Alert: Preparer Tax ID No. (PTIN) Proposed Regulations Earlier this year the Internal Revenue Service issued proposed regulations allowing the IRS to require that paid tax return preparers use Preparer Tax Identification Numbers (PTINs) as the preparers' identifying number on all tax returns and tax refund claims that they prepare. On Aug. 2, 2010, thirty-one members of the House of Representatives responded to Treasury Secretary Timothy Geithner, expressing their concerns with certain aspects of the proposed regulations. They have requested, among other items, that the regulations be modified to exempt from preparer registration obligations those non-signing preparers who work for a CPA firm. The proposed regulations also provide that tax return preparers must apply for a PTIN, regularly renew the PTIN, and pay associated user fees. The IRS plans to launch a new system through which all tax return preparers will be required to register, including those who already have a PTIN. Tax return preparers who already have a PTIN will have the number revalidated and reassigned to them through the new system, while tax return preparers who do not have a PTIN will be issued one through the new system. As of Aug. 19, the IRS has indicated that mid-September is the current target date for the launch of this new on-line registration system. Effective Date Under the proposed regulations, the IRS will issue forms, instructions, or other guidance that will require paid tax return preparers to begin using PTINs for all tax returns and refund claims filed after Dec. 31, 2010. The proposed PTIN regulations are effective after the date that final regulations are published in the Federal Register. Note that the exact date that these rules will be adopted by the Treasury and included in the Federal Register remains uncertain. In its Special AICPA News Update of Aug. 23, the AICPA issued an action alert, requesting that all CPAs immediately contact the IRS to emphasize the burdens CPAs, CPA firms and businesses will face if the IRS fully implements its proposed Tax Preparer Registration program. The alert includes a sample e-mail message to be sent to the National Public Liaison for the IRS at *public_liaison@irs.gov and can be found at the following link: http://www.aicpa.org/Publications/Newsletters/AICPANewsUpdate/2010/Pages/20100823_SpecialAICPANewsUpdate_Vol13No35.aspx CAMICO is monitoring the proposed regulations and will communicate important developments to policyholders. Meanwhile, some useful links for more information are as follows: IRS FAQs The IRS updates FAQs on its proposed requirements for tax return preparers at: www.irs.gov/taxpros/article/0,,id=218611,00.html Articles "Members of Congress Ask Treasury to Modify Return Preparer Registration Plans," Journal of Accountancy (Aug. 11, 2010): www.journalofaccountancy.com/Web/20103190.htm "AICPA Comments on IRS PTIN Proposal," The Tax Adviser (July 1, 2010): http://www.aicpa.org/Publications/TaxAdviser/2010/July/Pages/NewsNotes_July2010-story-01.aspx "IRS Issues Prop. Regs. On Use of PTINs After 2010," The Tax Adviser (June 1, 2010): www.aicpa.org/Publications/TaxAdviser/2010/June/Pages/NewsNotes_jun10-story-04.aspx) "AICPA Submits Comment Letter on IRS PTIN Proposal," Journal of Accountancy (April 26, 2010): www.journalofaccountancy.com/Web/20102863.htm "IRS Proposes New Requirements for Return Preparers," Journal of Accountancy (Jan. 5, 2010): www.journalofaccountancy.com/Web/20102463.htm Text of Proposed PTIN Regulation http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=2010_register&docid=fr26mr10-17 -------------------------------------------------------------------------------------------------------------------------------------------------------------- Alert: FTC Extends Enforcement Deadline for 'Red Flags' Rule   The Federal Trade Commission announced on May 28 that it is further delaying enforcement of the "Red Flags" Rule through Dec. 31, 2010, while Congress considers legislation that would affect the scope of entities covered by the Rule. www.ftc.gov/redflagsrule. If Congress passes legislation limiting the scope of the Red Flags Rule with an effective date earlier than Dec. 31, 2010, the FTC will begin enforcement as of that effective date. In the interim, FTC staff has continued to provide guidance through materials posted on CAMICO has also developed a compliance template based on our interpretation of the impact to CPA firms of the Rule as currently written.  The Rule requires creditors or financial institutions with covered accounts to have in place programs to assist in identifying a potential identity theft. CAMICO's template, which is available on our Members-only website under "Knowledge Tree," "Alert Documents"and "2009" is intended for use by CAMICO policyholders only and should be modified as appropriate to reflect the firm's specific factual situation. CAMICO also has additional resources and tools available regarding identity theft on the ID Theft/Data Security Resource Center on the Members-only site. For previous eAlerts go to the Knowledge Tree and click the CAMICO Publications folder on the Members-only site.