Karina Basso  |  September 10, 2014

Category: Labor & Employment

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IRS class action lawsuitThis Monday, two accountants filed a tax preparer fee class action lawsuit in Washington D.C. federal court against the Internal Revenue Service alleging that it is unlawful for the IRS to require a $50 annual charge in order to obtain a preparer tax identification numbers (PTIN).

PTINs are unique to each tax filer, stay fixed and do not change year to year, much like an individual’s Social Security number. In 2010, the IRS changed their policy and instituted the $50 PTIN fee along with strict penalties against tax preparers who do not pay the yearly fee.

Adam Steele and Brittany Montrois are licensed certified public accountants (CPAs) with good standings in the roles of CPAs in the states of Minnesota and Georgia respectively. Steele and Montrois have filed this IRS PTIN class action lawsuit on behalf of themselves and estimated 700,000 Class Members who work as paid tax preparers within the United States.

In their IRS class action lawsuit, Steele and Montrois allege, “The [IRS’s] Final Regulations state that the special benefit tax return preparers receive in exchange for the fee is the right to prepare returns and refund claims for compensation. However, … that right exists and has always existed. Thus there is no benefit and no special benefit. Accordingly, charging of fees to issue a PTIN is unlawful.”

Steele and Montrois further allege that by instituting this PTIN fee and creating heavy penalties of up to $25,000 a year for not including a PTIN on a tax return, the IRS has exceeded its authority because the 2010 PTIN fee did not come about as a result of legislation.

The IRS has claimed that this relatively new fee allows the government to better monitor who is eligible to prepare tax returns. However, the plaintiffs of the PTIN fee class action lawsuit argue that it is unlawful for the IRS to require and enforce a user fee that exceeds the amount needed to provide a special benefit. While the IRS charges $50 to $64 for renewal PTIN and first time PTIN registering, the IRS has allegedly indicated that the actual cost for the agency to provide this benefit is closer to $13 to $14.25.

The rest of the fee is kept by the IRS as part of covering “costs of administering registration cards” among other so-called costs, though the plaintiffs claim that even additional administration costs could not equal the costs of the PTIN fees.

According to the PTIN class action lawsuit, “Plaintiffs seek refunds for all user fees paid, plus interest, with respect to those Plaintiffs who have already paid such fees. Plaintiffs also ask the Court  to issue an injunction prohibiting the Defendant and any agency of the Defendant from charging user fees in order to receive an initial PTIN or annually renew a PTIN. Finally, Plaintiffs ask the Court to issue an injunction prohibiting Treasury from asking more information than is necessary to issue a PTIN, and requiring  Treasury to ask for such necessary information only once.”

Adam Steele and Brittany Montrois are represented by Stuart J. Bassin of The Bassin Law Firm PLLC.

The IRS PTIN Fee Class Action Lawsuit is Adam Steele and Brittany Montrois, et al. v. United States of America, Case No. 1:cv-14-1523, in the U.S. District Court for the District of Columbia.

UPDATE: A judge has granted Class certification to a group of tax preparers who were charged a fee to obtain or renew a preparer tax identification number (PTIN).

UPDATE 2: On June 1, 2017, a federal judge found that the IRS does not have authority over tax return preparers and must refund PTIN fees.

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6 thoughts onAccountants File Class Action Lawsuit over IRS Tax Preparer Fees

  1. Robin Darling says:

    How to file a claim

  2. Sharon Williams says:

    How can I file my claim

  3. Top Class Actions says:

    UPDATE 2: On June 1, 2017, a federal judge found that the IRS does not have authority over tax return preparers and must refund PTIN fees.

  4. Top Class Actions says:

    UPDATE: A judge has granted Class certification to a group of tax preparers who were charged a fee to obtain or renew a preparer tax identification number (PTIN).

  5. Jessica Ivy says:

    Tax prep workers do not want to pay fees for licensure, and the IRS needs to fund operations with the fees, it would seem a most simple resolve to just stop taxing people on what they earn and save all of the money spent on documenting how much people earn. The most simple answer is usually the right one, but how would we then pay for the thousands of things tax money isn’t paying for anyway? .. that is always the argument but the answer is always “just like every other country that does not tax citizens”. Voters always seem to misunderstand that most basic concept.

    1. Gail Wilson says:

      I wants to file a claim… how can I file a claimed

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