LATAX Highlights from the IRS Advisory Council Report – Tax Preparers
In November 2024, the IRS Advisory Council released its annual report addressing key issues for the tax professional community. LATAX has summarized the recommendations that specifically impact tax preparers and the use of Preparer Tax Identification Numbers (PTINs).
Key Recommendations
- Deactivate inactive PTINs: Archive PTINs not renewed in the last three years to prevent unauthorized use.
- Identity verification: Match the preparer’s name with the PTIN on tax returns before processing refunds, ensuring the information is accurate and fraud-free.
- Unified platform: Enable PTIN application and renewal through the Tax Pro account for streamlined access to IRS online services.
- Effective communication: Promote procedures for deactivating PTINs via the PTIN homepage and email renewal notices.
- Technology validation: Require software providers to validate PTINs in a manner similar to EFIN validation.
- Late renewal penalties: Implement fees for late PTIN renewals after December 31 to encourage timely renewals.
- Educational outreach: Leverage the PTIN renewal process to inform tax preparers about training programs, IRS forums, and webinars.
- Expanded data access: Allow tax professionals to view not only 1040 forms filed under their PTIN but also other forms such as 706, 709, 1120, and more.
Key Issues Identified
- Inactive PTIN excess: Over one million inactive PTINs remain in the system, enabling potential misuse and fraud.
- Security vulnerabilities: Lack of multifactor authentication in the PTIN renewal process exposes preparers to risks.
- Limited real-time validation: Current systems fail to verify PTIN validity during electronic tax return submissions.
Conclusion
The IRS Advisory Council emphasizes the need for enhanced security and functionality in PTIN systems to protect tax preparers and taxpayers alike. These recommendations aim to strengthen the integrity of the tax preparation process while fostering professionalism in the field.
