PTIN fees are valid, Federal Court holds.

• Author: Nevius, Alistair M.
• Position: Preparer tax identification numbers

The Eleventh Circuit held that the fee the IRS charges to issue preparer tax identification numbers (PTINs) to tax return preparers, who are required to use the PTINs on returns they prepare, is valid because the PTIN confers a special benefit on the preparers: the privilege to prepare tax returns for others for compensation (Jesse E. Brannen, III, P. C, No. 11-14138 (11th Cir. 6/7/12), aff'g No. 4:11-cv-00135-HLM (N.D. Ga. 8/26/11)).

The plaintiff, an attorney and CPA who prepares tax returns, argued that Sec. 6109, which requires PTINs for tax return preparers, did not authorize a user fee to be charged for the PTINs. The court, however, explained that 31 U.S.C. Section 9701, the Independent Offices Authorities Act, permits agencies to charge a fee for a service or thing of value the agencies provide. A fee is distinguishable from a tax, which agencies may not levy because taxes are the exclusive domain of the legislature. A fee, however, cannot be charged if the service or thing of value benefits the general public; it must confer a special benefit on the person being charged the fee (Federal Power Comm'n v. New England Power Co., 415 U.S. 345...