Legal Definitions - Preparer Taxpayer Identification Number (PTIN)

A Preparer Taxpayer Identification Number (PTIN) is a unique identification number issued by the Internal Revenue Service (IRS) to individuals who prepare or assist in preparing federal tax returns for compensation. Essentially, if you are paid to complete or help complete federal tax forms for others, whether they are individuals or businesses, you are required to have a PTIN.

This number helps the IRS track and regulate tax preparers, ensuring accountability and maintaining the integrity of the tax system. To obtain a PTIN, an applicant must provide personal and professional information to the IRS and pay an application fee. The PTIN is valid for one calendar year and must be renewed annually.

Here are some examples of when a PTIN would be required:

• Example 1: Independent Tax Consultant

  Maria operates a small accounting practice where she prepares federal income tax returns for individuals and small businesses in her community. She charges a fee for each return she completes. Because Maria receives compensation for preparing federal tax returns on behalf of her clients, she is legally required to obtain and maintain a current PTIN from the IRS.

• Example 2: Employee at a Tax Preparation Firm

  David works for a national tax preparation chain. His job involves interviewing clients, inputting their financial data into tax software, and reviewing the prepared federal tax returns before they are filed. Although David is an employee and not directly charging clients, his employer compensates him for his role in preparing federal tax returns. Therefore, David must also have a valid PTIN.

• Example 3: Attorney Specializing in Business Tax

  Sarah is an attorney who specializes in corporate law and often advises businesses on their tax obligations. When a client hires her to prepare and file their complex federal corporate income tax return (Form 1120), she charges a professional fee for this service. Since Sarah is preparing a federal tax return for compensation, she needs a PTIN, even though her primary profession is law.