Tax professionals must maintain an active preparer tax identification number (PTIN) to legally prepare federal tax returns for compensation.

The Steele v. United States ruling, released last week by the U.S. Court of Appeals for the D.C. Circuit, confirms that the IRS can indeed require paid preparers to obtain and renew a PTIN. This ruling reinforces the foundation of IRS oversight of the paid preparer community, a key component in protecting taxpayers and the integrity of the tax system.

The court did not conclusively decide whether the current PTIN fee amount is reasonable in all respects, leaving the door open for future challenges. Importantly, this was a procedural defeat for the preparers: the court ruled their challenge could not proceed under current legal standards but did not conclude that the current PTIN fee structure is unquestionably reasonable or fair.

PTIN basics and renewal costs

A PTIN is a unique identification number issued by the IRS to individuals authorized to prepare federal tax returns for compensation. Anyone who prepares or assists in preparing federal returns for pay must have a valid PTIN before doing so. PTINs belong to the individual, not the business or firm.

PTINs must be renewed annually by submitting Form W-12, IRS Paid Preparer Tax Identification Number (PTIN) Application and Renewal, to the IRS and paying the applicable fee; the 2025 renewal cost is $19.75, comprised of $11 for the IRS fee, plus a separate $8.75 fee charged by a third-party contractor. This can be submitted online using the IRS portal.

Short history of the Steele case

The Steele litigation has been ongoing for more than a decade. In 2014, a group of preparers filed a suit, arguing that PTIN fees were excessive and that the IRS lacked authority to require a PTIN. Over time, courts consistently recognized that the IRS possesses statutory authority to require PTINs but questioned whether the amount charged was reasonable. Earlier decisions resulted in the IRS lowering the fee from $30.75 to $11 as of October 2023, reflecting the actual costs incurred by the agency in administering the PTIN program.

What was challenged in the Steele case?

The plaintiffs in Steele argued that the IRS lacked statutory authority to require PTINs and that the fees charged were excessive and unjustified. They claimed that the PTIN program served no legitimate regulatory purpose and placed undue financial burdens on preparers, especially those who prepare only a small number of returns each year.

What did the court say (and what it didn’t)?

The D.C. Circuit upheld the IRS’s authority to require PTINs, reaffirming that the agency has discretion to regulate who practices before it and how they are identified. However, the court did not definitively rule that the current PTIN fee structure is unassailable. In essence, this was a procedural defeat for the challengers: the court rejected their arguments but left open the possibility that future litigation could test the reasonableness of the fees. The key takeaway is that this ruling confirms the requirement to maintain an active PTIN but does not foreclose all debate about fee amounts.

Take action with NATP

The Steele decision makes clear that a valid PTIN is required to prepare federal tax returns for compensation. Renew annually using Form W-12 and pay the correct fees. To assist in staying compliant, follow NATP for the latest IRS updates, practical guidance and tools to keep your business ahead. We’ll continue to monitor any further litigation on PTIN fees and update members accordingly.