IRS Releases Publication 3112 (4/2017), IRS e-file Application and Participation
Publication 3112 (4/2017)
- Jurisdictions
- LanguageEnglish
Applying to IRS e-file
This edition of Publication 3112, IRS e-file Application and Participation, replaces the previous edition last revised in March 2009. The IRS communicated most of the changes on its Web site at IRS.gov as they occurred since the last revision of this publication.
Benefits of IRS e-file
IRS e-file builds strong client relationships and improves business. Authorized IRS e-file Providers (Providers) meet the expectations of their clients. They electronically file their clients' returns including business, individual and information returns. The IRS processes e-file returns faster and with fewer errors. This means quicker refunds and less contact with the IRS. IRS e-file provides proof of receipt within 24 hours of sending returns to the IRS. Individual and business clients can e-file balance due returns and schedule an electronic funds transfer (EFT) from their account for any date. Taxpayers can delay out of pocket expenses by paying their individual income tax with a credit card. IRS e-file provides good return on your investment by saving money on costs of printing, mailing and document storage. It also helps to keep client information more organized, centralized, and readily available when needed.
The IRS also benefits when tax return preparers participate in IRS e-file and comply with the e-file standards. The Service has greater assurance that IRS e-file providers are conscientious and honest, and can rely on their representations in processing the returns they submit. Prescribing IRS e-file provider rules is relevant to the IRS mission by assuring taxpayers that paid preparers are honest, understand and will abide by the rules.
Most Tax Return Preparers Must Use IRS e-file
Since January 1, 2012, any tax return preparer who anticipates preparing and filing 11 or more Forms 1040EZ and 1041 during a calendar year generally must use IRS e-file (unless the preparer or a particular return is administratively exempt from the e-file requirement or the return is filed by a preparer with an approved hardship waiver).
Members of firms must count returns in the aggregate. If the number of applicable income tax returns is 11 or more, then all members of the firm generally must e-file the returns they prepare and file. This is true even if a member expects to prepare and file fewer than 11 returns on an individual basis. IRS refers to preparers who are subject to the e-file requirement as "specified tax return preparers." See IRS.gov for additional information and frequently asked questions.
What is an Authorized IRS e-file Provider
A Provider may be an Electronic Return Originator (ERO), Intermediate Service Provider, Transmitter, Software Developer, or Reporting Agent.
An Authorized IRS e-file Provider (Provider) is a business or organization authorized by the IRS to participate in IRS e-file. It may be a sole proprietorship, partnership, corporation or other entity. The firm submits an e-file application, meets the eligibility criteria and must pass a suitability check before the IRS assigns an Electronic Filing Identification Number (EFIN). Applicants accepted for participation in IRS e-file are Authorized IRS e-file Providers.
A Provider may be an Electronic Return Originator (ERO), Intermediate Service Provider, Transmitter, Software Developer, Reporting Agent or ACA Provider. These roles are not mutually exclusive. For example, a Provider that is an ERO may also be a Transmitter. Providers may also be tax return preparers, but the activities and responsibilities for IRS e-file and return preparation are distinct and different from each other.
Getting Started
Apply to participate in IRS e-file using the IRS e-file Application at IRS.gov. Applying is an easy three-step process (explained later). This applies to all applicants that want to develop software or e-file Forms 56, 720, 940, 941, 943, 944, 945, 990 series, 1040 series, 1041, 1065, 1120 series, 2290, 8849, 9465, certain state income tax returns, and extensions of time to file individual, business and exempt organization returns.
Filing state tax returns electronically is an additional business decision. Federal/State e-file is cooperative tax filing between the IRS and most of the states that have taxes. It allows electronic filing of both federal and state tax returns at one time. Each participating state has its own requirements, but all of the states require that the IRS accept applicants to participate in IRS e-file before they will accept the applicant to participate in their state electronic filing programs.
The IRS may conduct pilot programs looking for ways to improve and simplify IRS e-file. The IRS may conduct pilot programs within a limited geographic area or with a limited taxpayer or practitioner community. The rules for pilot programs are contained in implementing documents referred to as "Memoranda of Understanding" (MOU) or "Memoranda of Agreement" (MOA). The implementing document has the same force as Revenue Procedure 2007-40.
Applicants must become familiar with the rules and requirements for participation in IRS e-file by reading the applicable IRS e-file documents. Publication 1345 Handbook for Authorized IRS e-file Providers of Individual Returns provides rules and requirements for participation in IRS e-file. Violation of a provision of Publication 1345 or this publication may subject an e-file Provider to sanctions. As noted in Publication 1345, those sanctions may include suspension, expulsion or other legal action. More details on potential sanctions are provided below. See Appendix for list of publications and other sources of information about IRS e-file. Applicants with questions, or who do not know where to begin may call IRS e-help, toll-free at (866) 255-0654 for assistance.
Become an Authorized IRS e-file Provider in 3 Steps
You should submit your completed application no later than 45 days prior to the date you intend to begin filing returns electronically.
1. Create an IRS e-services Account.
2. Submit an IRS e-file Application.
3. Pass a Suitability Check.
STEP 1: Create an IRS e-services Account
Before you begin an electronic IRS e-file application, you must have an IRS e-services account, which facilitates electronic interaction with the IRS. When you apply for an e-services account, you must:
• Provide your legal name, Social Security Number (SSN), date of birth, phone number, e-mail address and your home mailing address (confirmation of your account will be mailed to you);
• Provide your Adjusted Gross Income from the current or prior tax year(this is for verification purposes only);
• Create a username, a password and a PIN and provide an answer to a question to recover your username;
• Make sure that every Principal and Responsible Official in your firm signs up for e-services account; and
• Return to your e-services account to confirm your registration within 28 days of your registration submission.
Contact e-help toll-free at (866) 255-0654, for assistance with e-services registration.
STEP 2: Submit Your Application to Become an Authorized IRS e-file Provider
Contact e-help toll-free at (866) 255 0654, for assistance with the IRS e-file Application.
Your firm can begin the IRS e-file application once all Principals have created their e-services accounts. The application process is necessary to protect the integrity and security of the electronic filing system. The process is comprehensive and designed to allow you to save your data during the session and to return to the application when convenient. Plan accordingly; the IRS may take up to 45 days to approve an application. The e-file application prompts for missing information to ensure that applicants submit only complete applications to the IRS.
Here are the key steps of the application process:
• Log in to e-services and access the e-file application;
• Select your e-file Provider Options -- return preparers who want to e-file for a client should select Electronic Return Originator (ERO);
• Enter identification information for your firm, as well as services provided to taxpayers;
• Enter the name, home address, social security number, date of birth and citizenship status for each Principal and Responsible Official in your organization;
• Enter the current professional information for Principals and Responsible Officials if an attorney, certified public accountant, enrolled agent, officer of a publicly traded corporation, or a bonded bank official.
• Call the IRS toll free at 866-255-0654 to request a fingerprint card for any Principal or Responsible Official who is not an attorney, certified public accountant, or enrolled agent, officer of a publicly traded corporation, or a bonded bank official, and
• Get fingerprinted by a trained professional at your local police station or at a company that provides this service. Write the tracking number provided after successful transmission of the application and mail the signed card to the IRS at Andover Campus, ATTN. EFU Acceptance, Testing Stop 983, 310 Lowell Street, Andover, MA 01812.
• Each Principal and Responsible Official must answer several personal questions, and sign the Terms of Agreement (TOA) using a PIN selected when creating an e-services account. In addition, each Principal and Responsible Official must declare under penalty of perjury that the personal information is true.
• Submit the IRS e-file Application and retain the tracking number provided after successful submission of the application.
Help is available when completing the application by clicking designated words and symbols. Contact e-help toll-free at (866) 255-0654, for assistance with the IRS e-file Application.
Provider Options
Become an Authorized IRS e-file Provider to enhance your business and your clients' return filing experience.
Applicants choose Provider Options, which include Electronic Return Originator, Intermediate Service Provider, Online Provider, Transmitter, Software Developer and Reporting Agent. Applicants may choose more than one Provider Option, for example; ERO and Transmitter on one application, but should only choose those options they intend to use.
Brief descriptions for each Provider type are below (See IRS e-file Participation, Provider Roles and Responsibilities for additional information): Electronic Return Originator (ERO) -- originates the electronic submission of tax returns to the IRS.
Intermediate Service Provider -- assists with processing return information between an ERO and a Transmitter, and the taxpayer and a Transmitter in the case of Online Filing.
Reporting Agent -- originates the electronic submission of certain returns for its clients, and/or transmits the returns to the IRS. A Reporting Agent must be an accounting service, franchiser, bank, or other entity that complies with Rev. Proc. 2007-38 on behalf of a taxpayer. Reporting Agents must submit Form 8655, Reporting Agent Authorization, to the IRS prior to or at the same time that they submit an IRS e-file Application.
Software Developer -- writes either origination or transmission software according to the IRS e-file specifications.
Transmitter -- sends the electronic return data directly to the IRS. EROs and Reporting Agents may apply to be transmitters and transmit return data themselves, or they may contract with an accepted third-party transmitters that can transmit the data for them. A Transmitter must have software and computers that allow it to interface with the IRS.
Online Provider -- An Online Provider allows taxpayers to selfprepare returns by entering return data directly on commercially available software, software downloaded from an Internet site and prepared off-line, or through an online Internet site. Online Provider is a secondary role; therefore, they must also choose another Provider Option such as Software Developer, Transmitter or Intermediate Service Provider. Although an ERO may also use an Internet Web site to obtain information from taxpayers to originate the electronic submission of returns, the ERO is not an Online Provider.
ACA Provider -- An ACA Provider is a business or entity engaged in manufacturing or importing branded prescription drugs sold to specified government programs ("covered entity") or a health insurance provider reporting net premiums written ("covered entity") that originates the electronic submission of its own information report(s) or a third party that will transmit report(s) on behalf of a covered entity. An ACA Provider that is a third party does not have signature authority for the covered entity that it services.
Note: A Large Taxpayer is a Provider Option on the IRS e-file Application but it is not an Authorized IRS e-file Provider. A Large Taxpayer is a business or other entity with assets of $10 million or more, or a partnership with more than 100 partners, that originates the electronic submission of its own return(s). To submit an IRS e-file Application, Large Taxpayers should follow instructions in Part V of Publication 4163, Modernized e-file (MeF) Information for Authorized IRS e-file Providers and Large Taxpayers (Corporations, Partnerships and Tax Exempt Organizations).
When completing the e-file application the applicant provides basic information about the business and its Principals and at least one Responsible Official. The roles of Principal and Responsible Official are not mutually exclusive; a Principal may also serve as the Responsible Official.
Principals and Responsible Officials
A Responsible Official ensures the Provider adheres to the provisions of the revenue procedure as well as all publications and notices governing IRS e-file.
Principals
Generally, the Principal for a business or organization includes the following: Sole Proprietorship: The sole proprietor is the Principal for a sole proprietorship.
• Partnership: Each partner who has a 5 percent or more interest in the partnership is a Principal. If no partner has at least a 5 percent or more interest in the partnership, the Principal is an individual authorized to act for the partnership in legal and/or tax matters. At least one such individual must be on the application. See Note below.
• Corporation: The President, Vice-President, Secretary, and Treasurer are each a Principal of the corporation. See Note below.
• Other: The Principal for an entity that is not a sole proprietorship, partnership, or corporation is an individual authorized to act for the entity in legal and/or tax matters. At least one such individual must be on the application.
Note: A large firm (other than a sole proprietor) with multi-layered management may include "Key Persons" who "participate substantially" in the firm's electronic filing operations as Principals on the firm's IRS e-file Application. A large firm usually has subsidiaries or multiple operating divisions/branches.
"Participate substantially" means participation that is extensive and substantive, with control over the firm's electronic filing operation, and not peripheral, clerical or ministerial.
Responsible Officials
Principals and Responsible Officials must submit fingerprints or provide valid professional status information.
A Responsible Official is an individual with authority over the Provider's IRS e-file operation at a location, is the first point of contact with the IRS, and has authority to sign revised IRS e-file applications. A Responsible Official ensures the Provider adheres to the provisions of the revenue procedure as well as all publications and notices governing IRS e-file. The Responsible Official may oversee IRS e-file operations at one or more offices, but must be able to fulfill identified responsibilities for each of the offices. If one individual cannot fulfill these responsibilities, add Responsible Officials to the e-file application. To add or change Responsible Officials, a Provider must revise its IRS e-file Application.
Each individual who is a Principal or Responsible Official must:
• Be a United States citizen or an alien lawfully admitted for permanent residence as described in 8 U.S.C. §1101(a)(20) (1994);
• Be at least 18 years of age as of the date of application; and
• Meet applicable state and local licensing and/or bonding requirements for the preparation and collection of tax returns.
Principals and Responsible Officials must submit fingerprints unless the individuals meet one of the exceptions shown below. Each Principal and Responsible Official must submit one set of fingerprints.
The unique fingerprint cards for IRS e-file are available only from the IRS by calling e-help, toll-free at (866) 255-0654. A trained specialist must fingerprint the individuals. Most local law enforcement offices and fingerprinting service companies charge a fee.
In lieu of fingerprints, Principals and Responsible Officials may need to enter professional status information (credential number, state of jurisdiction, and date of expiration) in the e-file application as evidence that they are one of the following:
• Attorney -- Must be in good standing of the bar of the highest court in any state, commonwealth, possession, territory or the District of Columbia at the time of the application. An attorney should not be under suspension or disbarment from practice before the IRS or from the bar of any state, commonwealth, possession, territory or the District of Columbia.
• Certified Public Accountant -- Must have a current license to practice as a Certified Public Accountant in any state, commonwealth, possession, territory or the District of Columbia at the time of the application. A CPA should not be under suspension or disbarment from practice before the IRS or from practice by a state, commonwealth, possession, territory or the District of Columbia. Licensed Public Accountants (LPAs) must provide fingerprints.
• Enrolled Agent (pursuant to part 10 of 31 C.F.R. Subtitle A) -- Must have a valid Enrolled Agent Number.
• Officer of a publicly held corporation -- May be asked to provide information about the exchange where listed and the name under which the stock is traded on corporate letterhead which carries the name of the officer.
• Banking official, bonded and fingerprinted within the last two years -- May be asked to provide a copy of the bonding certificate and proof of fingerprinting within the last two years.
STEP 3: Pass a Suitability Check
The IRS conducts a suitability check on the applicant and on all Principals and Responsible Officials listed on the application.
The IRS conducts a suitability check on the applicant and on all Principals and Responsible Officials listed on the application. The IRS does not complete suitability checks on applicants only applying to be Software Developers.
Suitability checks may include the following:
• A criminal background check
• A credit history check
• A tax compliance check to ensure that all required returns are filed and paid, and to identify assessed fraud penalties
• A check for prior non-compliance with IRS e-file requirements
Other Individuals on IRS e-file Applications
Other individuals such as contacts and Delegated Users may also be included on IRS e-file Applications.
Contacts
Contact persons should be available on a daily basis for the IRS to contact them for general questions during testing and the processing year. Contacts may be a Principal or Responsible Official. They may also be persons distinct from the Principals and Responsible Officials but if they are, they will not have access to private information that is only available to Principals and Responsible Officials.
A Primary Contact is required for each application. An Alternate Contact is not required, but Providers can specify one or more Alternate Contacts. It is important for a Principal or Responsible Official to change or delete Contacts when the Contacts are no longer with the firm or their position within the firm no longer warrants being a Contact.
Delegated Users
Large firms with multiple Delegated Users on a single IRS e-file Application should limit the number of Delegated Users to 100.
Delegated Users are individuals authorized by the Provider to use one or more of the e-services products even though they are not a Principal or Responsible Official. A Principal or Responsible Official appoints an individual as a Delegated User on the IRS e-file Application via e-services. A Delegated User should be an employee, partner or other member of the Firm/Organization or have a business relationship with the Firm/Organization. Principals and Responsible Officials are responsible for the actions of all Delegated Users on the firm's application.
Each Delegated User needs to be on only one IRS e-file Application. It is not necessary for a Delegated User to be on more than one IRS e-file Application to access e-services Transcript Delivery Service. Each Delegated User affiliated with different firms (identified by different TINs) and authorized to view and make changes to an e-file application, must be on the specific IRS e-file Application to be able to review and make changes to the application. Large firms with multiple Delegated Users on a single IRS e-file Application should limit the number of Delegated Users to 100.
A Principal or Responsible Official may authorize a Delegated User with any or all the following authorities:
• Viewing, updating, signing and submitting IRS e-file Applications
• Accessing e-services Transcript Delivery System
• MeF Internet Transmitter and MeF System Enroller
• Viewing Software Developer information
Principals and Responsible Officials with authority to Add, Delete and Change Principal can assign Principal Consent authority to a Delegated User. A Delegated User with Principal Consent authority has the same e-file application authorities as a Principal.
It is important for a Principal or Responsible Official to change or delete Delegated Users and authorities on the IRS e-file Application when the authorities of the Delegated Users change or the Delegated Users are no longer with the firm or their position within the firm no longer warrants the authorities.
Denial to Participate in IRS e-file
After an applicant passes the suitability check and the IRS completes processing the application, the IRS notifies the applicant of acceptance to participate in IRS e-file.
If a firm, a Principal or a Responsible Official fails the suitability check, the IRS notifies the applicant of denial to participate in IRS e-file, the date when they may reapply and that they may reapply sooner if they resolve the suitability issues. In most circumstances, the denied applicant, Principal or Responsible Official may appeal the decision through the Administrative Review described later.
An applicant, Principal or Responsible Official denied because a federal or state court enjoined them from filing returns or a federal or state legal action prohibits it from participating in IRS efile may not appeal its denial. If the injunction or other legal action expires or is reversed, the denied applicant may reapply to participate in IRS efile.
The IRS reviews each firm or organization, Principal and Responsible Official listed on the IRS e-file Application. The IRS may deny an applicant participation in IRS efile for a variety of reasons that include but are not limited to:
1. An indictment or conviction of any criminal offense under the laws of the United States or of a state or other political subdivision, or an active IRS criminal investigation;
2. Failure to file accurate federal, state or local tax returns;
3. Failure to pay any federal, state or local tax liability;
4. Assessment of fraud penalties;
5. Suspension/disbarment from practice before the IRS or before a state or local tax agency;
6. Disreputable conduct or other facts that may adversely impact IRS e-file;
7. Misrepresentation on an IRS e-file Application, which includes using another individual's personal information (name, SSN, etc.) without their permission (i.e. identity theft);
8. Unethical practices in return preparation;
9. Non-compliance with §6695(g) of the Internal Revenue Code;
10. Stockpiling returns prior to official acceptance to participate in IRS e-file;
11. Knowingly and directly or indirectly employing or accepting assistance from any firm, organization or individual denied participation in IRS e-file, or suspended or expelled from participating in IRS e-file. This includes any individual whose actions resulted in the denial, suspension or expulsion of a firm from IRS e-file;
12. Knowingly and directly or indirectly accepting employment as an associate, correspondent or as a subagent from, or sharing fees with, any firm, organization or individual denied participation in IRS e-file, or suspended or expelled from participating in IRS e-file. This includes any individual whose actions resulted in denial, suspension or expulsion of a firm from IRS e-file
13. Enjoined from filing returns by a federal or state court injunction or prohibited from filing returns by any Federal or State legal action that prohibits them from participation. A type of such legal action is a Federal Executive Order such as Executive Order 13224 (September 23, 2001), which involves prohibitions directed at terrorist individuals and organizations.
Acceptance
Authorized IRS e-file Providers must protect their EFINs, ETINs, and passwords from unauthorized use.
After an applicant to become an Authorized IRS e-file Provider passes the suitability check and the IRS completes processing the IRS e-file Application, the IRS notifies the applicant of acceptance to participate in IRS e-file. Transmitters and Software Developers must complete testing before acceptance. The IRS assigns Electronic Filing Identification Numbers (EFINs) to all Providers and assigns Electronic Transmission Identification Numbers (ETINs) to Transmitters, Software Providers and Online Providers. The IRS assigns EFINs with prefix codes 10, 21, 32, 44 and 53 to Online Providers.
Authorized IRS e-file Providers do not have to reapply each year as long as they continue to e-file returns. However, if a Provider does not e-file returns for two consecutive years, the IRS will notify the Provider of removal from the IRS active Provider list. The IRS may reactivate a Provider if the Provider replies within sixty days and requests reactivation. Otherwise, the Provider will have to complete and submit a new application.
If the IRS suspends a Provider from participation in IRS e-file, the Provider may reapply to participate in IRS e-file after the suspension period is completed or after resolution of suitability issues. Providers expelled or revoked from participation in IRS e-file usually may not reapply.
Providers do not need to submit a new IRS e-file Application each year to participate in IRS e-file. Providers are required to have the appropriate identification numbers and should review their IRS e-file Application at IRS.gov to check their status. Providers may contact e-help, toll free at (866) 255-0654 with questions regarding their e-file application status.
Providers must update their application information within 30 days of the date of any changes to the information on their current application. Make all changes using the IRS e-file Application. See Changes to Your IRS e-file Application.
EFINs, ETINs and Password
Providers must protect their EFINs, ETINs and passwords from unauthorized use. Providers must never share the numbers and passwords with others including not transferring EFINs or ETINs to another entity when transferring the business by sale, gift or other disposition. If the IRS learns of a compromised EFIN or ETIN, we will change the number and notify the Provider by mail.
The IRS mails a security letter to Transmitters, Software Developers and Online Providers containing a replacement password when necessary. The last two digits of the corresponding Electronic Transmitter Identification Number (ETIN) are in the letterhead.
All Providers must include their identification numbers with the electronic return data of all returns it transmits to the IRS. If more than one Authorized IRS e-file Provider is involved in the origination and transmission of the return data, applicable electronic filing identification numbers (EFIN and ETIN) for each Provider must be included in the electronic return record. Online Providers must include an EFIN with a Prefix Code of 10, 21, 32, 44 or 53 with each Online Return.
Checking Other Authorized IRS e-file Providers
Providers should request other Providers provide information to ascertain that they are Authorized IRS e-file Providers.
Authorized IRS e-file Providers (Providers) may use only other Authorized IRS e-file Providers to perform IRS e-file activities, including but not limited to origination and transmission of electronic submission. For example, Transmitters must ensure they are transmitting only for Providers. Providers should request other Providers provide information to ascertain that they are Authorized IRS e-file Providers. Care is necessary to safeguard IRS e-file.
A Provider can print a summary of its e-file application via e-services at IRS.gov and provide it to other Providers as needed. Providers can also confirm EROs using the Authorized IRS e-file Provider Locator at IRS.gov. If an ERO cannot be found it may still be an Authorized IRS e-file Provider as EROs may elect not to be included on the Authorized IRS e-file Provider Locator. The IRS can advise if the firm is an Authorized IRS e-file Provider only if it is on the Authorized IRS e-file Provider Locator. If you need assistance to search the Locator, contact the IRS by calling e-help toll free at (866) 255-0654.
Using Third Parties for IRS e-file Related Activities
Authorized IRS e-file Providers may associate with third parties that are not Authorized IRS e-file Providers for related activities only if the third party agrees to adhere to all applicable requirements for participation in IRS e-file. The IRS may require the Provider to discontinue their association with third parties that are not adhering to IRS e-file requirements. The IRS may also sanction a Provider that knowingly and either directly or indirectly associates with a third party that is not adhering to applicable IRS e-file requirements.
When to Submit a New Application
Providers may need to submit new IRS e-file Applications when expanding their e-file businesses to new business locations.
Applicants and Authorized IRS e-file Providers (Providers) must either submit a new application or reapply for any of the reasons below. Principals and Responsible Officials may have to provide fingerprints or professional status information.
• They never participated in IRS e-file
• They were previously denied participation in IRS e-file
• They were previously suspended from IRS e-file
• They have not submitted any e-file returns for more than two years
• The structure of the business has changed, requiring use of a new or different Taxpayer Identification Number (TIN)
Adding New Business Locations
Providers may need to submit new IRS e-file Applications when expanding their e-file businesses to new business locations. EROs must submit new applications for additional fixed locations from which the origination of the electronic submission of returns will occur. A fixed location is an office owned or leased by the ERO.
EROs may originate the electronic submission from other than fixed locations without submitting an application for each such location. The ERO uses the EFIN assigned to a fixed location for electronic submission of returns originated from other than fixed locations.
If all activities occurring at a location are other than origination of electronic submission of returns, an application is not required for the location. If tax returns are prepared or collected at a location, but forwarded to another location for origination of the electronic submission, an application is not required for the location where the tax returns are prepared or collected.
Obtaining a Foreign EFIN
Providers may obtain an Electronic Filing Identification Number (EFIN) for use by a firm in "its business-related group" if the firm cannot obtain an EFIN because its Principals and/or Responsible Officials are not U. S. citizens or aliens lawfully admitted for permanent residence as described in 8 U.S.C. §1101(a)(20). The term "business-related group" applies to brother-sister firms, subsidiaries, franchises, affiliates, etc. "Business-related group" is broad to include any business relationship. The Provider may establish its own policies to determine the firms for which it will obtain an EFIN and how it monitors the use of the EFIN.
The Provider must submit an IRS e-file application for each foreign EFIN it wants to obtain. The Provider must include its address as the mailing address, but include the physical address of the firm for which it is obtaining the foreign EFIN. The IRS will issue EFINs to the Provider for each location from which the firm in its "business-related group" will originate the electronic submission of returns. The Provider is responsible for the EFINs and may delete the EFIN assigned to any firm location when it determines appropriate.
The Provider is responsible for the business-related firm's adherence to IRS e-file rules, but is not responsible for the preparation of returns of the firm in its "business-related group." The Provider should only obtain EFINs for other firms it knows to be trustworthy. IRS will look to the Principals and the Responsible Officials if necessary to assist the IRS in gathering information to address potential violations of IRS e-file rules by the "business-related" firm. The IRS may inactivate the EFIN for a "business-related" firm that is not adhering to IRS e-file rules without sanctioning the Provider or affecting its other EFINs.
For additional information see Questions and Answers on IRS.gov.
Acquiring an IRS e-file Business by Purchase, Transfer or Gift
Authorized IRS e-file Providers should ensure that the IRS has current information by reviewing and updating their IRS e-file Applications.
Providers that acquire an existing IRS e-file business by purchase, transfer or gift must submit a new IRS e-file Application and receive new Electronic Filing Identification Numbers (EFINs), and passwords when applicable. The Provider must submit an e-file application and proof of sale, transfer or gift during the period beginning forty-five days before and ending thirty days after the acquisition date.
Providers that acquire an existing IRS e-file business by purchase, transfer or gift may not use the EFIN, other identification numbers or passwords of the previous Provider. Providers may not acquire the EFIN, other identification numbers, or passwords of another Provider by sale, merger, loan, gift, or otherwise.
When transfers occur during filing season, Providers should contact the IRS prior to the acquisition for assistance in making a smooth transition. Providers interested in acquiring firms suspended, expelled, or revoked from participation in IRS e-file or denied acceptance to participate in IRS e-file should also contact the IRS. Contact IRS e-help at (866) 255-0654 to discuss transition issues.
Changes to Your IRS e-file Application
A change to IRS tax records does not automatically update information on a Provider's IRS e-file application.
Authorized IRS e-file Providers (Providers) should ensure that the IRS has current information by reviewing and updating their IRS e-file Applications. Providers may review their IRS e-file Application information electronically via e-services. A Principal, Responsible Official or a Delegated User authorized to revise an IRS e-file Application may submit all revisions.
Providers must submit updates within thirty days of a change of any information. It is important to provide updates such as, changes to business structure, Principals, Responsible Officials, addresses and telephone numbers and to remove individuals no longer associated with the firm, including deceased individuals. The IRS needs current information to be able to contact Providers and obtain or provide important information.
If a Principal or Responsible Official loses their professional status, the firm must update its e-file application and provide the required fingerprints of the individual.
The IRS removes deceased individuals including Principals, Responsible Officials, and Delegated Users from the e-file application if the Provider does not remove the individual within 30 days of the date of death. The IRS also removes Providers from participation in IRS e-file when it receives undeliverable mail or is unable to contact a Provider. Until the Provider updates the information, the IRS rejects all returns submitted by the Provider.
NOTE: Changes submitted on an IRS e-file Application do not change the address of record for a business' tax records, just as a change to tax records does not automatically update information on a Provider's IRS e-file Application.
Notifying the IRS of Changes to IRS e-file Application
If a Provider is unable to update its IRS e-file Application electronically a Principal or Responsible Official may either use the firm's official letterhead or call e-help at 1-866-255-0654 to notify the IRS of changes to the below information:
• All addresses
• All telephone and fax numbers
• e-mail addresses
• Contact persons
• Form types to be e-filed
• Transmission protocols
• Adding Federal/State e-file
• Changes to Foreign Filer information
• Add or remove Provider Options
When Providers that are only Software Developers add a Provider Option, they have to submit the application but can continue participation as Software Developers.
Exceptions -- Changes that require a firm to acquire a new Employer Identification Number (EIN) require a Provider to submit a new IRS e-file Application. Firms that change their form of organization, such as from a sole proprietorship to a corporation, generally require the firm to acquire a new EIN. The letters must include sufficient information for the IRS to identify the application the Provider is revising. Be sure to include the appropriate EFIN and/or ETIN that applies, as well as a firm name, firm EIN or Social Security Number (SSN) and doing business as name. If the firm is controlled or owned by another Provider, the name, business address and EFIN and ETIN (if applicable) of the controlling Provider must be included. A Principal or the Responsible Official of the firm must sign the letter. Providers can make most of the same changes by telephone. A Principal or the Responsible Official of the firm must sign the letter or call the IRS. The caller will have to provide identifying information.
Providers that sell, transfer or otherwise discontinue an IRS e-file business must notify the IRS within 30 days. The easiest way to notify the IRS is to use the "Close Office" feature on IRS e-file Application on the IRS Web site. If notifying by letter, be sure to include enough information to identify the correct business location. Providers may not sell or transfer EFINs, other identification numbers, or passwords when selling, transferring or otherwise discontinuing an IRS e-file business.
Revision of the IRS e-file Application Required
Providers that sell, transfer, or otherwise discontinue an IRS e-file business must notify the IRS within 30 days.
The following situations are changes that require revision of the IRS e-file Application:
• The Provider is functioning solely as a Software Developer or Reporting Agent and intends to do business as an ERO, Intermediate Service Provider or Transmitter
• An additional Principal or Responsible Official is being added
• A Principal or Responsible Official is changed
• A Principal or Responsible Official must be deleted
These revised applications (except when deleting a Principal or Responsible Official) must be signed electronically and submitted. Fingerprint cards or evidence of professional status for new Principals and Responsible Officials of the firm are required unless the individual is listed as a Principal or Responsible Official on the application of a Provider currently participating in IRS e-file.
Providers should familiarize themselves with the revenue procedure, the e-file publications, and e-file information on the IRS Web site IRS.gov to ensure compliance with requirements for participation in IRS e-file.
Authorized IRS e-file Providers (Providers) must adhere to applicable IRS e-file rules and requirements to continue participating in IRS e-file. The IRS e-file rules and requirements are included in Revenue Procedure 2007-40, throughout this publication and in other IRS e-file publications and notices on the IRS Web site. Providers must adhere to all applicable IRS e-file rules and requirements regardless of where published.
Providers should familiarize themselves with the revenue procedure, the e-file publications and e-file information on the IRS Web site IRS.gov to ensure compliance with requirements for participation in IRS e-file.
Some rules and requirements are specific to the e-file activity performed by the Provider. Additional rules and requirements specific to the Provider's e-file activity are included under each Provider Option. The list below, while not all-inclusive, applies to all Providers:
• Adhere to the advertising standards described in this publication
• Clearly display the Provider's "doing business as" name at all locations and sites including Web sites at which the Provider or a third party obtains information from taxpayers for electronic filing of returns by the Provider
• Cooperate with the IRS' efforts to monitor Authorized IRS e-file Providers and investigate electronic filing fraud and abuse
• Comply with provisions for all e-file programs, including free file and pilot programs in which the Provider participates
• Ensure against the unauthorized use of its EFIN and/or ETIN, including not transferring its EFIN or ETIN to another entity when transferring the business by sale, gift, or other disposition
• Ensure the security of taxpayer information
• Make changes to the IRS e-file Application as described within this publication in a timely manner
Safeguarding IRS e-file
Safeguarding of IRS e-file from fraud and abuse is the shared responsibility of the IRS and Authorized IRS e-file Providers (Providers). Providers must be diligent in recognizing fraud and abuse, reporting it to the IRS, and preventing it when possible. Providers must also cooperate with the IRS' investigations by making available to the IRS upon request, information and documents related to returns with potential fraud or abuse. Additional information regarding Reporting Fraud and Abuse in IRS e-file is available at IRS.gov.
Indicators of abusive or fraudulent returns may be unsatisfactory responses to filing status questions, multiple returns with the same address, and missing or incomplete schedules for income and expense documentation. A "fraudulent return" is a return in which the individual is attempting to file using someone else's name or SSN on the return or where the taxpayer is presenting documents or information that have no basis in fact. A "potentially abusive return" is a return the taxpayer is required to file but may contain inaccurate information and may lead to an understatement of a liability or an overstatement of a credit resulting in production of a refund to which the taxpayer may not be entitled.
Safeguarding Taxpayer Information
Safeguarding of IRS e-file from fraud and abuse is the shared responsibility of the IRS and Authorized IRS e-file Providers.
Safeguarding taxpayer information is a top priority for the Internal Revenue Service. It is the responsibility of governments, businesses, organizations and individuals that receive, maintain, share, transmit or store taxpayers' personal information. Taxpayer information is information furnished in any form or manner by or on behalf of taxpayers for preparation or filing of their returns. Authorized IRS e-file Providers must safeguard taxpayer information from unauthorized disclosure, use, and destruction. In addition, they must be diligent in detecting and preventing identity-theft fraud patterns and schemes to protect taxpayers and IRS e-file from identity-theft refund fraud. Early detection of these patterns and schemes is critical to stopping them and their adverse impacts, and to protecting taxpayers and IRS e-file.
Providers must have security systems in place to prevent unauthorized access by third parties to taxpayer accounts and personal information. The Gramm-Leach-Bliley Act, codified at 15 U.S.C. §§ 6801-6827, and the implementing rules and regulations promulgated by the Federal Trade Commission include rules that are designed to ensure the security and privacy of taxpayer information and are applicable to Providers. Providers should become familiar with the Privacy and Security Rules and other important information regarding safeguarding personal information available at the FTC Web site.
Providers must implement security and privacy practices that are appropriate for the size, complexity, nature and scope of their business activities. The IRS Publication 4600, Safeguarding Taxpayer Information Quick Reference Guide for Business, and Publication 4557, Safeguarding Taxpayer Data A Guide for Your Business, contain information to help non-governmental businesses, organizations and individuals to understand and meet their responsibility to safeguard taxpayer information.
The IRS may set forth additional safeguarding requirements for Providers as it determines appropriate. The requirements will be included in revisions of appropriate e-file publications or published on the IRS Web Site at IRS.gov.
Registration of Web Sites with the IRS
To safeguard taxpayer information, the IRS requires Providers to register all internet Web sites from which information is collected from taxpayers.
To safeguard taxpayer information by more quickly identifying fraud schemes including phishing, the IRS requires Providers to register with the IRS all Internet Web sites from which information is collected from taxpayers, either directly or through third parties, and used by the Provider for federal returns that are filed electronically.
Providers must submit the below information to the IRS prior to the Web site being accessible on the Internet, and submit any changes to previously provided information to the IRS within three (3) business days.
1. An EFIN for the Provider;
2. The name of a Principal or Responsible Official shown on the e-file application for the EFIN; and
3. The Uniform Resource Locators (URLs) of all Web sites from which the Provider collects information from taxpayers, either directly or through third parties, for electronic filing of federal returns.
Providers must login to e-services and navigate to the e-file Application. Click "Add/Delete URL" and proceed as instructed. If "Add/Delete URL" is not in the e-file Application Menu, click "EFIN Status" and select "Yes" in response to the Web site question. After saving, the "Add/Delete URL" link should be available on the "e-file Application" menu page.
Provider Roles and Responsibilities
The roles and responsibilities of Providers relate to the e-file activity the firm is conducting. The firm identifies its e-file activity by selecting the appropriate Provider Option in the IRS e-file Application. Each Provider Option is a different role and may have different responsibilities that relate specifically to the e-file activity of the firm. Some Providers may have more than one e-file business activity. For example, an ERO may also be a Transmitter. Providers must adhere to all IRS e-file rules and requirements applicable to their multiple e-file roles.
Electronic Return Originator
An ERO must originate the electronic submission of only returns that the ERO either prepared or collected from a taxpayer.
An Electronic Return Originator (ERO) is the Authorized IRS e-file Provider that originates the electronic submission of a return to the IRS. The ERO is usually the first point of contact for most taxpayers filing a return using IRS e-file.
The Origination of an Electronic Return
Although an ERO may also engage in return preparation, that activity is separate and different from the origination of the electronic submission of the return to the IRS. An ERO originates the electronic submission of a return after the taxpayer authorizes the filing of the return via IRS e-file. An ERO must originate the electronic submission of only returns that the ERO either prepared or collected from a taxpayer. An ERO originates the electronic submission by either of the following:
• Electronically sending the return to a Transmitter that will transmit the return to the IRS
• Directly transmitting the return to the IRS
• Providing a return to an Intermediate Service Provider for processing prior to transmission to the IRS
In originating the electronic submission of a return, the ERO has a variety of responsibilities, including, but not limited to the following:
• Timely originating the electronic submission of returns
• Submitting any required supporting paper documents to the IRS
• Providing copies to taxpayers
• Retaining records and making records available to the IRS
• Accepting returns only from taxpayers and Providers
• Having only one EFIN for the same firm for use at one location, unless the IRS issued more than one EFIN to the firm for the same location. For this purpose, the business entity is generally the entity that reports on its return the income derived from electronic filing. The IRS may issue more than one EFIN to accommodate a high volume of returns, or as it determines appropriate.
An ERO must clearly display the firm's "doing business as" name at all locations and sites including Web sites at which the ERO or a third party obtains information from taxpayers for electronic origination of returns by the ERO.
Intermediate Service Provider
An Intermediate Service Provider receives tax information from an ERO (or from a taxpayer who files electronically using a personal computer, modem and commercial tax preparation software), processes the tax return information and either forwards the information to a Transmitter or sends the information back to the ERO (or taxpayer for Online Filing).
The Intermediate Service Provider has a variety of responsibilities that include, but are not limited to the following:
• Including its Electronic Filing Identification Number (EFIN) and the ERO's EFIN with all return information it forwards to a Transmitter
• Serving as a contact point between its client EROs and the IRS, if requested
• Providing the IRS with a list of each client ERO, if requested
• Adhering to all applicable rules that apply to Transmitters
An Intermediate Service Provider must clearly display the firm's "doing business as" name at all locations and sites including Web sites at which the ERO or a third party obtains information from taxpayers for electronic origination of returns by the ERO.
Software Developer
Testing that ensures the compatibility of your transmission systems with the IRS systems must be completed to enable transmission of the electronic return data to the IRS.
A Software Developer develops software for the purposes of formatting electronic return information according to IRS e-file specifications and/or transmitting electronic return information directly to the IRS. IRS e-file specifications are in some of the e-file publications mentioned earlier.
Software Developers must pass either acceptance or assurance testing. If a Provider is a Software Developer that performs no other role in IRS e-file but that of software development, its Principals and Responsible Officials do not have to pass a suitability check during the application process.
A Software Developer has a variety of responsibilities that include, but are not limited to the following:
• Promptly correcting any software error causing returns to reject and distributing the correction
• Ensuring its software creates accurate returns
• Adhering to specifications provided by the IRS in publications
Transmitter
A Transmitter transmits electronic tax return information directly to the IRS. A bump-up service provider that increases the transmission rate or line speed of formatted or reformatted information sent to the IRS via a public switched telephone network is also a Transmitter. The IRS accepts transmissions using a variety of telecommunication protocols.
In order to transmit electronic return data directly to the IRS, Transmitters must be equipped with both computer hardware and software that make it possible. Prior to transmitting return data to the IRS, an application requesting the "Transmitter" Provider Option must be submitted, and an EFIN, an ETIN and a password received for testing. Testing that ensures the compatibility of your transmission systems with the IRS systems must be completed to enable transmission of the electronic return data to the IRS.
A Transmitter has a variety of responsibilities that include, but are not limited to the following:
• Ensuring EFINs of Providers are included as required by IRS e-file specifications in the electronic return record of returns it transmits
• Timely transmitting returns to the IRS, retrieving acknowledgment files and sending the acknowledgment file information to the ERO, Intermediate Service Provider or taxpayer (for Online Filing)
• Promptly correcting any transmission error that causes an electronic transmission to be rejected
A Transmitter participating as an Online Provider must clearly display the firm's "doing business as" name at all locations and sites including Web sites at which the Transmitter or a third party obtains information from taxpayers for electronic origination of returns by the ERO.
Not for Profit Providers
An employer may offer electronic filing as an employee benefit whether the employer chooses to transmit returns or contracts with a third party to transmit the tax returns.
All requirements of an Authorized IRS e-file Provider apply to Not for Profit Providers, unless otherwise noted. See Publication 1345 for additional information.
IRS Sponsored Programs
IRS sponsored programs, including Volunteer Income Tax Assistance (VITA), Tax Counseling for the Elderly (TCE), Outreach, Self-Help and Taxpayer Assistance Centers in IRS offices, may electronically file returns. A VITA or TCE sponsor must obtain the permission of the IRS (and, in the case of a TCE sponsor, the permission of the IRS (and in the case of a TCE sponsor, the permission of the IRS office that is funding the TCE program) to participate in IRS e-file.
Employers Offering IRS e-file as an Employee Benefit
An employer may offer electronic filing as an employee benefit whether the employer chooses to transmit returns or contracts with a third party to transmit the tax returns.
Testing
The Provider must not use improper or misleading advertising in relation to IRS e-file.
The purpose of testing is to ensure, prior to live processing, that Providers transmit in the correct format and meet the IRS electronic filing specifications; that returns have few validation or math errors; and that Providers understand the mechanics of IRS e-file.
All Software Developers must complete Acceptance or Assurance Testing in accordance with the applicable publication for each type of return. Communication testing is a requirement for Reporting Agents and Transmitters planning to transmit electronic returns to the IRS. Most software packages (IRS accepted e-file software) have communications tests built in so that completing this requirement is relatively easy. Follow the directions in the software or documentation package. If you have problems, you should first contact either the vendor that sold you the software or the technical support operation for the software package.
A Provider can view the test status of each form it transmitted to the IRS by accessing the firm's IRS e-file application and clicking on the "FORMS" link. The form/format previously selected for Transmitter Provider Option is displayed in a table along with the status. The status is updated from "test" to "production" when required communication testing is completed. The status is set back to "test" around the end of October for Forms 1040, ETD (electronically transmitted documents), 1041. These are the only forms requiring renewed communications testing prior to each filing season. Software Developers can view the information they provided to the IRS about each of their software packages, the IRS assigned Software ID number, and the test status of a particular package.
If the software appears to be working correctly but you cannot complete the tests, you do not receive acknowledgment files, or experience other problems, contact e-help at (866) 255-0654 (toll free).
Advertising Standards
"IRS e-file" is a brand name. Firms accepted for participation in IRS e-file as EROs, Transmitters, Intermediate Service Providers, Reporting Agents and Software Developers are "Authorized IRS e-file Providers". Acceptance to participate in IRS e-file does not imply endorsement of the software or quality of services provided by the IRS, Financial Management Service (FMS) or Treasury. All Providers must abide by the following advertising standards.
A Provider must comply with the advertising and solicitation provisions of 31 C.F.R. Part 10 (Treasury Department Circular No. 230). This circular prohibits the use or participation in the use of any form of public communication containing a false, fraudulent, misleading, deceptive, unduly influencing, coercive or unfair statement of claim. A Provider must adhere to all relevant Federal, state and local consumer protection laws that relate to advertising and soliciting.
The Provider must not use improper or misleading advertising in relation to IRS e-file. For example, any claim concerning a faster refund by virtue of electronic filing must be consistent with the language in official IRS publications. The Provider must clearly describe that a financial institution is advancing funds as a loan or will provide the funds for other financial products. The advertisement on a Refund Anticipation Loan (RAL) or other financial product must be easy to identify and in easily readable print. It must be clear in the advertising that the taxpayer is borrowing against the anticipated refund or obtaining funds from a financial institution and not obtaining the refund itself from the financial institution.
Once accepted to participate in IRS e-file, a firm may represent itself as an "Authorized IRS e-file Provider".
A Provider must not use the IRS' name, "Internal Revenue Service," or "IRS" within a firm's name. However, once accepted to participate in IRS e-file, a firm may represent itself as an "Authorized IRS e-file Provider". Advertising materials must not carry the FMS, IRS or other Treasury Seals. Advertising for a cooperative electronic filing project (public or private sector), must clearly state the names of all cooperating parties.
The IRS does not have a copyright for the IRS e-file logo. Use the logo only to indicate that a Provider offers this service to taxpayers or has performed it on behalf of a taxpayer. Providers must not use the logo to portray any other relationship between the IRS and any Provider. In using the IRS e-file logo, the Provider must use the following guidelines:
• Do not combine the logo with the IRS eagle symbol, the word "Federal" or with other words or symbols that suggest a special relationship between the
• IRS and the logo user
• Do not place text closer than 1/4 inch from the logo
• Do not overprint other words or symbols on the logo
• Do not change the letter spacing or type style
In one-color products, the logo should be printed solid, preferably PMS 285 blue. In multi-color products, print the logo in solid PMS 285 blue with the lightning bolt in solid PMS 109 yellow. When using color systems other than Pantone (PMS), the colors should be as close as possible to the PMS shades.
If a Provider uses radio, television, Internet, signage or other methods of communication to advertise IRS e-file, the Provider must keep a copy and provide it to the IRS upon request, the text or, if prerecorded, the recorded advertisement. A Provider must retain copies until the end of the calendar year following the last transmission or use.
If a Provider uses direct mail, e-mail, fax communications or other distribution methods to advertise, the Provider must retain a copy, as well as a list or other description of the firms, organizations, or individuals to whom the communication was sent. The Provider must retain the records until the end of the calendar year following the date sent and provide the records to the IRS upon request.
Monitoring of IRS e-file Providers
To safeguard IRS e-file, the IRS completes suitability checks regularly on Providers, Principals and Responsible Officials.
The IRS monitors Authorized IRS e-file Providers (Providers) for compliance with the revenue procedure and IRS e-file rules and requirements.
Suitability
All Providers, except those that function solely as Software Developers, must pass a suitability check on the firm as well as all Principals and Responsible Officials of the firm prior to acceptance to participate in IRS e file. To safeguard IRS e-file, the IRS completes suitability checks regularly on Providers, Principals and Responsible Officials. If the results of a suitability check indicate that a firm or individual does not meet or adhere to IRS e-file requirements, the IRS may revoke or sanction the Provider from participating in IRS e-file as explained below.
IRS e-file Monitoring
The IRS monitors Providers through review of IRS records and during visits to Providers' offices and other locations where Providers perform IRS e-file activities. During monitoring visits, the IRS may investigate complaints and ensure compliance with IRS e-file rules. Monitoring may include, but is not limited to the following:
• Reviewing the quality of IRS e-file submissions for rejects and other defects
• Checking adherence to signature requirements on returns
• Scrutinizing advertising material
• Examining records
Observing office procedures
In addition, the IRS may monitor Providers for compliance with the tax return preparer regulations, including provisions of IRC section 6695(g), which relates to the due diligence requirements for Earned Income Tax Credit claims on individual income tax returns.
Revocation
The IRS may revoke participation of an Authorized IRS e-file Provider (Provider), a Principal or a Responsible Official in IRS e-file if either a Federal Court order enjoins them from filing returns, or if they are prohibited by a Federal or State legal action that would prohibit participation in e-file. A type of such legal action is a Federal Executive Order, including Executive Order 13224 (September 23, 2001), which involves prohibitions directed at terrorist individuals and organizations.
They are not entitled to an administrative review process for revocation of participation in IRS e-file if the IRS denies or revokes a firm, Principal or a Responsible Official because of a Federal Court Order enjoining filing of returns or a Federal or State legal action that prohibits participation in filing of returns. If the injunction or other legal action expires or is reversed, the revoked Provider may reapply to participate in IRS e-file after the injunction or other legal action expires or is reversed.
Sanctioning
Sanctioning may be a written reprimand, suspension or expulsion from participation from IRS e-file, or other sanctions, depending on the seriousness of the infraction.
Violations of IRS e-file requirements may result in warning or sanctioning Principals, Responsible Officials and the Authorized IRS e-file Provider (Provider). The IRS may sanction any Provider when the firm or any of its Principals or Responsible Officials fails to comply with any requirement or any provision of this publication, as well as other publications and notices that govern IRS e-file. The IRS may also sanction for the same reasons that it denies an application to participate in IRS e-file. See Denial to Participate in IRS e-file. Before sanctioning, the IRS may issue a warning letter that describes specific corrective action the Provider must take. The IRS may also sanction without issuance of a warning letter.
Sanctioning may be a written reprimand, suspension or expulsion from participation from IRS e-file, or other sanctions, depending on the seriousness of the infraction. The IRS categorizes the seriousness of infractions as Level One, Level Two and Level Three. The Provider, Principal or Responsible Official may appeal sanctions through the Administrative Review Process. Suspended Providers and individuals are usually ineligible to participate in IRS e-file for a period of either one or two years from the effective date of the sanction, but they may reapply after resolution of suitability issues. Individuals of firms expelled from participation may be eligible for reconsideration after a five-year waiting period.
In most circumstances, a sanction is effective 30 days after the date of the letter informing of the sanction or the date the reviewing offices or the Office of Appeals affirms the sanction, whichever is later. In certain circumstances, the IRS can immediately suspend or expel a Provider, Principal or Responsible Official without warning or notice. If a Provider, Principal or Responsible Official is suspended or expelled from participation in IRS e-file, every related entity, including those that listed the suspended or expelled Principal or Responsible Official on its IRS e-file Application, may also be suspended or expelled.
The IRS may list in the Internal Revenue Bulletin, newsletters or other media the name and owner of any entity suspended, expelled or revoked from participation in IRS e-file and the effective date of the IRS action.
Levels of Infraction
Level One Infractions -- Level One Infractions are violations of IRS e-file rules and requirements that, in the opinion of the IRS, have little or no adverse impact on the quality of electronically filed returns or on IRS e-file.
The IRS may issue a written reprimand for a Level One Infraction.
Level Two Infractions -- Level Two Infractions are violations of IRS e-file rules and requirements that, in the opinion of the IRS, have an adverse impact upon the quality of electronically filed returns or on IRS e-file. Level Two Infractions include continued Level One Infractions after the IRS has brought the Level One Infraction to the attention of the Authorized IRS e-file Provider (Provider).
Depending on the infractions, the IRS may either restrict participation in IRS e-file or suspend the Authorized IRS e-file Provider from participation in IRS e-file for a period of one year beginning with the effective date of suspension.
Level Three Infractions -- Level Three Infractions are violations of IRS e-file rules and requirements that, in the opinion of the IRS, have a significant adverse impact on the quality of electronically filed returns or on IRS e-file. Level Three Infractions include continued Level Two Infractions after the IRS has brought the Level Two Infraction to the attention of the Provider.
A Level Three Infraction may result in suspension from participation in IRS e-file for two years beginning with the effective date of the suspension year, or depending on the severity of the infraction, such as identity theft, fraud or criminal conduct, it may result in expulsion without the opportunity for future participation. The IRS reserves the right to suspend or expel a Provider prior to administrative review for Level Three Infractions.
Administrative Review
The firm, Principals and Responsible Officials of denied applicants and sanctioned Authorized IRS e-file Providers are entitled to an administrative review.
The firm, Principals and Responsible Officials of denied applicants and sanctioned Providers are entitled to an administrative review. The administrative review process is usually a two-step process. The firm, Principals or Responsible Officials must request an administrative review by the office that denied or sanctioned them. If the reviewing office affirms the denial of the sanction, and it is not a written reprimand, the firm, Principals or Responsible Officials may appeal the denial or sanction by submitting a written signed appeal request to the IRS Office of Appeals. Failure to request an administrative review within 30 calendar days of the date of any denial or sanction letter terminates the right to an administrative review or appeal.
Administrative Review Process for Denial of Participation in IRS e-file
A firm, Principals or Responsible Officials denied participation in IRS e-file usually have the right to an administrative review. They may mail a written response to the address shown in the denial letter, within 30 calendar days of the date of the denial letter. The applicant's response must address the IRS' reason(s) for denial, have supporting documentation and be signed. During this administrative review process, the denial of participation remains in effect. Upon receipt of a written response, the IRS reevaluates its denial of the participation in IRS e-file. The IRS may either withdraw its denial of participation in IRS e-file or will issue a second denial letter.
A firm, Principal or Responsible Official who receives a second denial letter is entitled to an appeal. They must submit the appeal in writing to the attention of the IRS Office of Appeals, by mailing the appeal to the address shown in the second denial letter within 30 calendar days of the date of the denial letter. The written appeal must contain a detailed explanation that addresses the denial, along with documentation supporting why the IRS should reverse the decision.
The Administrative Review Process for Sanctioning
The written appeal must contain detailed reasons, with supporting documentation, to show why the IRS should not impose the recommended suspension or expulsion.
Providers, Principals and Responsible Officials have the right to an administrative review if the IRS advises of either a proposed, recommended or immediate sanction. They may mail a signed, detailed written explanation with supporting documentation as to why the IRS should reverse its decision and not impose the sanction within 30 calendar days of the date of the letter to the office that issued the letter. During this administrative review process, an immediate sanction remains in effect.
Upon receipt of the written response, the IRS reevaluates and may either reverse or uphold the sanction in writing. If a Provider, Principal or Responsible Official receives a letter affirming a suspension or an expulsion, they may appeal to the Office of Appeals. The appeal must be in writing, signed and mailed to the IRS office that issued the recommended sanctioning letter within 30 calendar days of the date of the letter recommending the sanction. The written appeal must contain detailed reasons, with supporting documentation, to show why the IRS should reverse its decision and not impose the recommended suspension or expulsion.
Reconsideration after Expulsion
Individuals that can't participate in IRS e-file because their firms were expelled may be reconsidered after a five-year waiting period. This period begins five years from the date the firm was expelled or five years after the individual has completed rehabilitation (e.g. incarceration, parole, probation, restitution, etc.). There are some expulsion situations not eligible for reconsideration.
To request consideration, send a letter to: Internal Revenue Service, Electronic Products and Services Support, 310 Lowell Street, Stop 983, Andover, MA 01812. You must provide an explanation as to why you should be allowed to reapply and include a copy of your expulsion letter and any pertinent documents to support your position. In addition, you must meet all eligibility requirements at this time to participate in IRS e-file. You will be notified in writing regarding your request.
References
e-News for Tax Professionals, provides the latest national news for the tax professional community, as well as links to resources on IRS.gov and local news and events by state. For more information on the electronic subscription services, visit "Tax Professionals" at irs.gov, click on "Subscription Services" under "Tax Professional Topics."
IRS Web site (IRS.gov), The IRS regularly posts important information, including updates and Frequently Asked Questions (FAQs). Taxpayers can use the IRS Web site to locate the nearest Electronic Return Originators to assist them with e-filing returns.
QuickAlerts, provide up to the minute e-file information. It is the IRS' technology messaging system for Providers. Users receive messages by e-mail. The messages advise of problems that may interrupt processing or acknowledgment of electronically filed returns, publication changes for IRS e-file and other information of interest to Authorized IRS e-file Providers.
Publication 1345, Handbook for Authorized IRS e-file Providers of Individual Income Tax Returns, contains requirements and important information for participating in IRS e-file of Individual Income Tax Returns.
Publication 1436, Test Package for Electronic Filers of Individual Income Tax Returns, contains scenarios and instructions for preparing test material for Electronic Filing of Individual Income Tax Returns.
Publication 1474, Technical Specifications Guide For Reporting Agent Authorization For Magnetic Tape/Electronic Filers and Federal Tax Depositors, contains technical file specifications for Reporting Agents.
Publication 4163, Modernized e-file (MeF) Information for Authorized IRS e-file Providers for Business Returns, contains rules and other specific information for e-file of Forms 1120/1120S.
Publication 4164, Modernized e-file (MeF) Guide for Software Developers and Transmitters, outlines the communication procedures, transmission formats, business rules and validation procedures for returns e-filed through the Modernized e-file (MeF) system.
Revenue Procedure 2007-40, Requirements of Participants in the IRS e-file Program, specifies the requirements for participating as Authorized IRS e-file Providers, and is the official set of rules that govern participation in IRS e-file. The IRS revises the revenue procedure as needed. The IRS may post additional e-file rules to the IRS Web site and include the rules in IRS e-file publications.
Treasury Department Circular No. 230, Regulations governing practice before the Internal Revenue Service.
- Jurisdictions
- LanguageEnglish
