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The Internal Revenue Service (IRS) has implemented significant changes, including reduced fees for preparer tax identification numbers (PTINs) and updates to its digital self-service portal, Tax Pro Account. In a move aimed at easing the burden on tax professionals and enhancing their services for clients, the IRS has reduced PTIN application and renewal fees from $30.75 to $19.75. This reduction comprises an $11 IRS user fee and an $8.75 fee payable directly to a third-party contractor.

Background: Legal Challenge Leads to Fee Recalculation

Following a court ruling earlier this year in Steele v. IRS, where it was deemed that PTIN fees were excessive, the IRS reevaluated the fee structure. Taking into account the court’s decision and the biennial review requirement outlined in OMB Circular A-25, the IRS recalculated the user fee and the third-party contractor fee. The $11 IRS user fee is based on an estimated cost of $10.79 per application, considering a total of 2.5 million applicants over the fiscal years 2024 to 2026.

Future Changes to Contractor Fee

The $8.75 fee paid to the third-party contractor might change in 2026 when the current contract expires and a new computation is conducted, according to the IRS. This contractor is responsible for issuing, renewing, and maintaining PTINs. The annual application and renewal period for PTINs for the 2024 filing season is set to commence shortly.

Tax Pro Account Enhancements

In addition to the fee reduction, the IRS has introduced new features to Tax Pro Account, its digital self-service portal for tax professionals. Tax professionals can now access their clients’ tax information, including balance due amounts, and withdraw from active authorizations online in real-time. These enhancements facilitate a seamless experience for tax professionals and their clients.

Streamlining Authorization Processes

Tax professionals using Tax Pro Account can send power of attorney and tax information authorization requests directly to a taxpayer’s individual IRS online account. Once approved by the taxpayer and validated, the authorization is immediately recorded in the Centralized Authorization File (CAF) database. This digital process eliminates the need for faxing, mailing, or uploading information.

Looking Ahead: IRS Commissioner’s Statement

IRS Commissioner Danny Werfel emphasized the significance of these changes, stating, “As part of our transformation efforts, we will be working to add new technology and expand our relationship with the tax professional community. The ongoing improvements to the Tax Pro Account are just part of a larger effort.”

These updates, effective from October 19, mark a step forward in the IRS’s efforts to enhance services, reduce fees, and streamline processes for tax professionals and their clients.

Source (Journal of Accountancy news).