IRS Loses Suit- PTIN System Down

Internal Revenue Service federal building Washington DC USA

“On June 1, 2017, the United States District Court for the District of Columbia upheld the Internal Revenue Service’s authority to require the use of a Preparer Tax Identification Number (PTIN), but enjoined the IRS from charging a user fee for the issuance and renewal of PTINs. As a result of this order, PTIN registration and renewal is currently suspended.”

This was posted on the IRS site on June 5, 2017, after it was ruled by Federal Judge Royce Lamberth that fees charged for PTIN activation and renewals are unlawful acts by the IRS.  The case is Steele, et al. v. United States, No. 14-cv-1523-RCL, and is a class action representing all individuals and entities who have paid for a PTIN.

“PTINs have been required since the 2011 filing year and the IRS has collected between $175 million and $300 million in PTIN fees”

No doubt this is big news to all tax professionals. “PTINs have been required since the 2011 filing year and the IRS has collected between $175 million and $300 million in PTIN fees”, according to one of the plaintiffs, Joseph Henchman who is Vice President of Legal & State Projects at the Tax Foundation. This class action suit brought against the IRS in September of 2014 represents more than 700,00 practitioners. The IRS has also provided no update on when we can expect their PTIN System to be reactivated. In the meantime, no one will be able to register or renew their PTIN.

The IRS goes on to say that they are working with the Department of Justice on how to proceed and will post updates on their Tax Pros Page. We are waiting for updates to become available.

Check out this blog post by Joseph Henchman on June 6th. For more details on the case, you can review the court ruling here: Official court documents from the Steele, et al. v. United States, No. 14-cv-1523-RCL.

What are your thoughts on this ruling? Let us know here.

—Dylan Capaldo, National Account Manager