Legislative / Regulatory | Taxation

PTIN non-compliance: Tax Armageddon?

Signhere I'll be honest: When the IRS announced that it's trying to track down about 100,000 tax preparers who have thus far failed to obtain the new Tax Preparer Identification Number, or PTIN, I didn't give it much thought.

We're talking about a new program, plus lots of confusion over who has to comply, plus lots of technical difficulties at the outset. Given all of that, I'm a bit surprised the number was only 100,000.

Then I read Robert McKenzie's take in Forbes. It's equal parts alarmist and thought provoking, as evidenced by its title: "100,000 Preparers Who Failed to Follow New Registration Rules Are a Danger to Public." Here's an excerpt:

"Given the extensive publicity by the IRS over the past year, it is certain that this subgroup of non-compliant paid tax preparers are probably among the most incompetent in the profession. Some may have chosen to not register because the IRS has announced its intent to perform background checks on those enrolling in the program. Others may have missed the IRS publicity campaign. If the preparers are so out of the loop they missed the tidal wave of publicity surrounding this program, it is almost an absolute certainty that they also fail to maintain minimum levels of knowledge of tax laws to prepare accurate tax returns."

The first thought McKenzie's column provoked in me was: "That's a bit harsh." Sure, phrases like "incompetent," "out of the loop" and "unscrupulous" apply to some of the folks in question. But I think it's a bit too early in the game to use such broad strokes to paint this particular scene.

Consider this take from "TaxGirl" Kelly Phillips Erb, who points to the hodge-podge of rules, regulations and exemptions that surround the PTIN program as evidence that we should have expected some compliance issues:

"Realistically, much like other parts of the Tax Code, it seems that a particular goal (tax preparer regulation) has been so exempted, excepted and watered down that it doesn’t resemble its former self. It is perhaps then, no wonder, that there’s not 100% compliance for the initiative."

In other words, let's figure out what this program wants to be before we start labeling everyone who didn't immediately comply as unscrupulous and incompetent. Some folks deserve those attacks. Others just need to catch up.

Am I wrong? Let me know what you think, then learn more about the PTIN program at the following events;


Bill Sheridan