issue of the Federal 
Register].
* * * * *
    (d) [The text of proposed Sec.  300.13(d) is the same as the text 
of Sec.  300.13T(d) published elsewhere in this issue of the Federal 
Register].

Karen M. Schiller,
Acting Deputy Commissioner for Services and Enforcement.
[FR Doc. 2015-27791 Filed 10-29-15; 8:45 am]
BILLING CODE 4830-01-P