Practices and Procedures · Requirements for Enrolled Agents

PTIN requirements

The PTIN rule is easy to state and easy to get wrong at the edges. The statute requires a preparer’s identifying number on the return; the regulation says what that number is and who may hold one; Circular 230 § 10.8 makes it a condition of practice. The examinable material is at the boundaries — who needs one, and what it does not authorise.

The rule

The statute (IRC § 6109(a)(4)). Any return or claim for refund prepared by a tax return preparer shall bear such identifying number for securing proper identification of the preparer, his employer, or both, as may be prescribed; “return” and “claim for refund” take the meanings given by IRC § 6696(e).

The number (Reg. § 1.6109-2(a)). Each filed return or claim prepared by one or more preparers must include the identifying number of the preparer required by Reg. § 1.6695-1(b) to sign it. Where there is an employment arrangement or association between the individual preparer and another person — except where the return is prepared for that person — that person’s identifying number must also appear. For returns filed after December 31, 2010, the individual’s number is the PTIN (Reg. § 1.6109-2(a)(2)(ii)); the employing person’s is that person’s employer identification number (Reg. § 1.6109-2(a)(3)).

Who must have one (Reg. § 1.6109-2(d)). Beginning after December 31, 2010, all tax return preparers must have a PTIN, applied for in the manner prescribed, including payment of a user fee. The regulation goes on to require, “except as provided in paragraph (h),” that a preparer be an attorney, certified public accountant, enrolled agent, or registered tax return preparer authorised to practise under 31 U.S.C. § 330 — and § 1.6109-2(h) reserves to the IRS the power to prescribe exceptions to that requirement “as necessary in the interest of effective tax administration.”

Who counts as a preparer for this purpose (Reg. § 1.6109-2(g)). Only for purposes of paragraphs (d), (e) and (f), a tax return preparer is any individual compensated for preparing, or assisting in preparing, all or substantially all of a return or claim. Three factors govern: the complexity of the individual’s work relative to the return’s overall complexity; the amount of the items of income, deduction or loss attributable to that work relative to the totals required to be reported; and the amount of tax or credit attributable to that work relative to the total liability. Preparing a single form or schedule — the regulation’s example is Schedule EIC — may constitute preparing all or substantially all.

Circular 230’s version (§ 10.8). Any individual who for compensation prepares or assists with the preparation of all or substantially all of a return or claim must have a PTIN, and is subject to subpart B duties and subpart C sanctions (§ 10.8(a)). Any individual may, for compensation, prepare less than substantially all of a return, appear as a witness, or furnish information at the IRS’s request (§ 10.8(b)). And anyone who for compensation prepares all or a substantial portion of a document pertaining to a taxpayer’s liability for submission to the IRS is subject to subparts B and C — but, unless otherwise a practitioner, may not prepare all or substantially all of a return or claim, or sign returns and claims (§ 10.8(c)).

Renewal, checks and penalty. The IRS may designate an expiration date for any PTIN and prescribe the time and manner of renewal, including a user fee (Reg. § 1.6109-2(e)); Circular 230 § 10.6(d)(2)(i) separately requires every enrolled agent to renew their PTIN as prescribed. The IRS may conduct a federal tax compliance check on a preparer who applies or renews (Reg. § 1.6109-2(f)). And a preparer who fails to comply with § 6109(a)(4) pays a penalty for each failure unless it is due to reasonable cause and not wilful neglect, subject to an annual cap (IRC § 6695(c)) — both amounts in the figures table.

Current figures

How it works in practice

Start with the sharpest distinction, the one the exam uses. Every enrolled agent must have a PTIN, whether or not they prepare a single return: the IRS states it in terms in the “Do I need a PTIN?” guidance, and Circular 230 § 10.6(d)(2)(i) makes PTIN renewal part of maintaining enrolled status. Attorneys and CPAs are treated differently — they need one only if they prepare for compensation all or substantially all of a federal return or claim. An enrolled agent doing pure representation work still holds and renews a PTIN; a CPA doing pure audit work does not.

Next, the “all or substantially all” test. It is not a page count and not a time sheet. Reg. § 1.6109-2(g) makes it a comparison across three dimensions — complexity, amounts, and tax effect — and the regulation’s own example is counter-intuitive: preparing Schedule EIC alone may amount to preparing substantially all of a return, because the credit can drive most of the tax result. Conversely, compiling a large volume of low-impact detail on a complex return may fall below the line.

Circular 230 § 10.8(b) is the safe harbour: three permitted acts for someone with no credential — preparing less than substantially all of a return for compensation, appearing as a witness, and furnishing information at the IRS’s request. None requires a PTIN or makes the individual a practitioner.

Section 10.8(c) is the trap. It extends subpart B duties and subpart C sanctions to anyone who for compensation prepares all or a substantial portion of a document pertaining to a taxpayer’s liability — a wider net than returns. Two limits then apply to anyone not otherwise a practitioner: no preparing all or substantially all of a return or claim, and no signing returns and claims. The paragraph also carves out the mechanical assistant: an individual described in Reg. § 301.7701-15(f) is not treated as having prepared a substantial portion by reason of that assistance.

What a PTIN is not matters as much as what it is. It confers no practice rights: it does not make an unenrolled preparer a practitioner, does not permit representation, and does not permit signing where § 10.8(c) forbids it. Nor is it an EFIN — the PTIN identifies an individual preparer and goes in the paid-preparer block, while the Electronic Filing Identification Number identifies an authorised e-file provider, may be issued to a firm, and carries no fee. Most preparers need both.

Three mechanical rules round it out, each from the IRS guidance opened for this page. A PTIN is individual and non-shareable — an office may not operate on one number, and no preparer may hold more than one. The applicant must be at least 18. And an employee who prepares only their employer’s returns as part of the job is not required to sign as a paid preparer and, absent other paid preparation, does not need a PTIN.

How this has changed

Reg. § 1.6109-2 dates from the 2010 return-preparer initiative: paragraph (a)(1) applies to returns filed after December 31, 2008, (a)(2)(ii) and (d) to returns and preparers after December 31, 2010, and (e) through (h) after September 30, 2010 (Reg. § 1.6109-2(i)). Circular 230 § 10.8 comes from T.D. 9527, applicable beginning August 2, 2011.

The most important currency point is textual. Both Reg. § 1.6109-2(d) and Circular 230 § 10.8(a) still say a PTIN holder must be an attorney, CPA, enrolled agent, or registered tax return preparer. That designation did not survive, and the IRS does issue PTINs to preparers holding none of the four credentials. The mechanism is in the regulations themselves: Reg. § 1.6109-2(h) authorises exceptions to the authorisation requirement “as necessary in the interest of effective tax administration,” and § 10.8(a) opens with “except as otherwise prescribed in forms, instructions, or other appropriate guidance.” Reading the credential sentence alone gives the wrong answer about who can hold a PTIN today.

The related point is what the exception does not do. An uncredentialed PTIN holder is still subject to Circular 230 subparts B and C under § 10.8(a) and (c), and still cannot represent taxpayers. The Annual Filing Season Program is the IRS’s voluntary route to limited representation rights for such preparers; it is not a Circular 230 designation and does not change § 10.8.

The § 6695(c) penalty is stated in the Code at its original figure and is adjusted annually for inflation; the current amount in the figures table comes from the annual inflation-adjustment revenue procedure, not from the statutory text.

Exam focus

The single most tested point is the asymmetry: every enrolled agent must hold and renew a PTIN, while attorneys and CPAs need one only when they prepare all or substantially all of a return for compensation.

Know the “all or substantially all” factors from Reg. § 1.6109-2(g) — complexity, amounts, tax effect — and that a single schedule can meet the test. Know the three things Circular 230 § 10.8(b) permits without a credential: preparing less than substantially all of a return, appearing as a witness, and furnishing information to the IRS.

Know that a PTIN is individual, unshareable, one per person, requires the holder to be at least 18, renews annually, and is distinct from an EFIN — and that the penalty for failing to furnish the identifying number is IRC § 6695(c), with a reasonable-cause defence.

Check yourself

1. Must an enrolled agent who prepares no returns for compensation obtain a PTIN? (A) No, the requirement attaches only to preparation (B) Yes, every enrolled agent must obtain and renew one (C) Only if the agent represents taxpayers in examinations (D) Only in a renewal year Answer: B. The IRS guidance states a PTIN must be obtained by all enrolled agents, and Circular 230 § 10.6(d)(2)(i) requires every enrolled agent to renew it as prescribed.

2. Which factor is not listed in Reg. § 1.6109-2(g) for “all or substantially all”? (A) Complexity of the work relative to the return’s overall complexity (B) Amount of income, deductions or losses attributable to the work (C) Hours spent relative to total preparation time (D) Amount of tax or credit attributable to the work Answer: C. The regulation lists complexity, amounts of items, and amount of tax or credit; hours worked is not a factor.

3. Which act may an uncredentialed individual with no PTIN perform for compensation under § 10.8(b)? (A) Sign a return as paid preparer (B) Prepare less than substantially all of a return (C) Represent a taxpayer in an examination (D) Prepare all of a simple return Answer: B. Section 10.8(b) permits preparing less than substantially all of a return, appearing as a witness, and furnishing information at the IRS’s request.

4. Three preparers in one office file all returns under the senior preparer’s PTIN. Permitted? (A) Yes, if he reviews every return (B) Yes, if the firm’s EIN also appears (C) No, each individual who prepares for compensation must have their own PTIN (D) Yes, for returns he signs Answer: C. Each preparer must have his or her own PTIN and may hold only one; Reg. § 1.6109-2(a)(1) requires the number of the preparer required to sign.

5. Which statement about the PTIN and the EFIN is correct? (A) They are the same number (B) The PTIN identifies an individual preparer and carries a fee; the EFIN identifies an e-file provider, may go to a firm, and is free (C) The EFIN is issued only to individuals (D) The EFIN replaces the PTIN on e-filed returns Answer: B. The PTIN goes in the paid-preparer block; the EFIN accompanies electronic return data. Most preparers need both.