Question

To avoid the risk of penalties, tax preparers must abide by rules regarding preparer tax identification numbers (PTINs). Which of the following statements is TRUE regarding PTINs?

1. A PTIN is required semi-annually for anyone who prepares or assists in preparing federal tax returns for compensation.

2. If a tax preparer does not have a PTIN, they can still prepare tax returns for compensation.

3. The IRS may provide a PTIN to taxpayers who are victims of identity theft.

4. The preparer must enter their PTIN on the tax return in the space provided.

Answer 1

The true statement regarding PTINs is that tax preparers must enter their PTIN on the tax returns they prepare for compensation. PTINs are not issued on a semi-annual basis, and they are specific to tax preparers, not taxpayers who are victims of identity theft.

Step-by-step explanation:

The statement that is TRUE regarding preparer tax identification numbers (PTINs) is: 4. The preparer must enter their PTIN on the tax return in the space provided. PTINs are mandatory identifiers that all paid tax preparers must use on U.S. federal tax returns or claims for refund submitted to the Internal Revenue Service (IRS). A PTIN is required for each tax preparer annually, not semi-annually. It is incorrect to say that tax preparers can legally prepare tax returns for compensation without a PTIN. Also, PTINs are for tax preparers and not provided to taxpayers as a direct consequence of identity theft, though the IRS has other mechanisms to assist identity theft victims.

Answer 2

The correct statement about PTINs is that a tax preparer must enter their PTIN on tax returns they prepare for compensation. PTINs must be renewed annually and are not issued to taxpayers, even if they are identity theft victims.

Step-by-step explanation:

Out of the statements provided regarding preparer tax identification numbers (PTINs), the true one is that the preparer must enter their PTIN on the tax return in the space provided. A PTIN is an identification number that all paid tax preparers must use on U.S. federal tax returns or claims for refund submitted to the Internal Revenue Service (IRS). It is important to note that individuals who are compensated for preparing, or assisting in the preparation of, federal tax returns are legally obligated to have a PTIN. This number must be renewed annually, not semi-annually. Furthermore, a tax preparer cannot prepare tax returns for compensation without a valid PTIN. The IRS does not provide PTINs to taxpayers, regardless of whether they are victims of identity theft; the PTIN is specifically for tax preparers.