Many people are ever suspicious of the private sector and fervently believe that government should control certain segments of our economy. This wishful (and delusional) thinking is most prevalent in the health care industry, where the left regrets not having passed a single-payer (government-controlled) system instead of ObamaCare. Having recently undergone a painful interaction with the federal government, I can only wonder what planet these people are from. The experience made me doubt why almost anything would be left in the hands of federal bureaucrats.
This story begins with something the government did that was good; but, as usual, they found a way to turn it into a disaster. As a tax preparer, I was required to put my social security number on tax returns. But in these times of rampant identity theft, I’m sure you can understand that having your social security number floating around on hundreds of documents is not particularly palatable. So in coordination with the community of CPAs and enrolled agents, the IRS implemented a Preparer Tax Identification Number (PTIN) to solve the problem. We obtained our PTIN, started using it on tax returns, and life was beautiful. Predictably, however, the government could not leave well enough alone.
Flash forward a few years. For many good reasons, the IRS decided that they needed to register every tax preparer. There were people – generally not CPAs or enrolled agents – who were abusing the tax system, usually by fraudulently claiming an earned income tax credit (EITC). The EITC is known as a “refundable credit,” which means that a low-income worker can get money back from the government even without paying any withholding. Unfortunately, there has been a lot of cheating and abuse, including a large number of claims made by fictitious people.
For some unknown reason, one registration isn’t sufficient. In their infinite wisdom, the IRS decided that anyone holding a PTIN had to register every year, along with payment of a new $63 annual fee (which I’m confident will go up soon). One has to log onto the IRS web site, set up an account, and then make a credit card payment.