Preparer Tax Identification Number

If they won't put their name on it, you shouldn't trust them with yours.

Red flag number six, they refuse to sign it or provide a PTIN.

Now, the IRS requires paid preparers to sign the return and provide a practitioner tax identification number, also known as a PTIN.

No signature, no PTIN, no accountability.

That's not optional.

That's the law.

Let's start with the group of penalties that are sixty dollars for twenty twenty-five for each failure, with a maximum penalty of thirty-one thousand five hundred dollars per year.

These include the failure to furnish a copy of the return to the taxpayer, failure to sign the return as the preparer, failure to include your Preparer Tax Identification Number, or PTIN, and failure to retain a copy of the return or a list of prepared returns for three years.

An exam question might list several of these small failures together, asking you to calculate the total penalty.

So know that sixty-dollar figure.

A classic exam question involves a preparer who doesn't ask follow-up questions or document their inquiries when a client's eligibility for the EITC seems questionable.

You must complete and retain Form eighty eighty sixty seven, the Paid Preparer's Due Diligence Checklist, to prove you met the requirements.

A great mnemonic to remember the basic duties is copy, sign, PTIN, retain for the client's gain.

Missing any of these basic administrative steps is an easy penalty for the IRS and should be an easy point for you on the exam.