1. An individual who prepares all or substantially all of a tax return after December 31, 2010, must have a Preparer Tax ID Number (PTIN), whether or not that individual signs the return, and

2. Ultimately, only individuals who are authorized to practice before the IRS will be able to obtain a PTIN. Currently, the major categories of individuals authorized to practice before the IRS are:
a. Attorneys
b. CPAs
c. Enrolled agents
d. Enrolled actuaries
e. Enrolled retirement plan agents (ERPAs)

3. The IRS intends to add a sixth category of individuals authorized to prepare returns (and not generally authorized to practice before the IRS). This category will be known as “Registered tax return preparers" (RTRPs). To become an RTRP, an individual must pass an exam. Currently, the IRS plans to issue exams dealing with personal income tax return preparation (Form 1040 series). The IRS does not have immediate plans to issue exams for other types of returns.

The IRS has just released Notice 2011-6, which substantially modifies these rules. It contains relief important to retirement plan practitioners in several respects.

The Notice says that virtually all tax forms are returns, but includes a list of forms which are not returns. The 5500 series returns (5500, 5500-EZ, 5500-SF, 5558), 1099 forms (including 1099-R and 1099-MISC), W-2 forms, and determination letter forms (5300, 5307, 5310, 8717) are not considered “returns" for the PTIN requirements. That means a practitioner can prepare Form 5500 or Form 1099-R without having a PTIN.

However, there are several other tax forms ERISA practitioners prepare which apparently do require a PTIN. These include Form 5330 (retirement plan excise taxes, including the prohibited transaction penalty), Form 945 (withholding), and Form 990-T (unrelated business income tax). Practitioners who prepare these forms will need a PTIN. The Notice does not discuss the upcoming Form 8955-SSA.

The Notice also says that in three circumstances an individual can obtain a PTIN and prepare returns, even though the individual is non-credentialed (i.e., the individual is not an RTRP or otherwise authorized to practice before the IRS).

1. The IRS does not anticipate issuing the RTRP exam until “mid 2011." Until that time, non-credentialed individuals can obtain a “provisional PTIN." Although the PTIN must be renewed (with a new fee) every year, an individual with a provisional PTIN will not need IRS credentials until January 1, 2014.

2. A non-credentialed individual who is at least 18 years old who meets each of the following requirements can receive a PTIN: (1) The individual is supervised by someone with IRS credentials (other than an RTRP), (2) The supervisor actually signs the return, and (3) The individual is employed by the recognized firm of the supervisor. A recognized firm is a law firm, CPA firm, or other business owned at least 80% by persons (other than RTRPs) authorized to practice before the IRS.

3. An non-credentialed individual who is at least 18 years old can receive a PTIN if the individual certifies that the individual is not involved in preparing 1040 series forms.

By far the most important exception is the third. Unless and until the IRS issues competency exams for returns other than the 1040 series, you can get a PTIN and prepare any tax form other than those in the 1040 series.

To obtain a PTIN, you must apply online or on Form W-12 and pay a $64.25 user fee. Only applications after September 28, 2010 count. The IRS will issue PTINs only to individuals who pass a tax compliance check (verifying that they are up-to-date in filing and paying personal and business taxes) and ultimately a “suitability" check.

Persons authorized to prepare returns are subject to professional standards that govern other IRS practitioners. The IRS reserves the right to revoke a provisional PTIN for “disreputable conduct."

The January 18 Web seminar Good News on PTINs: What it Means and What’s Left, will cover this topic in details. Earn 1 hour of Ethics CE credit. See more details and register online on our Web site.

Plan Fees Workshop: Navigating the Maze – Jan/Feb 2011
The DOL has spent years working on guidance related to plan fees. What can the plan pay? How can fiduciaries understand what the plan is paying? What must fiduciaries tell participants? What must fiduciaries tell the DOL? What must those charging the fees disclose? Finally, it is all coming together, with several sets of new regulations and new requirements. Unfortunately, the various pieces of guidance use different thresholds and different terminology (or, even worse, the same terms to mean different things). The result, instead of understanding, is a maze of confusion and frustration. Attend this new workshop to find out what the rules are and what they mean for you. Learn what to expect and what to do. We will help you get through the maze of regulations to achieve compliance with the new disclosure requirements. We also will provide sample forms to facilitate compliance with the new regulations. Register for the workshop on our Web site.

Orlando Advanced Pension Conference – Early Registration Discount Ends January 10
February 9-11, 2011. Timely topics include: keeping current – a summary of changes over the past year, including the DOL’s expected new rules on fiduciaries and investments; Washington update with Craig Hoffman; service provider fee disclosure regulations; overview of the anticipated participant fee disclosure rules; designing service agreements under the new rules; DB and cash balance plans for DC practitioners; mock IRS audit; troubleshooting EFAST2; plan correction; and more. Plus, earn up to 19 hours of continuing education credits including 1 ethics hour. Register by January 10 and save $150. View the complete agenda and register online.