The Internal Revenue Service (IRS) released proposed regulations that would establish a fee for individuals who apply for a preparer tax identification number (PTIN). In March, the IRS issued proposed regulations that would require certain tax return preparers to obtain a number. The IRS is working to finalize those proposed regulations, which are the first of a series of steps planned to increase oversight of federal tax return preparation.

The proposed regulations would establish a $50 fee—payable to the IRS—to cover technology costs, as well as compliance and outreach efforts associated with the new PTIN program. The proposed regulations would also provide for an additional fee, expected to be substantially lower than $50, to be charged by the third-party vendor chosen to operate the new online application system. That fee amount is expected to be announced soon, as well as additional details about the launch of a new online application system. The IRS also noted these fees could change in future years as program costs are reevaluated.

Those required to pay the fee include CPA’s, lawyers or enrolled agents who get paid to prepare a business or another individual’s tax returns. The new proposed regulation would require paid tax preparers to register with the IRS, obtain a PTIN and pay the user fee. Registration must be renewed every three years and another user fee payment must be made at the time of renewal. Only volunteer or uncompensated preparers would be exempt from the fee.

Currently, the IRS does not require paid tax preparers to register with the IRS but they must sign the returns they prepare and provide their Social Security Number (SSN) or PTIN. Acquiring a PTIN was optional for people who did not want to disclose their SSN.

The Office of Management and Budget advised federal agencies to charge user fees to recover the cost of services that convey special benefits beyond those available to the general public, which includes the authority to prepare federal tax returns for compensation.

In January, IRS Commissioner Doug Shulman announced the results of a comprehensive six-month study of the tax return preparer industry, which proposed new registration, testing, and continuing education of tax return preparers. According to the commissioner, with more than 80 percent of American households using a tax preparer or tax software to help them prepare and file their taxes, higher standards for the tax return preparer community will significantly enhance protections and service for taxpayers, increase confidence in the tax system and result in greater compliance with tax laws over the long term.

Tax professionals and other interested parties have until Aug. 23 to submit comments regarding the proposed regulations. The official publication date of these proposed regulations is July 23. The earliest effective date of this new regulation is next filing season.

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