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Authorized IRS e-file Providers
of Individual Income Tax Returns
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Table of Contents
Table of Contents
Chapter 1 – Stay Informed.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Why a New Publication 1345?.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Where to Get Additional Information.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Chapter 2 – Must Read Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Publications for Individual Income Tax Returns.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Safeguarding IRS e-file. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
New IRS e-file Security and Privacy Standards.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
“Returns Filed” Using IRS e-file. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Returns Not Eligible for IRS e-file.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Submitting a Timely Filed Electronic Tax Return. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Federal/State e-file. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Chapter 3 – Electronic Return Origination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Obtaining, Handling and Processing Return Information from Taxpayers. . . . . . . . 15
Safeguarding IRS e-file From Fraud and Abuse.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Verifying Taxpayer Identification Numbers (TINs).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Be Aware of Non-Standard Information Documents.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Be Careful with Addresses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Avoiding Refund Delays. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Refund Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Direct Deposit of Refunds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Balance Due Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Electronic Funds Withdrawal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Credit or Debit Card Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Electronic Federal Tax Payment System (EFTPS).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Pay by Check.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Installment Agreement Requests.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Signing an Electronic Tax Return. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Electronic Signature Methods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
IRS e-file Signature Authorization.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Electronic Signatures for EROs.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Submitting the Electronic Return to the IRS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Submission of Paper Documents to the IRS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ii
ERO Duties after Submitting the Return to the IRS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Record Keeping and Documentation Requirements.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Providing Information to the Taxpayer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Acknowledgments of Transmitted Return Data.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Resubmission of Rejected Tax Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Advising Taxpayers about Refund Inquiries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Refund Delays.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Refund Offsets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Other EROs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
IRS Sponsored Programs.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Employers Offering IRS e-file as an Employee Benefit.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Chapter 4 – Transmission. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Additional Requirements for Transmitters Participating in Online Filing. . . . . . . . . . . . . 37
Electronic Postmark. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Transmitting for Federal/State e-file. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Chapter 5 – Other Authorized IRS e-file Provider Activities. . . . . . . . . . . . . . . 41
Intermediate Service Providers.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Additional Requirements for Intermediate Service Providers
Participating in Online Filing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Software Developers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Additional Requirements for Software Developers
Participating in Online Filing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Chapter 6 – IRS e-file Rules and Requirements.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Additional Requirements for Participants in Online Filing. . . . . . . . . . . . . . . . . . . . . . . . . . 45
Financial Products. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
RALs and Other Financial Products.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Fee Restrictions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Advertising Standards.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Disclosure of Tax Return Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Preparer Penalties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Paperwork Reduction Act Notice.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Glossary.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
iii
Chapter1
Chapter x
Chapter Title
Stay Informed
Why a New Publication 1345?
This edition of Publication 1345, Handbook for Authorized IRS e‑file Providers
of Individual Income Tax Returns replaces the previous edition revised November,
2004. This publication continues to address only the rules and requirements for
participation in IRS e‑file by Authorized IRS e‑file Providers (Providers) filing
Individual Income Tax Returns and related forms and schedules.
Following is a brief description of changes included in this publication.
Chapter 1 – Stay Informed
Updated “Where to Get Additional Information” to include:
n Removed
reference to the Electronic Filing Bulletin Board which Individual
e-file no longer uses to post operational information;
n Added
IRS.gov page locations for easier navigation;
n Updated
n Added
the information on how to report suspected fraudulent activity; and
information related to IRS e‑file marketing material.
Chapter 2 – Must Read Information
Updated “Publications for Individual Income Tax” as follows:
n Publication
1345 is now available in Web content on IRS.gov, “Authorized IRS e‑file
Providers e-filing Individual Income Tax Returns” and
n Publication
1345A is deleted.
Updated “Safeguarding IRS e-file” as follows:
n Included
New IRS e-file Security and Privacy Standards
1
Chapter 1
Stay Informed
Updated “Returns Filed Using IRS e‑file” as follows:
n Deleted
all references to Form 8453‑OL as it is now obsolete;
n Corrected
n Updated
references to Form 8453, U.S. Individual Income Tax Transmittal; and
the valid ITIN range from 70 to 80 in the fourth and fifth digits to 70 to 88.
Chapter 3 – Electronic Return Origination
n The
ERO must always enter the paid preparer’s identifying information [name,
address, EIN when applicable, and Social Security Number (SSN) or Preparer’s Tax
Identification Number (PTIN)] in the appropriate fields of the electronic record.
n An
ERO must be diligent in recognizing fraud and abuse, reporting it to the IRS and
preventing it when possible. Providers must cooperate with the IRS’ investigations
by making available to the IRS upon request, information and documents related to
returns with potential fraud and abuse.
n Taxpayers can now e-file returns with an Individual Tax Identification Number
(ITIN)/(SSN) mismatch because of programming changes made in the IRS e-file system.
n Taxpayers
should not request a direct deposit into another individual’s
bank account.
n Taxpayers
can now split direct deposits between up to three qualified accounts
by using Form 8888.
n For
EFW payments, Electronic Return Originators (EROs) should have clients
confirm their bank account and routing transit numbers, as erroneous information
results in rejected direct debits.
n Taxpayers
can make up to four estimated tax payments when filing Form 1040
series return electronically.
n The
IRS now accepts debit cards in addition to credit cards.
n The
IRS now accepts credit/debit card payments for “1040 advance payment of
deficiency” and “trust fund recovery” balances due.
n Updated
the Electronic Federal Tax Payment System (EFTPS) section to include
additional information regarding enrollment and requirements.
n Taxpayers
who cannot pay the balance due on Form 1040 series returns
may use the Online Payment Agreement application at IRS.gov to request an
installment agreement.
2
Chapter 1
n Taxpayers
Stay Informed
authenticate electronic signatures.
n More
can now use their prior year Personal Identification Number (PIN) to
taxpayers can now electronically sign individual tax returns; we have updat-
ed the list of taxpayers ineligible for electronic signatures.
n Deleted
n EROs
the paper signature sections as they are no longer applicable.
may sign Forms 8879 and 8878 by rubber stamp, mechanical device (such as
signature pen) or computer software program as described in Notice 2007-79.
n Included
all supporting documents that the IRS requires be attached to Form 8453,
U.S. Individual Income Tax Transmittal for an IRS e-file Return.
n Clarified
information regarding the storage of records by an ERO and the copy of
the tax return provided to the taxpayer.
Stay informed and
n Deleted
reference to extension Form 2688 which is obsolete.
check the IRS Web
site at IRS.gov.
Chapter 4 – Transmission
n Clarified
that Transmitters participating in Online Filing must provide the
Internet Protocol (IP) information (IP Address, IP Date, IP Time and IP Time Zone
of the computer the taxpayer uses to submit the return).
n The
taxpayer must adjust the electronic postmark to the time zone where the
taxpayer resides to determine the postmark’s actual time.
Paperwork Reduction Act
Removed reference to the Western Area
Distribution Center in relation to the
accuracy of estimates as this center
no longer exists.
3
Chapter 1
Stay Informed
Where to Get Additional Information
The IRS offers a number of ways to find out what Providers need to know.
Here are the best sources of information for frequently asked questions.
Where can I find the most current information about IRS e‑file?
n Visit
the IRS Web site at IRS.gov;
n Click
on the IRS e‑file logo;
n Click
on “e‑file for Tax Professionals.”
How does the IRS keep Authorized IRS e‑file
Providers (Providers) informed of operational issues?
The IRS posts all important operations information at IRS.gov. The IRS also notifies
Providers of important information via “QuickAlerts” e‑file Messaging System and
various other subscription services.
Subscribe
to these
Services on the
IRS Web site:
the moment they happen, by fax or e-mail.
n IRS.gov
via e‑mail as the IRS National Media Relations Office in Washington, DC issues them.
n Click on the
“Tax Professionals” tab
n Click on Subscription
QuickAlerts – QuickAlerts provides first hand knowledge of processing delays
IRS Newswire – Newswire subscribers receive news releases and other documents
IRS Tax Tips – Tax Tips provide tax information via e‑mail from the IRS daily during
the tax‑filing season and periodically the rest of the year.
Services under “Tax
Tax Stats Dispatch Mailing List – Announcements via e‑mail which cover the most
Professional Topics”
recent tax statistics.
n Click on the particular
service described, right,
e-News for Small Businesses – Provides information about IRS small business and
that you are interested
self‑employed outreach products and programs via e‑mail.
in to receive important
information.
IRS GuideWire – The IRS notifies GuideWire subscribers by e‑mail when it issues
advance copies of tax guidance such as Revenue Rulings, Revenue Procedures,
Announcements and Notices.
e-News for Tax Professionals – The IRS 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.
4
Chapter 1
Stay Informed
Where can I find the current filing season information I need?
“YYYY (current year) Tax Year IRS e‑file for Individual Income Tax Returns” provides
necessary updated filing season information. It is updated prior to each filing season
and available in Web content only on the IRS Web site. To locate, select the IRS Web
site links indicated below:
n IRS.gov;
n Click
on the IRS e‑file logo;
n Click
on “Tax Professionals” under the heading “IRS e-file Options For” and
n Click
on “YYYY (current year) Tax Year IRS e‑file for Individual Income Tax Returns.”
If I get correspondence from the IRS,
who can I call for more information?
All letters from the IRS have a contact telephone number to reach the person best
able to help you with your questions.
Where can I find telephone numbers and addresses
for other services provided by the IRS?
Providers may find addresses and telephone numbers in current year tax packages
that are available at IRS.gov.
What information should I give taxpayers so they can
inquire about the status of their individual income tax refunds?
Taxpayers should be advised to check the status of their individual income
tax refunds using the “Where’s My Refund” feature at IRS.gov, or they may call
(800) 829‑1954.
Where can I get information about electronic payment options?
Via the Internet at the IRS Web site:
n IRS.gov;
n Keyword
“e-pay.”
5
Chapter 1
Stay Informed
How Do I Report Suspected Tax Fraud Activity?
If you suspect or know of an individual or company that is not complying with
the tax laws, you may report this activity by completing Form 3949‑A, Information
Referral, via the Internet at the IRS Web site.
n IRS.gov;
n Click
on “Tax Professionals;”
n Click
on “Basic Tools for Tax Pro” under the heading “Tax Professional Topics;”
n Click
on “How to Report Problem Preparers” under the heading
“Your Responsibilities as a Tax Professional.”
My software doesn’t work, what should I do?
The IRS does not develop or sell tax preparation or electronic return data
transmission software. If problems exist, Providers should contact the vendor
who sold them the software or the technical support operation that comes
The IRS does not develop
with the software package.
or sell tax preparation or
electronic return data
transmission software.
Where can I get information
about the IRS Nationwide Tax Forums?
Via the Internet at the IRS Web site:
n IRS.gov;
n Click
on “Tax Professionals;”
n Click
on “Nationwide Tax Forum Information.”
6
Chapter 1
Stay Informed
Where can I get more information about
filing both federal and state individual income tax returns?
Additional information and a list of state e‑file contacts are available via
the IRS Web site:
n IRS.gov;
n Click
on the IRS e-file logo;
n Click
on “Tax Professionals” under the heading “IRS e‑file Options For;”
n Click
on “Federal/State e-file.”
Often, the Provider offering comprehensive one‑stop tax service is the most
successful. If the Provider is not participating in Federal/State e‑file, it is missing
a golden business opportunity to offer its clients and customers the benefits and
convenience of filing both federal and state tax returns electronically. See the
Federal/State e‑file section, page 14, in Chapter 2.
Is there marketing material available
to help grow my e‑file business?
Providers are eligible to receive a free IRS e‑file Marketing Toolkit (Publication 3005).
The IRS updates this toolkit annually. It contains professionally designed marketing
materials and brochures. It’s a great way to attract new clients and provide answers
to everyone’s e‑file questions. Providers can order the Marketing Toolkit by calling
(800) 829-3676.
7
Chapter2
Chapter x
Chapter Title
Must Read Information
Chapter 2 Must Read
Publications for Individual Income Tax Returns
Publication 1345
and Publication 1346
are available on the
IRS Web site:
n IRS.gov;
n Click on the IRS e-file logo;
n Click on “Tax Professionals”
under the heading “IRS e-file
Options For” and
n Click on “Library”
n Click on IRS e-file
Technical Publications
Publication 1345, Handbook for Authorized IRS e-file Providers of Individual
Income Tax Returns, provides rules and requirements for participation in IRS e-file
of Individual Income Tax Returns and related forms and schedules. Violating a
provision of this publication may subject the Authorized IRS e-file Provider
(Provider) to sanctions. Providers should familiarize themselves with the Revenue
Procedure 2007-40, 2007-26 I.R.B. 1488 (or the latest update) and Publication 3112,
IRS e-file Application and Participation, to ensure compliance with requirements for
participation in IRS e-file. The IRS updates Publication 1345 as needed. The most
current information is available on the IRS Web site:
n
IRS.gov;
n Click
on the IRS e-file logo;
n Click
on “Tax Professionals” under the heading “IRS e-file Options For:”; and
n “Authorized
IRS e‑file Providers e-filing Individual Income Tax Returns.”
Providers can download the latest published version of Publication 1345, but it isn’t
as current as “Authorized IRS e‑file Providers e-filing Individual Income Tax Returns.”
Another important publication for participants in individual IRS e-file is
Publication 1346, Electronic Return File Specifications and Record Layouts for
Individual Income Tax Returns. This publication is in three parts:
n Part
1, File Specifications, contains file specifications and error reject
conditions for individual e-file income tax returns;
n Part
2, Record Layouts, contains record layouts for forms and schedules
associated with individual e-file income tax returns: and
n Part
3, Electronic Transmitted Documents, contains file specifications, error
reject conditions, and record layouts for e-file forms that taxpayers file separately
from the tax return.
8
Chapter 2
Must Read
Information
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 must be diligent in recognizing
and preventing fraud and abuse in IRS e-file. Neither the IRS nor Providers benefit
when fraud or allegations of abuse tarnish the integrity and reputation of IRS e-file.
Providers must report fraud and abuse to the IRS as indicated in “Where To Get
Additional Information,” page 4. 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.
Providers appoint an individual as a Responsible Official who is responsible for
ensuring the firm meets IRS e-file rules and requirements. Providers with problems
involving fraud and abuse may be suspended or expelled from participation in IRS
e-file, be assessed civil and preparer penalties or be subject to legal action.
Providers must be
diligent in recognizing
and preventing fraud
and abuse in IRS e-file.
New IRS e-file Security and Privacy Standards
The IRS has developed six (6) new security and privacy standards to better protect
taxpayer information collected, processed and stored by Providers participating in
Online Filing of individual income tax returns.
The IRS strongly encourages Providers participating in Online Filing of individual income tax returns to implement these six (6) new standards for the 2009 filing season.
The new standards are based on industry best practices and are intended to
supplement the Gram-Leach-Bliley Act and the implementing rules and regulations
promulgated by the Federal Trade Commission.
1. Extended Validation SSL Certificate
This standard applies to Authorized IRS e-file Providers participating in Online Filing
of individual income tax returns that collect taxpayer information via the Internet.
These Providers shall possess a valid and current Extended Validation Secure Socket
Layer (SSL) certificate using SSL 3.0 / TLS 1.0 or later and minimum 1024-bit RSA /
128-bit AES.
2. External Vulnerability Scan
This standard applies to Authorized IRS e-file Providers participating in Online Filing
of individual income tax returns that collect, transmit, process or store taxpayer
9
Chapter 2
information. These Providers shall contract with an independent third-party vendor
Must Read
Information
to run weekly external network vulnerability scans of all their “system components”
in accordance with the applicable requirements of the Payment Card Industry Data
Security Standards (PCIDSS). All scans shall be performed by a scanning vendor
certified by the Payment Card Industry Security Standards Council and listed on
their current list of Approved Scanning Vendors (ASV). In addition, Providers whose
systems are hosted shall ensure that their host complies with all applicable requirements of the PCIDSS.
For the purposes of this standard, “system components” is defined as any network
component, server or application that is included in or connected to the taxpayer
data environment. The taxpayer data environment is that part of the network that
possesses taxpayer data or sensitive authentication data.
If scan reports reveal vulnerabilities, action shall be taken to address the vulnerabilities in line with the scan report’s recommendations. Retain weekly scan
reports for at least one year. The ASV and the host (if present) shall be located in
the United States.
3. Information Privacy and Safeguard Policies
This standard applies to Authorized IRS e-file Providers participating in Online
Filing of individual income tax returns that own or operate a Web site through which
taxpayer information is collected, transmitted, processed or stored. These Providers
shall have a written information privacy and safeguard policy consistent with the
applicable government and industry guidelines and including the following statement: “we maintain physical, electronic and procedural safeguards that comply with
applicable law and federal standards.”
In addition, Providers’ compliance with these policies shall be certified by a privacy
seal vendor acceptable to the IRS.
4. Web site Challenge-Response Test
This standard applies to Authorized IRS e-file Providers participating in Online
Filing of individual income tax returns that own or operate a Web site through
which taxpayer information is collected, transmitted, processed or stored. These
Providers shall implement an effective challenge-response protocol (e.g., CAPTCHA)
to protect their Web site against malicious bots. Taxpayer information shall not be
collected, transmitted, processed or stored unless the user successfully completes
this challenge-response test.
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5. Public Domain Name Registration
Must Read
Information
This standard applies to Authorized IRS e-file Providers
participating in Online Filing of individual income tax returns
that own or operate a Web site through which taxpayer
information is collected, transmitted, processed or stored.
These Providers shall have their Web site’s domain name registered
with a domain name registrar that is located in the United States
and accredited by the Internet Corporation for Assigned Names and
Numbers (ICANN). The domain name shall be locked and not be private.
6. Reporting of Security Incidents
This standard applies to Authorized IRS e-file Providers participating in Online Filing
of individual income tax returns that collect, transmit, process, or store taxpayer
information. These Providers shall report security incidents to the IRS as soon as pos-
A taxpayer cannot
electronically file an
individual income tax
return after the 15th day
of October even if the
IRS has granted an
extension to file a return
beyond that date.
sible but not later than the next business day after confirmation of the incident. For
the purposes of this standard, an event that can result in an unauthorized disclosure,
misuse, modification or destruction of taxpayer information shall be considered a
reportable security incident. See instructions for submitting incident reports.
In addition, if the Provider’s Web site is the proximate cause of the incident, the
Provider shall cease collecting taxpayer information via their Web site immediately
upon detection of the incident and until the underlying causes of the incident are
successfully resolved.
“Returns Filed” Using IRS e-file
A return filed using IRS e-file may be a composite of electronically transmitted data
and certain paper documents or be completely paperless. The paper portion of
a composite return may consist of a paper transmittal Form 8453, U.S. Individual
Income Tax Transmittal and other paper documents that cannot be electronically
transmitted and must be mailed to the IRS attached to the Form 8453 (See page 15).
Filing individual income tax returns using IRS e-file is limited to tax returns with
prescribed due dates in the current year. A taxpayer cannot electronically file an individual income tax return after the 15th day of October even if the IRS has granted
an extension to file a return beyond that date. If the 15th day of October falls on a
Saturday, Sunday or legal holiday, the due date is the next business day.
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Chapter 2
If Providers submit state individual income tax returns as part of Federal/State e-file,
Must Read
Information
state returns become a part of the electronically transmitted data. States often
require the submission of paper documents to complete the return, but they are
separate from paper documents for federal returns. Providers should process state
paper documents according to applicable state rules.
Returns Not Eligible for IRS e-file
The following individual income tax returns and related
return conditions cannot be processed using IRS e-file:
n Other
n Tax
than current year tax returns;
returns with fiscal year tax periods;
n Amended
n Returns
tax returns;
containing forms or schedules that cannot be processed by IRS e-file other
than those forms and schedules that are required to be submitted with Form 8453,
U.S. Individual Income Tax Transmittal for an IRS e-file Return;
n Tax
returns with Taxpayer Identification Numbers (TIN) within the range of 900-00-
0000 through 999-99-9999. Exception: Adopted Taxpayer Identification Numbers
(ATIN) and Individual Taxpayer Identification Numbers (ITIN) may fall within the
range above. Valid ATINs contain the digits 93 in the fourth and fifth positions. Valid
ITINs contain digits within a range of 70 through 88 in the fourth and fifth digits.
See Verifying Taxpayer Identification Numbers, page 16, for more information on ATINs
and TINs; and
n The
IRS cannot electronically process tax returns with rare or unusual processing
conditions or that exceed the specifications for returns allowable in IRS e-file. These
conditions change from year to year. The software should alert Providers to these
conditions when they occur. If Providers transmit electronic return data with one of
these conditions to the IRS, it rejects and the taxpayer may have to file the tax return
on paper. The software package documentation or the software’s support program
should provide more specific information.
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Chapter 2
Must Read
Information
Submitting a Timely Filed Electronic Tax Return
All prescribed due dates for filing of returns apply to e-file returns. All Providers must
ensure that returns are promptly processed. However, a Provider that receives a
return for electronic filing on or before the due date of the return must ensure that
it transmits the electronic portion of the return on or before the due date (including extensions). An electronically filed return is not considered filed until the IRS
acknowledges acceptance of the electronic portion of the tax return for processing.
The IRS accepts individual income tax returns electronically only if the taxpayer signs
the return using a Personal Identification Number (PIN). If Providers transmit the
electronic portion of a return on or shortly before the due date and the IRS ultimately rejects it, but the Provider and the taxpayer comply with the requirements for
timely resubmission of a correct return, the IRS considers the return timely filed. For
additional information about the filing of a return through IRS e-file, see Submitting
the Electronic Return to the IRS, page 28.
Transmitters may provide electronic postmarks to taxpayers for individual returns
if the Transmitters adhere to the requirements in Chapter 4. The receipt of an electronic postmark provides taxpayers with confidence that they have filed their return
timely. The date of the electronic postmark is considered the date of filing when the
date of electronic postmark is on or before the prescribed due date and the return is
received by the IRS after the prescribed due date for filing. All requirements for signing the return and completing a paper declaration, if required, as well as for timely
resubmitting of a rejected timely filed return must be adhered to for the electronic
postmark to be considered the date of filing.
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Chapter 2
Must Read
Information
Federal/State e-file
Federal/State e-file is a cooperative tax-filing effort between the IRS and most
states. Providers may file both federal and state returns electronically for clients and
customers. In addition to accepting federal and state individual income tax returns
electronically in a single transmission, State Only returns are also accepted and
forwarded to the Electronic Management System (EMS). The IRS may accept a State
Only return if the state return:
n was
Providers may file both
federal and state returns
electronically for clients
and customers.
previously rejected by the state;
n is
originated separately from the federal return;
n is
a part-year residency return;
n is
a non-resident state return; or
n is
a married filing separately state return, but the federal return was filed jointly.
The IRS provides state acknowledgement service on its Electronic Management
System (EMS). Participating states can send their acknowledgements to EMS for
transmitters to pick up when they pick up their federal acknowledgement.
Adding Federal/State e-file to a Provider’s business is very similar to the process it
went through to become a Provider. Refer to Publication 3112, IRS e-file Application
and Participation for further details. Also, the Provider should contact the state
coordinators for the state programs in which it participates for further explanation
of state rules and requirements.
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Chapter3
Chapter x
Chapter Title
Electronic Return Origination
Chapter 3 Electronic Return Origination
Obtaining, Handling and Processing
Return Information from Taxpayers
An Electronic Return Originator (ERO) originates the electronic submission of
returns it either prepares or collects from taxpayers who want to e-file their returns.
An ERO originates the electronic submission of a return after the taxpayer authorizes
the filing of the return via IRS e-file. The ERO must have either prepared the return
or collected it from a taxpayer. An ERO originates the electronic submission by:
n Electronically
sending the return to a Transmitter that transmits the return to
the IRS;
n Directly
transmitting the return to the IRS; or
n Providing
a return to an Intermediate Service Provider for processing
prior to transmission to the IRS.
The ERO must always identify the paid preparer (if any) in the appropriate field
of the electronic record of returns it originates. The ERO must always enter the
paid preparer’s identifying information [name, address, EIN, when applicable, and
Social Security Number (SSN) or Preparer’s Tax Identification Number (PTIN)] in the
appropriate fields of the electronic record. Make sure the PTIN (preferred) or SSN
of the individual who prepared the return is present as well as the EIN of the firm
(if applicable). If the individual preparer is a foreign national and does not have an
SSN or PTIN, the Provider should enter the preparer’s individual EIN in the SSN/PTIN
field. EROs may either transmit returns directly to the IRS or arrange with another
Authorized IRS e-file Provider (Provider) to transmit the electronic return to the IRS.
A Provider, including an ERO, may disclose tax return information to other Providers
in connection with e-filing a tax return under Treas. Reg. §301.7216-2(d)(1). For
example, an ERO may pass on return information to an Intermediate Service
Provider or a Transmitter for the purpose of having an electronic return formatted
or transmitted to the IRS.
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Chapter 3
An ERO that chooses to originate returns that it has not prepared, but only collected,
Electronic Return
Origination
becomes an income tax return preparer of the returns when, as a result of entering
the data, it discovers errors that require substantive changes and then makes the
changes. A non-substantive change is a correction limited to a transposition error,
misplaced entry, spelling error or arithmetic correction. The IRS considers all other
changes substantive, and the ERO becomes a tax return preparer. As such, the ERO
may be required to sign the tax return as the tax return preparer.
Safeguarding IRS e-file From Fraud and Abuse
While all Providers must be on the lookout for fraud and abuse in IRS e-file, EROs
must be particularly diligent while acting in their capacity as the first contact with
taxpayers filing a return. An ERO must be diligent in recognizing fraud and abuse,
reporting it to the IRS and preventing it when possible. Providers must 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
An ERO that is also the
status questions, multiple returns with the same address, and missing or incomplete
paid preparer should
Schedules A and C income and expense documentation. A “fraudulent return” is a
exercise due diligence in
return in which the individual is attempting to file using someone else’s name or
the preparation of returns
involving the Earned
Income Tax Credit (EITC),
as it is a popular target
SSN on the return or the taxpayer is presenting documents or information that have
no basis in fact. A potentially abusive return is a return that the taxpayer is required
to file but contains inaccurate information that may lead to an understatement of a
liability or the overstatement of a credit resulting in a refund to which the taxpayer
may not be entitled.
for fraud and abuse.
An ERO that is also the paid preparer should exercise due diligence in the
preparation of returns involving the Earned Income Tax Credit (EITC), as it is a
popular target for fraud and abuse. Section 6695(g) of the Internal Revenue Code
requires paid preparers to exercise due diligence in the preparation of returns
involving EITC. Paid preparers must complete all required worksheets and meet
all record keeping requirements.
Verifying Taxpayer Identification Numbers (TINs)
To safeguard IRS e-file from fraud and abuse, an ERO should confirm identities
and TINs of taxpayers, spouses and dependents listed on returns prepared by its
firm. TINs include SSNs, EINs, Adopted Taxpayer Identification Numbers (ATINs) and
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Chapter 3
Individual Taxpayer Identification Numbers (ITINs). To confirm identities, an ERO
Electronic Return
Origination
should ask taxpayers not known to them to provide two forms of identification
(picture IDs are preferable) that include the taxpayer’s name and current address.
Also, seeing Social Security cards, ITIN letters and other documents avoids including
incorrect TINs for taxpayers, spouses and dependents on returns. Providers should
take care to ensure that they transcribe all TINs correctly.
The TIN entered in the Form W-2, Wage and Tax Statement, of the electronic return
record must be identical to the TIN on the version provided by the taxpayer. The
TIN on the Form W-2 should be identical to the TIN on the electronic return unless
otherwise allowed by the IRS. The IRS requires taxpayers filing tax returns filed with
an Individual Taxpayer Identification Number reporting wages paid to show the
Social Security Number under which they earned the wages. This creates an identification number (ITIN/SSN) mismatch. In the past, taxpayers could only file returns
with this mismatch on paper. Due to programming changes the IRS’ e-file system
can now accept these returns. Taxpayer’s should use their correct ITIN as the
identifying number at the top of Form 1040, U.S. Individual Income Tax Return.
When inputting Form W-2 information, EROs should enter taxpayers’ SSNs exactly
as shown on the Form W-2 issued by the employer. It is now possible to e-file a
return with an ITIN/SSN mismatch.
Incorrect TINs, using the same TIN on more than one return or associating the
wrong name with a TIN are some of the most common causes of rejected returns
(see Acknowledgments of Transmitted Return Data, page 31).
Additionally, Name Control and TINs identify taxpayers, spouses and dependents.
A Name Control is the first four significant letters of an individual taxpayer’s last
name as recorded by the Social Security Administration (SSA) or the first four letters/
numbers of a business name. Having the wrong Name Control associated with a
taxpayer’s TIN contributes to a large portion of TIN related rejects. The most common example for a return rejecting due to a mismatch between a taxpayer’s TIN
and Name Control involves newly married taxpayers. Typically, the taxpayer may file
using a correct SSN along with the name used in the marriage, but the taxpayer has
failed to update the records with the SSA to reflect a name change. To minimize TIN
related rejects, it is important to verify taxpayer TINs and Name Control information
prior to submitting electronic return data to the IRS.
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Chapter 3
Electronic Return
Origination
Be Aware of Non-Standard Information Documents
The IRS has identified questionable Forms W-2 as a key indicator of potentially
abusive and fraudulent returns (see Safeguarding IRS e-file From Fraud and Abuse,
page 16). Be on the lookout for suspicious or altered Forms W-2, W-2G, 1099-R
and forged or fabricated documents. EROs must always enter the “non-standard
form” code in the electronic record of individual income tax returns for Forms W-2,
W-2G or 1099-R that are altered, handwritten or typed. An alteration includes any
pen-and-ink change. Providers must never alter the information after the taxpayer
has given the forms to them.
Providers should report questionable Forms W-2 if they observe or become aware
of them. See the “Where To Get Additional Information” section, page 4.
Be Careful with Addresses
Addresses on Forms W-2, W-2G or 1099-R; Schedule C or C-EZ; or on other tax
forms supplied by the taxpayer that differ from the taxpayer’s current address must
be input into the electronic record of the return. Providers must input addresses
that differ from the taxpayer’s current address even if the addresses are old or if
the taxpayer has moved. EROs should inform taxpayers that when the return is
processed, the IRS uses the address on the first page of the return to update the
taxpayer’s address of record. The IRS uses a taxpayer’s address-of-record for various
notices that it is required to send to a taxpayer’s “last known address” under the
Internal Revenue Code and for refunds of overpayments of tax (unless otherwise
specifically directed by taxpayers, such as by Direct Deposit).
Finally, Providers must never put their address in fields reserved for taxpayers’
addresses in the electronic return record or on Form 8453, U.S. Individual Income
Tax Transmittal for an IRS e-file Return. The only exceptions are if the Provider is
the taxpayer or the power of attorney for the taxpayer for the tax return.
Avoiding Refund Delays
EROs should advise taxpayers that they can avoid refund delays by having all of
their taxes and obligations paid, providing current and correct information to the
ERO, ensuring that all bank account information is up-to-date, ensuring that their
Social Security Administration records are current and carefully checking their tax
return information before signing the return.
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Chapter 3
EROs can do a number of things for clients and customers to avoid rejects and
Electronic Return
Origination
refund delays. Here are some suggestions:
n Insist
on identification and documentation of social security and other
identification numbers for all taxpayers and dependents;
n Exercise
care in the entry of tax return data into tax return preparation software
and carefully check the tax return information before signing the tax return;
n Avoid
taxpayers who insist on claiming dubious items on tax returns or present
altered or suspicious documents;
n Ask
taxpayers if there were problems with last year’s refund; if so, see if the condi-
tions that caused the problems have been corrected or can be avoided this year; and
n Keep
track of client issues that result in refund delays and analyze for common
problems; counsel taxpayers on ways to address these problems.
See Refund Delay Conditions in Publication 1346.
Refund Returns
When taxpayers are entitled to refunds, Providers should inform them that they
have several options. An individual income tax refund may be applied to next year’s
estimated tax; received as a Direct Deposit or paper check; or be split so that a
portion is applied to next year’s estimated tax and the rest received as a Direct
Deposit or paper check.
Direct Deposit of Refunds
Taxpayers often elect the Direct Deposit option because it is the fastest way of
receiving refunds. Providers must accept any Direct Deposit election to any eligible
financial institution designated by the taxpayer. The taxpayer may designate refunds
for Direct Deposit to qualified accounts in the taxpayer’s name. Qualified accounts
include savings, checking, share draft or consumer asset accounts (for example,
IRA or money market accounts). Taxpayers should not request a deposit of their
refund to an account that is not in their own name (such as their tax preparer’s own
account). The taxpayer may not designate refunds for Direct Deposit to credit card
accounts. Qualified accounts are accounts held by financial institutions within the
United States and established primarily for personal, family or household purposes.
Qualifying institutions may be national banks, state banks (including the District of
19
Chapter 3
Columbia and political sub-divisions of the 50 states), savings and loan associations,
Electronic Return
Origination
mutual savings banks and credit unions.
By completing Form 8888, Direct Deposit of Refund to More Than One Account, the
taxpayer may split refunds between up to three qualified accounts. A qualified account can be a checking, savings, or other account such as an individual retirement
arrangement (IRA), health savings account (HSA), Archer MSA, Coverdell education
savings account (ESA), or TreasuryDirect online account. For example, a taxpayer
expecting a refund of $400 may choose to deposit $150 into a checking account,
$150 into a savings account, and $100 into an IRA account. Taxpayers may choose
the refund splitting option regardless of which Form 1040 series tax form they file.
Providers should caution taxpayers that some financial institutions do not permit
the deposit of joint individual income tax refunds into individual accounts. The IRS
is not responsible if the financial institution refuses Direct Deposits for this reason.
Check or share draft accounts that are “payable through” another institution may
not accept Direct Deposits. Taxpayers should verify their financial institution’s Direct
Deposit policy before they elect the Direct Deposit option.
Taxpayers who choose Direct Deposit must provide Providers with account numbers
and routing transit numbers for qualified accounts. The annual tax packages show
how to find and identify these numbers. The taxpayer can best obtain this information from official financial institution records, account cards, checks or share drafts
that contain the taxpayer’s name and address. The sole exception involves accounts
specifically created to receive refunds that repay Refund Anticipation Loans (RAL)
and other refund products offered by financial institutions. In those cases Providers
may supply the identifying account data.
Additionally, a Provider must never charge a separate fee for Direct Deposit and
must accept any Direct Deposit election by a taxpayer to any eligible financial
institution. The Provider must advise taxpayers that they cannot rescind a Direct
Deposit election and they cannot make changes to routing transit numbers of
financial institutions or to their account numbers after IRS has accepted the return.
The Provider must not alter the Direct Deposit information in the electronic record
after taxpayers have signed the tax return.
Providers with repeat customers or clients should check to see if taxpayers have
new accounts. Some software stores prior year’s information and reuses it unless
it is changed. If account information is not current, taxpayers do not receive Direct
Deposit of their refunds.
20
Chapter 3
Refunds that are not Direct Deposited because of institutional refusal, erroneous
Electronic Return
Origination
account or routing transit numbers, closed accounts, bank mergers or any other
reason are issued as paper checks, resulting in refund delays of up to ten weeks.
While the IRS ordinarily processes a request for Direct Deposit, it reserves the right
to issue a paper check and does not guarantee a specific date for deposit of the
refund into the taxpayer’s account. Treasury’s Financial Management Service (FMS)
issues federal income tax refunds and offsets taxpayers’ refunds to pay off past-due
child support or federal agency debts such as student loans. Neither the IRS nor
FMS is responsible for the misapplication of a Direct Deposit that results from
error, negligence or malfeasance on the part of the taxpayer, the Provider, financial
institution or any of their agents.
Balance Due Returns
Taxpayers who owe
Taxpayers who owe additional tax must pay their balances due by the original due
additional tax must pay
date of the return or be subject to interest and penalties. An extension of time to
their balances due by the
file may be filed electronically by the original return due date, but it is an extension
original due date of the
of time to file the return, not an extension of time to pay a balance due. Providers
return or be subject to
should inform taxpayers of their obligations and options for paying balances due.
interest and penalties.
Taxpayers have several choices when paying any taxes owed on their returns as well
as estimated tax payments.
Electronic Funds Withdrawal
Taxpayers can e-file and, at the same time, authorize an electronic funds withdrawal
(EFW). Taxpayers who choose this option must provide account numbers and routing
transit numbers for qualified savings, checking or share draft accounts to the Provider.
The IRS tax return instructions describe how to find and identify these numbers.
Providers should encourage their clients to confirm their account numbers and routing transit numbers with their financial institution. If a financial institution is unable to
locate, or match, the numbers entered in a payment record with account information
they have on file for a given taxpayer, they reject (return) the direct debit request.
Providers should caution taxpayers to ensure, before they e-file, that their financial
institution allows EFW requests from the designated account. Some credit unions do
not permit direct debits from share accounts.
21
Chapter 3
Taxpayers can schedule a payment for withdrawal on a future date. Scheduled pay-
Electronic Return
Origination
ments must be effective on or before the return due date. For example, the Provider
may transmit an individual income tax return in March and the taxpayer can specify
that the withdrawal be made on any day on or before the return due date. The taxpayer does not have to remember to do anything at a later date. For returns transmitted after the due date, the payment date must be the same as the date the Provider
transmitted the return. The taxpayer must authorize EFW payments by completion
of a payment record at the time the balance due return or form is e-filed.
Taxpayers can make payments by EFW for the following:
n Current
n Form
year Form 1040 series return;
4868, Application for Automatic Extension of Time to File U.S. Individual
Income Tax Return;
n Form
2350, Application for Extension of Time to File U.S. Income Tax Return for Citizens
and Resident Aliens Abroad Who Expect to Qualify for Special Tax Treatment; and
n Form
1040-ES, Estimated Tax for Individuals. Taxpayers can make up to four estimat-
ed tax payments at the time that they electronically file the Form 1040 series return.
Providers should be careful to ensure that all the information needed for the EFW
request is included with the return. The payment record must include the following:
n Routing
Transit Number (RTN);
n Bank
account number;
n Type
of account (checking or savings);
n Requested
payment date (e.g., 20090415 for balance due payment; e.g., 20090615
for 3rd quarter estimated payment) and
n Amount
of tax payment for balance due payments sent after the due date; this
amount may include interest and penalty payment.
If taxpayers do not provide all of the needed information, Providers must contact
the taxpayers. If the Provider is unsuccessful in obtaining or transmitting the EFW
information, but the return is otherwise complete, the Provider should proceed with
the origination of the electronic return data to the IRS. The Provider must inform
their clients that they need to make other arrangements to pay the balance due
and/or estimated payments. See below for other payment options.
22
Chapter 3
Electronic Return
Origination
Credit or Debit Card Payments
Taxpayers may also pay electronically using a credit or debit card. Taxpayers can
make credit or debit card payments when e-filing or separately via telephone or
the Internet.
n
Integrated e-file and e-pay: Taxpayers can e-file and, at the same time, pay the
balance due by credit or debit card if the tax software used includes this option. The
software prompts taxpayers to enter the necessary card information. The service
provider charges taxpayers convenience fees based on the amount of the tax payments and informs them of these fees before taxpayers authorize the payments.
n Pay by Phone or Internet: Taxpayers
may pay a balance due by phone or
the Internet using a major credit card (American Express® Card, Discover®Card,
MasterCard® or Visa® card). This service is available through credit card service
providers. The service provider charges a convenience fee based on the amount of
the tax payment. The software advises taxpayers of this fee during the transaction,
and they can choose to end the transaction before the payment is completed
and confirmed. The software provides a confirmation number at the end of the
transaction. EROs should inform taxpayers of this option and advise them that
fees may vary between service providers.
n An
ATM/debit card payment option is available through the service providers. Pay
by phone or internet using a Visa® consumer debit card or a MasterCard® consumer
debit card. You can also pay with an ATM/debit card with the NYCE®, PULSE® or STAR®
logos. The service provider charges a convenience fee per payment transaction.
n Taxpayers
can make payments by phone or the Internet via credit or debit card
for the following:
n Current
n Prior
year Form 1040 series returns, including balance due notices;
year Form 1040 series returns (applies to past due payments
where no Installment Agreement);
n Form
4868, Application for Automatic Extension of Time
to File U.S. Individual Income Tax Return;
n Form
1040-ES, Estimated Tax for Individuals;
n Form
1040, Advance Payment of a determined deficiency
n Trust
Fund Recovery Penalty; and
n
Installment Agreement payments.
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Chapter 3
Electronic Return
Origination
Electronic Federal Tax Payment System (EFTPS)
Individual taxpayers who make more than one tax payment per year, particularly installment or Form 1040 estimated payments, find EFTPS very convenient. Taxpayers
can enroll in EFTPS via the Internet at EFTPS.gov or by completing Form 9783 (EFTPS
Individual Enrollment Form) and mailing it to the EFTPS Enrollment Center. To receive
an Enrollment Form, individuals should call EFTPS Customer Service (800) 316-6541.
After EFTPS processes the enrollment, taxpayers receive two separate mailings.
One is a Confirmation/Update Form. The other is a letter that includes the taxpayers’
Enrollment Trace Number, Personal Identification Number (PIN) and instructions on
how to obtain an Internet Password. Once taxpayers receive the PINs, they may begin making payments by phone. After the taxpayers obtain their Internet Password,
they may begin making payments via the Internet. With EFTPS taxpayers only need
to enroll once to make a payment by both telephone and the Internet as the payment
methods are interchangeable. Payments can be made 24/7; however, taxpayers must
submit their tax payment instructions to EFTPS before 8:00 p.m. ET at least one calendar day prior to the tax due date. Taxpayers can schedule individual tax payments
up to 365 days in advance.
Pay by Check
Taxpayers may pay the balance due by mailing a check accompanied by Form 1040-V,
With EFTPS taxpayers
Payment Voucher. The taxpayer can find these forms in many individual income tax
return packages. Providers must supply Form 1040-V to taxpayers, if needed, and
only need to enroll once
help them identify the correct mailing address from the chart on the back of the
to make a payment by both
form. Taxpayers do not have to mail these vouchers at the same time the Provider
telephone and the Internet
transmits the electronic return. For example, the return may be transmitted in
as the payment methods
January and the taxpayer may mail the payment and voucher at any time on or
are interchangeable.
before the return due date.
Installment Agreement Requests
Taxpayers who cannot pay the amount they owe for Form 1040 series returns and
owe $25,000 or less in combined taxes, interest and penalties may use the Online
Payment Agreement (OPA) application to request an installment agreement. They
can also submit Form 9465, Installment Agreement Request, to the IRS. The Provider
can transmit Form 9465 electronically (if supported by software) with the taxpayer’s
electronic return data, or it may submit it later, either electronically or on paper. If
accepted, the IRS charges a user fee for setting up the installments.
24
Chapter 3
Electronic Return
Origination
Signing an Electronic Tax Return
As with an income tax return submitted to the IRS on paper, the taxpayer and paid
preparer (if applicable) must sign an electronic income tax return. Taxpayers must
sign individual income tax returns electronically. There are currently two methods
for signing individual income tax returns electronically (see Electronic Signature
Methods, below).
Taxpayers must sign and date the Declaration of Taxpayer to authorize the origination of the electronic submission of the return to the IRS prior to the transmission
of the return to IRS. The Declaration of Taxpayer includes the taxpayer’s declaration
under penalties of perjury that the return is true, correct and complete, as well as
the taxpayers’ Consent to Disclosure. The Consent to Disclosure authorizes the IRS to
disclose information to the taxpayers’ Providers. Taxpayers authorize Intermediate
Service Providers, Transmitters and EROs to receive from the IRS an acknowledgement of receipt or reason for rejection of the electronic return, an indication of any
refund offset, the reason for any delay in processing the return or refund and the
date of the refund.
Taxpayers must sign a new declaration if the electronic return data on individual
income tax returns is changed after taxpayers signed the Declaration of Taxpayer
and the amounts differ by more than either $50 to “Total income” or “AGI,” or $14
to “Total tax,” “Federal income tax withheld,” “Refund,” or “Amount you owe.”
Electronic Signature Methods
There are two methods of signing individual income tax returns with an electronic signature available for use by taxpayers. Both methods allow taxpayers to use a Personal
Identification Number (PIN) to sign the return and the Declaration of Taxpayer.
Self-Select PIN is one of these methods. The Self-Select PIN method requires taxpayers to provide their prior year Adjusted Gross Income (AGI) amount or prior year PIN
for use by the IRS to authenticate the taxpayers. EROs should encourage taxpayers
who do not have their original prior AGI or PIN to call IRS Tax Help at (800) 829-1040.
This method may be completely paperless if the taxpayers enter their own PINs
directly into the electronic return record using key strokes after reviewing the completed return. Taxpayers may also authorize EROs to enter PINs on their behalf, in
which case the taxpayers must review and sign a completed signature authorization
form after reviewing the return. Also see IRS e-file Signature Authorization below.
25
Chapter 3
Practitioner PIN is the other method and it does not require the taxpayer to provide
Electronic Return
Origination
their prior year AGI amount or prior year PIN. When using the Practitioner PIN method, taxpayers must always appropriately sign a completed signature authorization
form (see IRS e-file Signature Authorization). Taxpayers, who use the Practitioner PIN
method and enter their own PINs in the electronic return record using key strokes
after reviewing the completed return, must still appropriately sign the signature
authorization form.
Regardless of the method of electronic signature used, taxpayers may enter their
own PINs; EROs may select and enter the taxpayers’ PINs; or the software may generate
the taxpayers’ PINs in the electronic return. After reviewing the return, the taxpayers
must agree by signing an IRS e-file signature authorization containing the PIN.
The following taxpayers are ineligible to sign individual income tax returns with an
electronic signature using the Self-Select PIN:
n Primary
taxpayers under age sixteen who have never filed; and
n Secondary
taxpayers under the age sixteen who did not file the prior tax year.
EROs should advise taxpayers to keep a copy of their completed tax return to assist
with authentication in the subsequent year.
IRS e-file Signature Authorization
When taxpayers are unable to enter their PIN directly in the electronic return,
taxpayers authorize the ERO to enter their PINs in the electronic return record by
signing the appropriate completed IRS e-file signature authorization form. Form
8879, IRS e-file Signature Authorization, authorizes an ERO to enter the taxpayers’
PINs on Individual Income Tax Returns and Form 8878, IRS e-file Authorization for
Application of Extension of Time to File, authorizes an ERO to enter the taxpayers’
PINs on Forms 4868 and 2350.
The ERO may enter the taxpayers’ PINs in the electronic return record before the
taxpayers sign Form 8879 or 8878, but the taxpayers must sign and date the
appropriate form before the ERO originates the electronic submission of the return.
The taxpayer must sign and date the Form 8879 or Form 8878 after reviewing the
return and ensuring the tax return information on the form matches the information
on the return.
Only taxpayers who provide a completed tax return to an ERO for electronic filing
may complete the IRS e-file Signature Authorization without reviewing the return
26
Chapter 3
originated by the ERO. The ERO must enter the line items from the paper return on
Electronic Return
Origination
the applicable Form 8879 or Form 8878 prior to the taxpayers signing and dating
the form. The ERO may use these pre-signed authorizations as authority to input
the taxpayer’s PIN only if the information on the electronic version of the tax return
agrees with the entries from the paper return.
Taxpayers and the ERO representative must always complete and sign Form 8879
or Form 8878 for the Practitioner PIN method of electronic signature.
Electronic Signatures for EROs
EROs must also sign with a PIN. EROs should use the same PINs for the entire tax
year. The ERO may manually input or the software can generate the PIN in the electronic record in the location designated for the ERO Electronic Filing Identification
EROs must also sign
Number (EFIN)/PIN. The ERO is attesting to the ERO Declaration by entering a PIN in
with a PIN. EROs should
the ERO EFIN/PIN field. For returns prepared by the ERO firm return preparers are
use the same PINs for
declaring under the penalties of perjury that they reviewed the returns and they
the entire tax year.
are true, correct and complete.
EROs may authorize members of their firms or designated employees to sign for
them, but the EROs are still responsible for all the electronic returns originated by
their firms.
For returns prepared by other than the ERO firm that originates the electronic
submission, the ERO attests that the return preparer signed the copy of the return
and that the electronic return contains tax information identical to that contained in
the paper return. The ERO must enter the return preparer’s identifying information
(name, address, EIN, when applicable, and SSN or PTIN) in the electronic return.
EROs may sign Forms 8879 and 8878 by rubber stamp, mechanical device (such
as signature pen) or computer software program as described in Notice 2007-79.
The signature must include either a facsimile of the individual ERO’s signature or of
the ERO’s printed name. EROs using one of these alternative means are personally
responsible for affixing their signatures to returns or requests for extension. This
does not alter the requirement that taxpayers must sign Form 8879 and Form 8878
by handwritten signature. The ERO must retain Forms 8879 and 8878 for three years
from the return due date or the IRS received date, whichever is later. EROs must not
send Forms 8879 and 8878 to the IRS unless the IRS requests they do so.
27
Chapter 3
Electronic Return
Origination
Submitting the Electronic Return to the IRS
Once signed, an ERO must originate the electronic submission of a return as soon
as possible. EROs must not electronically file individual income tax returns prior to
receiving Forms W-2, W-2G or 1099-R. If the taxpayer is unable to secure and provide a correct Form W-2, W-2G, Certain Gambling Winnings, or 1099-R, Distributions
from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts,
etc., the ERO may electronically file the return after the taxpayer completes Form
4852, Substitute for Form W-2, Wage and Tax Statement or 1099-R, Distributions from
Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.,
in accordance with the use of that form. If Form 4852 is used, the non-standard W-2
indicator must be included in the record, and the ERO must maintain Form 4852 in
the same manner required for Forms W-2, W-2G and 1099-R.
An ERO must ensure that stockpiling of returns does not occur at its offices.
Stockpiling is
n
collecting returns from taxpayers or from another Authorized IRS e-file Provider
prior to official acceptance in IRS e-file; or
n after
official acceptance to participate in IRS e-file, stockpiling refers to waiting
more than three calendar days to submit the return to the IRS once the ERO has all
necessary information for origination.
The IRS does not consider returns held prior to the date that it accepts transmission
of electronic returns stockpiled. EROs must advise taxpayers that it cannot transmit
returns to the IRS until the date the IRS accepts transmission of electronic returns.
Submission of Paper Documents to the IRS
IRS e-file returns must contain all the same information as returns filed completely
on paper. EROs are responsible for ensuring that they submit to the IRS all paper
documents required to complete the filing of returns. Attach all appropriate
supporting documents that the IRS requires to the Form 8453 and send them to
the IRS. Refer to page 2 of Form 8453 for the current mailing address. Below is a
list of these supporting documents:
n Form
1098-C, Contributions of Motor Vehicles, Boats, and Airplanes (or equivalent
contemporaneous written acknowledgement);
n Form
2848, Power of Attorney and Declaration of Representative (only for an
electronic return signed by an agent);
n Form
3115, Application for Change in Accounting Method;
28
Chapter 3
n Form 3468—attach a copy of the first page of NPS Form 10-168a, Historic Preservation
Electronic Return
Origination
Certification Application (Part 2—Description of Rehabilitation), with an indication that
it was received by the Department of the Interior or the State Historic Preservation
Officer, together with proof that the building is a certified historic structure (or that
such status has been requested);
n Form
4136—attach the Certificate for Biodiesel and, if applicable, Statement of
Biodiesel Reseller or a certificate from the provider identifying the product as
renewable diesel and, if applicable, a statement from the reseller;
n Form
5713, International Boycott Report;
n Form
8283, Noncash Charitable Contributions, Section A, (if any statement or
qualified appraisal is required) or Section B, Donated Property, and any related
attachments (including any qualified appraisal or partnership Form 8283);
n Form
State income tax returns
in the Federal/State Program
often require that paper
documents be prepared
and forwarded to state tax
administration agencies.
Be sure to follow each state’s
rules when state income tax
returns are prepared.
8332, Release of Claim to Exemption for Child of Divorced or Separated Parents
(or certain pages from a post-1984 decree or agreement, see instructions);
n Form
8858, Information Return of U.S. Persons With Respect to
Foreign Disregarded Entities;
n Form
8864—attach the Certificate for Biodiesel and, if applicable, Statement
of Biodiesel Reseller or a certificate from the provider identifying the product as
renewable diesel and, if applicable, a statement from the reseller;
n Form
8885, Health Coverage Tax Credit, and all required attachments;
n Schedule
D-1, Continuation Sheet for Schedule D (Form 1040) (or a statement with
the same information), if you elect not to include your transactions on the electronic
short-term capital gain (loss) or long-term capital gain (loss) records; and,
n Worksheets
1 through 4 from Pub. 517, Social Security and Other Information
for Members of the Clergy and Religious Workers (or other statement showing the
required information and computations)
State income tax returns in the Federal/State Program often require that paper
documents be prepared and forwarded to state tax administration agencies. Be
sure to follow each state’s rules when state income tax returns are prepared.
29
Chapter 3
Electronic Return
Origination
ERO Duties after Submitting the Return to the IRS
Record Keeping and Documentation Requirements
EROs must retain the following material until the end of the calendar year at the
business address from which it originated the return or at a location that allows the
ERO to readily access the material as it must be available at the time of IRS request.
An ERO may retain the required records at the business address of the Responsible
Official or at a location that allows the Responsible Official to readily access the
material during any period of time the office is closed, as it must be available at the
time of IRS request through the end of the calendar year.
nA
copy of Form 8453, U.S. Individual Income Tax Transmittal for an IRS e-file Return,
and supporting documents that are not included in the electronic records
submitted to the IRS;
n Copies
nA
of Forms W-2, W-2G and 1099-R;
copy of signed IRS e-file consent
to disclosure forms;
nA
complete copy of the electronic portion
of the return that can be readily and
accurately converted into an electronic
transmission that the IRS can process; and
n The
acknowledgement file for IRS accepted returns.
EROs may electronically
Forms 8879 and 8878 must be available to the IRS in the same manner described
image and store all paper
above for three years from the due date of the return or the IRS received date,
records they are required to
whichever is later.
retain for IRS e-file.
EROs may electronically image and store all paper records they are required to retain
for IRS e-file. This includes Forms 8453 and paper copies of Forms W-2, W-2G and
1099-R as well as any supporting documents not included in the electronic record
and Forms 8879 and 8878. The storage system must satisfy the requirements of
Revenue Procedure 97-22, 1997-1 C.C. 652, Retention of Books and Records. In brief,
the electronic storage system must ensure an accurate and complete transfer of
the hard copy to the electronic storage media. The ERO must be able to reproduce
all records with a high degree of legibility and readability (including the taxpayers’
signatures) when displayed on a video terminal and when reproduced in hard copy.
30
Chapter 3
Electronic Return
Origination
Providing Information to the Taxpayer
The ERO must provide a complete copy of the return to the taxpayer. EROs may
provide this copy in any media, including electronic, that is acceptable to both the
taxpayer and the ERO. The copy need not contain the social security number of the
paid preparer. A complete copy of a taxpayer’s return includes Form 8453 and other
documents that the ERO cannot electronically transmit, when applicable, as well
as the electronic portion of the return. The electronic portion of the return can
be contained on a replica of an official form or on an unofficial form. However, on
an unofficial form, the ERO must reference data entries to the line numbers or
descriptions on an official form. If the taxpayer provided a completed paper return
for electronic filing and the information on the electronic portion of the return is
identical to the information provided by the taxpayer, the ERO does not have to
provide a printout of the electronic portion of the return to the taxpayer. The ERO
should advise the taxpayer to retain a complete copy of the return and any supporting material. The ERO should also advise taxpayers that, if needed, they must file an
amended return as a paper return and mail it to the submission processing center
that would handle the taxpayer’s paper return. Refer to the current year’s tax
package for addresses.
Acknowledgments of Transmitted Return Data
The IRS electronically acknowledges the receipt of all transmissions. Returns in each
transmission are either accepted or rejected for specific reasons. Accepted returns
meet the processing criteria and IRS considers them “filed” as soon as the return is
signed electronically or through the receipt by the IRS of a paper signature. Rejected
returns fail to meet processing criteria and the IRS considers them “not filed.” The
acknowledgment identifies the source of the problem using a system of error reject
codes and form field numbers (sequence numbers). The error reject codes tell why
the return rejected and the form field numbers tell which fields of the electronic
return data are involved. Information regarding reject codes and correcting common
errors is available at IRS.gov.
The acknowledgement record of an accepted individual income tax return contains
other information that is useful to the originator. The record confirms if the IRS
accepted a PIN, applied the taxpayer’s refund to a debt and if an elected EFW paid
a balance due. The ERO should check acknowledgement records regularly to identify
returns requiring follow up action and should take reasonable steps to address
issues identified on acknowledgement records.
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Chapter 3
The ERO must, at the request of the taxpayer, provide the Declaration Control
Electronic Return
Origination
Number (DCN) and the date the IRS accepted the electronic individual income tax
return data. The ERO may use Form 9325, Acknowledgment and General Information
for Taxpayers Who File Returns Electronically for this purpose. The ERO must also,
if requested, supply the electronic postmark if the Transmitter provided one for
the return.
Rejected electronic individual income tax return data can be corrected and
retransmitted without new signatures or authorizations if changes do not differ
from the amount on the original electronic return by more than $50 to “Total
income” or “AGI”, or more than $14 to “Total tax,” “Federal income tax withheld,”
“Refund” or “Amount you owe.” The ERO must give taxpayers copies of the new
electronic return data.
In the Federal/State e-file Program, if federal electronic return data rejects due to
errors, the state electronic return data also rejects. The converse is also true. That is,
If the IRS rejects the
if the IRS rejected state electronic return data because of error, the IRS also rejects
electronic portion of a
the federal electronic return data. Once the IRS accepts both the federal and state
taxpayer’s individual
income tax return for
processing, and the ERO
cannot rectify the reason
electronic return data, the subsequent rejection of state electronic return data by
a state tax administration agency does not impact federal electronic return data
accepted by the IRS. States determine when they accept as filed state electronic
return data received from the Federal/State e-file. Contact the state tax administration
agency when problems or questions arise.
for the rejection, the
ERO must take reasonable
steps to inform the
taxpayer of the rejection
within 24 hours.
Resubmission of Rejected Tax Returns
If the IRS rejects the electronic portion of a taxpayer’s individual income tax return
for processing, and the ERO cannot rectify the reason for the rejection, the ERO must
take reasonable steps to inform the taxpayer of the rejection within 24 hours. When
the ERO advises the taxpayer that it has not filed the return, the ERO must provide
the taxpayer with the reject code(s) accompanied by an explanation. If the taxpayer
chooses not to have the electronic portion of the return corrected and transmitted
to the IRS, or if the IRS cannot accept the return for processing, the taxpayer must
file a paper return. In order to timely file the return, the taxpayer must file the paper
return by the later of the due date of the return or ten calendar days after the date
the IRS gives notification that it rejected the electronic portion of the return or that
the return cannot be accepted for processing. Taxpayers should include an explanation in the paper return as to why they are filing the return after the due date.
32
Chapter 3
Electronic Return
Origination
Advising Taxpayers about Refund Inquiries
EROs should tell taxpayers how to follow up on returns and refunds by pointing
out the Where’s My Refund feature on IRS.gov. If taxpayers do not have access
to the Internet, the ERO should provide taxpayers with the IRS Tele-Tax return
information number, (800) 829-4477. Either of these options gives the date of
depositing or mailing of their refund.
Before checking on refunds, taxpayers should wait at least three weeks from the
time the IRS acknowledges acceptance of the return data. Because the IRS updates
refund information each weekend, EROs should advise taxpayers not to check more
than once a week to avoid checking with no possibility of success.
To check on refunds, taxpayers need to enter the first Social Security Number shown on
their tax return, the filing status and the exact amount of the refund in whole dollars.
If taxpayers do not receive their direct deposit within one week or (refund check within
30 days) of the date given, they may call the Refund Hotline number at (800) 829-1954
which has information about taxpayers’ refunds (when it becomes available).
Refund Delays
Taxpayers often ask EROs to help them when refunds take longer than expected.
The IRS may delay refunds for a number of reasons, including the following:
n Errors
in Direct Deposit information (refunds then sent by check);
n Financial
institution refusals of Direct Deposits (refunds then sent by check) or
delays in crediting the Direct Deposit to the taxpayer’s account;
n Estimated
tax payments differ from amount reported on tax return (for example,
fourth quarter payments not yet on file when return data is transmitted);
n Bankruptcy;
n Inappropriate
claims for the Earned Income Tax Credit; or
n Recertifications
to claim the Earned Income Tax Credit.
The IRS sends a letter or notice explaining the issue(s) and how to resolve the issue(s)
to the taxpayer when it delays a refund. The letter or notice contains the contact
telephone number and address for the taxpayer to use for further assistance.
If taxpayers’ refunds are lost or misapplied, taxpayers do not receive notices or
letters or there is no information on Where’s My Refund or the Refund Hotline
(see Advising Taxpayers about Refund Inquiries, above), EROs should advise
taxpayers to call the IRS Tax Help number listed in tax packages.
33
Chapter 3
Electronic Return
Origination
Refund Offsets
The IRS offsets as much of a refund as is needed to pay off overdue taxes owed by
taxpayers and notifies them when this occurs. The Financial Management Service
(FMS) offsets taxpayers’ refunds through the Treasury Offset Program (TOP) to pay
off past-due child support, federal agency non-tax debts such as student loans
and state income tax obligations. Offsets to non-tax debts occur after the IRS has
certified the refunds to FMS for payment but before FMS makes the Direct Deposits
or issues the paper checks. Refund offsets reduce the amount of the expected Direct
Deposit or paper check but they do not delay the issuance of the remaining refund
(if any) after offset. If taxpayers owe non-tax debts they may contact the agency they
owe, prior to filing their returns, to determine if the agency submitted their debts
for refund offset. If the IRS determines at time the taxpayer files the return it will
offset the refund, it provides a Debt Indicator on the Acknowledgement File. FMS
sends taxpayers offset notices if it applies any part of their refund to non-tax debts.
Taxpayers should contact the agencies identified in the FMS offset notice when
offsets occur if they dispute the non-tax debts or have questions about the offsets.
If taxpayers need further clarification, they may call the Treasury Offset Program Call
Center at (800) 304-3107. If a refund is in a joint name but only one spouse owed the
debt, the “injured spouse” should file Form 8379, Injured Spouse Allocation.
Other EROs
IRS Sponsored Programs
Often individuals or organizations serve as unpaid preparers in IRS sponsored
programs including Volunteer Income Tax Assistance (VITA), Tax Counseling for
the Elderly (TCE), Outreach and Taxpayer Assistance Centers in IRS offices. For IRS
sponsored programs, unless otherwise noted, all requirements of a Provider apply. A
manual or electronic quality review system is required to review each electronically
filed return. The IRS may designate an individual for this purpose. The IRS advises the
VITA or TCE sponsor how to submit or transmit returns. Some options available to
the IRS include:
n Submission
of returns by VITA or TCE sponsors on paper, magnetic disk or in an
electronic transmission to a designated IRS office;
n Submission
of returns by VITA or TCE sponsors via direct transmission to the IRS; or
n Submission
of returns by VITA or TCE sponsors through a third party Transmitter.
34
Chapter 3
A VITA or TCE sponsor can only accept a return for electronic filing that meets the
Electronic Return
Origination
criteria for VITA or TCE assistance. A VITA or TCE sponsor may accept for electronic
filing only the returns and accompanying forms and schedules included in a VITA or
TCE training course. A VITA or TCE sponsor may collect a fee only if it directly relates
to defraying the actual cost of electronically transmitting a tax return. A VITA or TCE
sponsor may also collect this fee on behalf of a third party Transmitter that electronically transmits a VITA or TCE return. Before a VITA or TCE sponsor may collect a
fee, the sponsor must advise the taxpayer that the fee is not for preparation of the
return, and it offers the VITA or TCE service without regard to either the electronic
filing or the collection of a fee.
A VITA or TCE sponsor and the IRS may enter into an agreement that provides for the
retention of copies of tax returns, Forms 8453 and IRS e-file Signature Authorizations
by the IRS. The VITA or TCE sponsor, or the IRS, must retain this information. The VITA
or TCE sponsor must not give this information to a third party, including a third party
Transmitter. The IRS is responsible for ensuring that the taxpayer sends Form 8453
to the appropriate IRS office or submission processing center. However, the IRS may
delegate to the VITA or TCE sponsor the responsibility for mailing Form 8453 to the
appropriate local office or submission processing center.
Employers Offering IRS e-file as an Employee Benefit
The following procedures apply to employers who choose to offer electronic filing
as an employee benefit to business owners and spouses, employees and spouses
and/or dependents of business owners and employees. These rules do not apply if
an employer contracts with an ERO to originate the electronic submission of the
tax return.
n An
employer may offer electronic filing as an employee benefit whether the
employer chooses to transmit tax returns or contracts with a third party to transmit
the tax returns. If an employer contracts with a third party to transmit tax returns,
the employer may collect from participating employees a fee that directly relates to
defraying the actual cost of transmitting the electronic portion of the tax return.
n An
employer and the IRS may enter into an agreement that provides for the
retention of copies of tax returns, including Forms 8453 and IRS e-file Signature
Authorizations. In the absence of such an agreement, the employer must retain
this information. It must not give this information to a third party, including a
third party Transmitter.
35
Chapter4
Chapter x
Chapter Title
Transmission
Chapter 4 Transmission
Requirements
In fulfilling the requirements of an Authorized IRS e-file Provider
(Provider) participating in IRS e-file, Transmitters must:
1. Transmit all electronic portions of returns to the appropriate IRS center
within three calendar days of receipt;
2. Retrieve the acknowledgment file within two work days of transmission;
3. Match the acknowledgment file to the original transmission file and send the
acknowledgment file containing all conditions on accepted returns, including debt
indicator, non-receipt of Personal Identification Number (PIN), etc. to the Electronic
Return Originator (ERO) or Intermediate Service Provider within two work days of
retrieving the acknowledgment file;
4. Retain an acknowledgment file received from the IRS until the end of the
calendar year in which the electronic return was filed;
5. Immediately contact the IRS at its e-Help number, 866-255-0654, for further
instructions if an acknowledgment of acceptance for processing has not been
received within two work days of transmission or if an acknowledgment for a
return that was not transmitted on the designated transmission is received;
6. Promptly correct any transmission error that causes an electronic transmission
to be rejected;
7. Contact the IRS at its e-Help number, 866-255-0654, for assistance if the electronic
portion of the return has been rejected after three transmission attempts;
8. Ensure the security of all transmitted data;
9. Ensure against the unauthorized use of its Electronic Filing Identification Number
(EFIN) or Electronic Transmitter Identification Number (ETIN). A Transmitter must not
transfer its EFIN or ETIN by sale, merger, loan, gift or otherwise to another entity; and
10. Use only software that does not have an IRS assigned production password
built into the software.
36
Chapter 4
Transmission
Additional Requirements for
Transmitters Participating in Online Filing
In addition to requirements of all Transmitters in the IRS e-file Program, a
Transmitter that participates in Online Filing has some additional responsibilities.
When participating in Online Filing, the Transmitter must:
1. Ensure that it includes their assigned Online Filing EFIN, which begins with
10, 21, 32, 44, or 53, in the appropriate field in the electronic return data;
2. Ensure that the Intermediate Service Provider’s EFIN is included in the
electronic return data, when applicable;
Stay informed and
3. Transmit, in separate batches, returns filed via Online Filing and returns filed
check the IRS Web
using an ERO;
site at IRS.gov.
4. Assign a Declaration Control Number (DCN) to the electronic portion of each
return received from a taxpayer;
5. Include the assigned DCN in the transmission of the electronic return data to the IRS;
6. Notify the taxpayer of the status of a return by sending an electronic transmission to
the taxpayer or the Intermediate Service Provider, when applicable, within two work
days of retrieving the acknowledgment file from the IRS or by mailing a written notification to the taxpayer within one work day of retrieving the acknowledgment file;
7. Ensure that it does not transmit or accept for transmission more than five electronic returns originating from one software package or from one e-mail address;
8. Provide the Internet Protocol (IP) information (IP Address, IP Date, IP Time and IP
Time Zone of the computer the taxpayer uses to submit the return);
9. Enter into agreements with companies to allow access to Online Filing only if
companies correctly capture the IP Address of the computer submitting the return
and the date, time and time zone of the computer receiving it;
10. Include the letter “O” in the “Transmission Type Code” field of the Trans Record “A.”
37
Chapter 4
The Transmitter must notify the taxpayer of the following
Transmission
if the IRS accepts the electronic portion of a taxpayer’s return:
n The
date the transmission was accepted;
n The
DCN;
n Where
n The
to put the DCN on Form 8453, if required;
requirement to properly complete and timely submit a Form 8453, if required,
with accompanying paper documents;
n The
appropriate submission processing center’s address to which Form 8453 with
accompanying paper documents, if required, must be sent;
n That
the IRS must receive a Form 8453, if required, before an Online filed return
is complete.
The Transmitter must notify the taxpayer of the following
if the IRS rejects the electronic portion of a taxpayer’s return:
n That
n The
the IRS rejected the electronic portion of the taxpayer’s return:
date of the rejection;
n What
the reject code(s) means;
n What
steps the taxpayer needs to take to correct the errors that caused
the rejection; and
n That
if the taxpayer chooses not to have the electronic portion of the return
corrected and transmitted to the IRS, or, if the IRS cannot accept the electronic
portion of the return for processing by the IRS, the taxpayer must file a paper return.
In order to timely file a paper return, the taxpayer must file it by the later of the due
date of the return or ten calendar days after the date the IRS gives notification that
it has rejected the electronic portion of the return or that it cannot accept the return
for processing. Taxpayers should include an explanation as to why they are filing
the paper return after the due date.
A Transmitter that receives returns from an Intermediate Service Provider for
Online Filing must adhere to the same requirements as a Transmitter that transmits
ERO returns received from Intermediate Service Providers.
38
Chapter 4
Transmission
Electronic Postmark
A Transmitter may provide an electronic postmark to taxpayers that file Individual
Income Tax Returns and Extensions of Time to File Individual Income Tax Returns,
through an ERO or through Online Filing. The Transmitter creates the electronic
postmark bearing the date and time (in the Transmitter’s time zone) that the return is
received at the Transmitter’s host computer. The taxpayer must adjust the electronic
postmark to the time zone where the taxpayer resides to determine the postmark’s
actual time. For example, if the Transmitter provides an electronic postmark with a
time in the Pacific Time Zone but the taxpayer resides in the Eastern Time Zone,
the taxpayer must add three hours to the postmark time to determine the actual
postmark time (Eastern Time Zone).
If the electronic postmark is on or before the prescribed deadline for filing but the
IRS receives the return after the prescribed deadline for filing, the IRS treats the
return as timely filed. In order for the IRS to treat a return as timely filed, based on
If the electronic postmark
is on or before the prescribed
the electronic postmark’s date, the taxpayer must meet all requirements for signing
the return and when applicable, mailing Form 8453 with supporting documents not
included in the electronic record. If the electronic postmark is after the prescribed
deadline for filing but the IRS
deadline for filing, the IRS actual receipt date, not the date of the electronic post-
receives the return after the
mark is the filing date. If the IRS rejects a return, the taxpayer must file a corrected
prescribed deadline for filing,
return in accordance with the rules for timely filing corrected returns after rejection
the IRS treats the return as
of an electronic return.
timely filed.
The IRS authorizes a Transmitter to provide an electronic postmark if the Transmitter:
a) Creates an electronic postmark bearing the date and time (in the Transmitter’s
time zone) the return was received by the Transmitter’s host system;
b) Provides the electronic postmark to the taxpayer or the ERO no later than when
the acknowledgment is made available to the taxpayer in a format that precludes
alteration and manipulation of the electronic postmark information;
c) Provides the same electronic postmark data to the IRS in the electronic record
of the return;
d) Provides taxpayers with an explanation of the electronic postmark and when
the IRS treats the electronic postmark as the filing date;
e) Refrains from using terms that currently have specific meaning in the postal
industry such as “certified” or “registered” and similar terms, and from using
39
Chapter 4
“Internal Revenue Service”, “IRS” or “Federal” as a definer of the electronic postmark
Transmission
when discussing the electronic postmark, including in all advertising, product packaging, articles, press releases and other presentations;
f) Retains a record of each electronic postmark until the end of the calendar year
and provides the record to the IRS upon request;
g) Transmits all tax returns and extensions of time to file that received an electronic
postmark to the IRS within two days of receipt from the ERO or from the taxpayer in
the case of Online Filing; and
h) Retains the original electronic postmark of the rejected return for a corrected
return that the Transmitter received through the last date for retransmitting rejected
returns and creates a new postmark for all returns, including corrected returns
received after the last date for retransmitting returns. All corrected returns retaining
an electronic postmark of a date through the prescribed last day of filing must be
transmitted to the IRS within two days of the date the return was received by the
Transmitter or the twenty second day of the respective month of the prescribed
due date, whichever is earlier.
Transmitting for Federal/State e-file
If Providers participate in Federal/State e-file, software should meet both IRS and
state specifications. However, before electronic return data can be transmitted (both
federal and state electronic return data is transmitted to the IRS), all requirements for
transmitting electronic data in IRS e-file must be met. Contact the appropriate state
coordinator for additional requirements specific to that state.
40
Chapter5
Chapter x
Chapter Title
Other Authorized
Chapter 5IRS e-file Provider Activities
Other Authorized IRS e-file Provider Activities
In addition to Electronic Return Origination and Transmission previously discussed,
there are other activities performed by Authorized IRS e-file Providers (Providers),
including intermediate service and software development.
Intermediate Service Providers
An Intermediate Service Provider receives tax information from an Electronic
Return Originator (ERO) (or from a taxpayer who files electronically using a
personal computer 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).
A Provider participating as an Intermediate Service Provider must meet the
following responsibilities to participate in IRS e-file. The Intermediate Service
Provider must:
1. Deliver all electronic returns to a Transmitter or the ERO who gave the electronic
returns to the Intermediate Service Provider within three calendar days of receipt;
2. Retrieve the acknowledgment file from the Transmitter within one calendar day
of receipt by the Transmitter and send the acknowledgment file to the ERO (whether
related or not) within one work day of retrieving it;
3. Retain each acknowledgment file received from a Transmitter until the end of
the calendar year in which the electronic return was filed;
4. Input the addresses on a Form W-2, W-2G, 1099-R or Schedule C when they
differ from the taxpayer's address on the electronic individual income tax return
if inputting the electronic data; and
5. Send any return needing changes as described in Chapter 3 back to the ERO
for correction.
41
Chapter 5
Other Authorized
IRS e-file Provider
Activities
Additional Requirements for Intermediate
Service Providers Participating in Online Filing
When the taxpayer files a return using Online Filing, the Intermediate Service
Provider processes information for a taxpayer so that a Transmitter can send the
electronic return(s) to the IRS. In so doing, the Intermediate Service Provider must:
1. Ensure that it uses an Online Filing EFIN which begins with 10, 21, 32, 44 and 53;
2. Ensure that its Online Filing EFIN is included in the appropriate field in the
electronic return data;
3. Assign a Declaration Control Number (DCN) to the electronic portion of each
return received from a taxpayer;
4. Send the transmission to the Transmitter within 24 hours of the receipt of the
When the taxpayer files
return from the taxpayer;
a return using Online Filing,
5. Ensure that no more than five tax returns are filed electronically by one
the Intermediate Service
software package or from one e-mail address;
Provider processes
6. Ensure that software used by the taxpayer does not have an IRS-assigned
information for a taxpayer
production password built into the software; and
so that a Transmitter can
7. Immediately forward to the taxpayer information received from the Transmitter
send the electronic return(s)
as required for Online Filing. For example, a Transmitter receives information from
to the IRS.
the IRS regarding the status of the electronic portion of a taxpayer's return. See
page 37, Additional Responsibilities for Participants in Online Filing.
Software Developers
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. Software Developers may find IRS e-file
specifications in Publication 1346, Electronic Return File Specifications and Record
Layouts for Individual Income Tax Returns. Software Developers must pass Participants
Acceptance Testing (PATS) as prescribed in Publication 1436, Test Package for Electronic
Filers of Individual Income Tax Returns.
42
Chapter 5
Other Authorized
IRS e-file Provider
Activities
A Software Developer must:
1. Promptly correct any software error which causes the electronic portion of a
return to be rejected and then promptly distribute that correction;
2. Ensure that any software package for multiple Providers to use to transmit
returns has the capability of combining returns into one IRS transmission file and
take into account sorting requirements of the Declaration Control Number (DCN);
3. Ensure that an IRS assigned production password is not incorporated into its
software;
4. Provide a copy of the software and accompanying documentation (a demonstration package is sufficient) to the IRS, if requested, upon successful completion
of the communication testing;
5. Ensure that its software contains appropriate language and version indicators
for Consent To Disclose and Jurat statements;
6. Ensure software contains IRS e-file Signature Authorization; and
7. Ensure its software allows for input of different addresses on appropriate
forms and schedules.
Additional Requirements for Software Developers
Participating in Online Filing
A Software Developer that participates in Online Filing must also:
1. Ensure that its software package cannot be used to transmit more than five
electronic returns;
2. Ensure that its software, if available for use on an Internet Web site, cannot be
used to file more than five electronic returns from one e-mail address;
3. Ensure that its software contains a Form 8453, U.S. Individual Income Tax
Transmittal for an IRS e-file Return, that can be printed and used by a taxpayer to
mail supporting documents to IRS;
4. Ensure that its software contains a payment voucher that can be printed and
used by a taxpayer to file with the IRS;
5. Provide a copy of the software and accompanying documentation (a demonstration package is sufficient) to the IRS Headquarters Online Filing Analyst upon
successful completion of testing (See page 45 for address); and
6. Ensure the Internet Protocol (IP) statement is present.
43
Chapter6
Chapter x
Chapter Title
IRS e-file
Chapter 6 Rules and Requirements
IRS e-file Rules and Requirements
All Authorized IRS e-file Providers (Providers) must adhere to IRS e-file rules and
requirements to continue participation in IRS e-file. Requirements are included in
Revenue Procedure 2007-40, throughout this publication and in other publications
and notices that govern IRS e-file (See Publication 3112, IRS e-file Application and
Participation). All Providers must adhere to all rules and requirements, regardless of
where published. Some rules and requirements are specific to the activities performed by the Provider and are included in appropriate chapters of this publication.
The following list, while not all-inclusive, applies to all Providers of Individual Income
Tax Returns, except Software Developers that do not engage in any other IRS e-file
activity other than software development. A Provider must:
1. Maintain an acceptable cumulative error or reject rate;
2. Adhere to the requirements for ensuring that tax returns are properly signed;
3. Properly use the standard/non-standard Form W-2 indicator;
4. Properly use the Refund Anticipation Loan (RAL) indicator;
5. Include the Electronic Return Originator's (ERO's) Electronic Filing Identification
Number (EFIN) as the return EFIN for returns the ERO submits to an Intermediate
Service Provider or Transmitter;
6. Include the Intermediate Service Provider's EFIN in the designated Intermediate
Service Provider field in the electronic return record;
7. Submit an electronic return to the IRS with information that is identical to the
information provided to the taxpayer on the copy of the return.
44
Chapter 6
IRS e-file Rules
and Requirements
Additional Requirements for Participants in Online Filing
In addition to the above, participants in Online Filing must adhere to the following:
1. Ensure that no more than five electronic returns are filed from one software
package or one e-mail address;
2. Supply a taxpayer with an accurate DCN;
3. Provide effective instructions to a taxpayer concerning the entry of the DCN on
Form 8453, if required; and
4. Submit any changes to the following information to:
IRS Headquarters Online Filing Analyst
SE:W:CAS:SP:ES:I
5000 Ellin Road
Ensure that no more
Lanham, MD 20706
than five electronic
by the 31st day of December preceding the filing season;
returns are filed from
n The
brand name of the software the Provider will be using, has developed or will
one software package
use for transmission. Required information about the software includes its Software
or one e-mail address.
Developer, Transmitter, retail cost and any additional costs for transmitting the electronic portion of the taxpayer's return. Additionally, software changes involving its
use to file Federal/State returns, Internet availability (including the Internet address),
successful completion of Participants Acceptance Testing (PATS) and the Professional
Package name under which the software was tested must be reported;
n The
Provider's point of contact for matters relating to Online Filing and the
telephone number for the point of contact;
n The
applicant's customer service number; and
n The
procedures the applicant will use to ensure that one software package or
one e-mail address transmits no more than five returns.
45
Chapter 6
IRS e-file Rules
and Requirements
Financial Products
RALs and Other Financial Products
A Refund Anticipation Loan (RAL) is money borrowed by a taxpayer from a lender
based on the taxpayer’s anticipated income tax refund. Financial institutions also
offer a variety of other financial products to taxpayers based on their refunds. The
IRS is in no way involved in or responsible for RALs or the other financial products.
Providers that assist taxpayers in applying for a RAL or other financial product have
additional responsibilities and may be sanctioned by the IRS if they fail to adhere to
the requirements below.
The Provider must:
n Ensure
taxpayers understand that by agreeing to a RAL or other financial product
they will not receive their refund from the IRS as the IRS will send their refund to the
financial institution;
The IRS is in no
n Advise
way involved in
receiving their refunds from the IRS;
or responsible for
n Advise
RALs or the other
frame for whatever reason, the taxpayers may be liable to the lender for additional
financial products.
interest and other fees, as applicable for the RAL or other financial product (see
taxpayers that RALs are interest bearing loans and not a quicker way of
taxpayers that if a Direct Deposit is not received within the expected time
explanation, page 47);
n Advise
taxpayers of all fees and other known deductions to be paid from their
refund and the remaining amount the taxpayers will actually receive;
n Secure
the taxpayer's written consent as specified in Treas. Reg. § 301.7216-3(a) to
disclose tax information to the lending financial institution in connection with an
application for a RAL or other financial product;
n Ensure
that if it is also the return preparer that it
is not a related taxpayer (within the meaning of
§267 or §707A) to the financial institution or
other lender that makes a RAL agreement; and
n Adhere
to fee restrictions and
advertising standards below.
46
Chapter 6
There are no guarantees that the Department of the Treasury deposits refunds
IRS e-file Rules
and Requirements
within a specified time or in their entirety. For example, it may delay a refund due
to processing problems or, it may offset some or all of the refund. The Department
of the Treasury is not liable for any loss suffered by taxpayers, Providers or financial
institutions resulting from reduced refunds or not honored Direct Deposits, causing
it to issue refunds by check.
Fee Restrictions
Providers may not base their fees on a percentage of the refund amount or compute
their fees using any figure from tax returns.
When assisting a taxpayer in applying for a RAL or other financial product, the
Provider may charge a flat fee for that assistance. The fee must be identical for all
customers and must not relate to the amount of the refund or the financial product.
The Provider must not accept a fee that is contingent upon the amount of the
refund or a RAL or other financial product from a financial institution for any
service connected with a financial product.
The IRS has no responsibility for the payment of any fees associated with the
preparation of a return, the transmission of the electronic portion of a return or
a RAL or other financial product.
Advertising Standards
In addition to the advertising standards in Publication 3112, IRS e-file Applications
and Participation, there are additional responsibilities for Providers of Individual
Income Tax Returns.
Providers must not use improper or misleading advertising in relation to IRS e-file,
including the time frames for refunds and RALs or other financial products. Any
claims by Providers concerning faster refunds by virtue of electronic filing must be
consistent with the language in official IRS publications. If Providers advertise the
availability of a RAL or financial product, the Provider and financial institution must
clearly refer to or describe the funds they advance as a loan or other financial product, not as a refund. The advertisement on a RAL or other financial product must be
easy to identify and in readable print. That is, it must make clear in the advertising
that the taxpayer is borrowing against the anticipated refund or receiving another
financial product and is not obtaining the refund itself from the financial institution.
47
Chapter 6
A Provider must not advertise that individual income tax returns may be elec-
IRS e-file Rules
and Requirements
tronically filed prior to the Provider's receipt of Forms W-2, W-2G and 1099-R,
as the Provider is generally prohibited from electronically filing returns prior to
receipt of Forms W-2, W-2G, and 1099-R. Advertisements must not imply that
the Provider does not need Forms W-2, W-2G and 1099-R, or that it can use pay
stubs or other documentation of earnings to e-file individual income tax returns.
In using the Direct Deposit name and logo in advertisement, the Provider must
use the name "Direct Deposit" with initial capital letters or all capital letters, use
the logo/graphic for Direct Deposit whenever feasible and may change the color
or size of the Direct Deposit logo/graphic when it uses it in advertising pieces.
Disclosure of Tax Return Information
Under Treas. Reg. §301.7216-d(1), disclosure of tax return information among
Providers for the purpose of preparing a tax return is permissible. For example, an
ERO may pass on tax return information to an Intermediate Service Provider and/or
a Transmitter for the purpose of having an electronic return formatted and transmitted to the IRS. However, if the tax return information is disclosed or used in any other
way without the consent of the taxpayer, an Intermediate Service Provider and/or a
Transmitter may be subject to the penalties described in Treas. Reg. §301.7216-1(a)
and/or the civil penalties in I.R.C. §6713 for unauthorized disclosure or use of tax
return information.
Preparer Penalties
Preparer penalties may be asserted against an individual or firm meeting the
definition of a tax preparer under I.R.C. §7701(a)(36) and Treas. Reg. §301.7701-15.
Preparer penalties that may be asserted under appropriate circumstances include,
but are not limited to, those set forth in I.R.C. §§6694, 6695, 6701 and 6713.
Under §301.7701-15(c), Providers are not tax return preparers for the purpose of
assessing most preparer penalties as long as their services are limited to “typing,
reproduction or other mechanical assistance in the preparation of a return or claim
for refund.” If an ERO, Intermediate Service Provider, Transmitter or the product of a
Software Developer alters the return information in a non-substantive way, this alteration is considered to come under the “mechanical assistance” exception described
in §301.7701-15(c). A non-substantive change is a correction or change limited to a
transposition error, misplaced entry, spelling error or arithmetic correction.
48
Chapter 6
If an ERO, Intermediate Service Provider, Transmitter or the product of a Software
IRS e-file Rules
and Requirements
Developer alters the return in a way that does not come under the “mechanical
assistance” exception, the IRS may hold the Provider liable for income tax return
preparer penalties. See Treas. Reg.§301.7701-15(c); Rev. Rul. 85-189, 1985-2 C.B. 341
(which describes a situation where the Software Developer was determined to be
an tax return preparer and subject to certain preparer penalties).
A $500 penalty may be imposed, per I.R.C. §6695(f), on a return preparer who
endorses or negotiates a refund check issued to any taxpayer other than the return
preparer. The prohibition on return preparers negotiating a refund check is limited
to a refund check for returns they prepared.
A preparer that is also a financial institution, but has not made a loan to the taxpayer
on the basis of the taxpayer's anticipated refund, may
n cash
a refund check and remit all of the cash to the taxpayer
n accept
a refund check for deposit in full to a taxpayer’s account provided the bank
does not initially endorse or negotiate the check, or
n endorse
a refund check for deposit in full to a taxpayer’s account pursuant to a
written authorization of the taxpayer.
A preparer bank may also subsequently endorse or negotiate a refund check as part
of the check-clearing process through the financial system after initial endorsement.
Under Treas. Reg. 1.6695-1(f), a tax preparer, however, may affix the taxpayer’s name
to a check for the purpose of depositing the check into the account in the name of
the taxpayer or in joint names of the taxpayer and one or more persons (excluding
the tax return preparer) if authorized by the taxpayer or the taxpayer’s recognized
representative. The IRS may sanction any income tax return preparer that violates
this provision.
In addition to the above-specified provisions, the IRS reserves the right to assert all
appropriate preparer and non-preparer penalties against a Provider as warranted.
49
Notice
Paperwork Reduction Act
Paperwork Reduction Act Notice
The collections of information contained in this publication have been reviewed
and approved by the Office of Management and Budget in accordance with the
Paperwork Reduction Act (44 U.S.C. 3507) under control number 1545-1708.
An agency may not conduct or sponsor, and a person is not required to respond to,
a collection of information unless the collection of information displays a valid control number. It must maintain books or records relating to a collection of information
as long as their contents may become material in the administration of any internal
revenue law. Generally, tax returns and tax return information are confidential, as
required by 26 U.S.C. § 6103.
The collections of information in this publication are in Chapters 3, 4 and 5. This
information is required to implement IRS e-file and to enable taxpayers to file their
individual income tax returns electronically. The IRS uses this information to ensure
that taxpayers receive accurate and essential information regarding the filing of their
electronic returns and to identify the persons involved in the filing of electronic returns. The collections of information are required to retain the benefit of participating in IRS e-file. The likely respondents are business or other for-profit institutions.
The estimated total annual reporting and recordkeeping burden is 6,023,762 hours.
50
Glossary
Glossary
Acceptance Letter Correspondence issued by the IRS to applicants confirming
they may participate in IRS e-file. See also Credentials.
Acknowledgment (ACK) A report generated by the IRS to a Transmitter that
indicates receipt of all transmissions. An ACK Report identifies the returns in each
transmission that are accepted or rejected for specific reasons.
Acceptance or Assurance Testing (ATS) Required testing for Software Developers
that participate in IRS e-file to assess their software and transmission capability with
the IRS, prior to live processing. PATS, BATS and CATS are acceptance or assurance
testing specific to certain form types.
Administrative Review Process The process by which a denied applicant or
sanctioned Authorized IRS e-file Provider may appeal the IRS’ denial or sanction.
Adoption Taxpayer Identification Number (ATIN) A tax processing number issued
by the IRS as a temporary taxpayer identification number for a child in the domestic
adoption process who is not yet eligible for a Social Security Number (SSN). An ATIN
is not a permanent identification number and is only intended for temporary use.
To obtain an ATIN, complete IRS Form W-7A, Application for Taxpayer Identification
Number for Pending U.S. Adoptions.
Authorized IRS e-file Provider (Provider) A firm accepted to participate in IRS e-file.
Automated Clearing House (ACH) A system that administers electronic funds
transfers (EFTs) among participating financial institutions. An example of such a
transfer is Direct Deposit of a tax refund from IRS into a taxpayer’s account at a
financial institution.
Batch A single transmission consisting of the electronic data from single or
multiple tax returns.
51
Chapter 8
Communications Testing Required test for all Transmitters using accepted IRS e-file
Glossary
software to assess their transmission capability with the IRS prior to live processing.
Credentials Documentation issued by the IRS which indicates qualification of an
Authorized IRS e-file Provider to participate in the IRS e-file Program. The documentation consists of identification numbers and acceptance letters.
Debt Indicator (DI) The Debt Indicator is a field on an ACK Report. It only indicates
whether a debt offset of a taxpayer’s refund occurs. It does not indicate how much
the offset is. Offsets taken by IRS may be for current and prior year tax obligations.
Offsets taken by the Financial Management Service (FMS) are for past due student
loans, child support, federal taxes, state taxes, or other governmental agency debts.
Declaration Control Number (DCN) A unique 14-digit number assigned by the ERO
(or Transmitter, in the case of Online Filing), to each electronically filed tax return.
Denied Applicant An applicant that the IRS does not accept to participate in
IRS e-file. An applicant that the IRS denies from participation in IRS e-file has the
right to an administrative review.
Depositor Account Number (DAN) The financial institution account to which a
Direct Deposit refund is to be routed.
Direct Deposit An electronic transfer of a refund into a taxpayer’s financial
institution account.
Direct Filer see Transmitter.
Drain The IRS scheduled time for processing electronically filed return data.
Drop or Dropped An EFIN that is no longer valid due to inactivity or other
administrative action.
Due Diligence Due Diligence, when used in context with the Earned Income Tax
Credit (EITC), refers to requirements that income tax return preparers must follow
when preparing returns or refund claims that involve EITC.
Earned Income Tax Credit (EITC) The Earned Income Tax Credit is a refundable
individual income tax credit for certain persons who work.
EITC Recertification A requirement for a taxpayer previously denied EITC to provide
additional information on Form 8862, Information to Claim Earned Income Tax Credit
After Disallowance, when they file a similar EITC claim on a subsequent return.
52
Chapter 8
Electronic Federal Tax Payment System (EFTPS) A free service from the U.S.
Glossary
Treasury through which federal taxes may be paid. The taxpayer can pay taxes via
the Internet, by phone or through a service provider. After authorization, EFTPS
electronically transfers payments from the authorized bank account to the
Treasury’s general account.
Electronic Filing Identification Number (EFIN) An identification number assigned
by the IRS to accepted applicants for participation in IRS e-file.
Electronic Funds Transfer (EFT) The process through which Department of the
Treasury transmits Direct Deposit refunds from the government to the taxpayer’s
account at a financial institution.
Electronic Funds Withdrawal (EFW) A payment method which allows the taxpayer
to authorize the U.S. Treasury to electronically withdraw funds from their checking
or savings account.
Electronic Postmark The Electronic Postmark is the date and time the Transmitter
first receives the electronic return on its host computer in the Transmitter’s time
zone. The taxpayer adjusts the time to their time zone to determine timeliness.
Electronic Return Originator (ERO) An Authorized IRS e-file Provider that originates
the electronic submission of returns to the IRS.
Electronic Signature Method of signing a return electronically through use
of a Personal Identification Number (PIN). See also Self-Select PIN Method and
Practitioner PIN Method.
Electronic Tax Administration and Refundable Credits (ETARC) ETARC is the
office within IRS with management oversight of the IRS’ electronic commerce
initiatives. The mission of ETARC is to revolutionize how taxpayers transact and
communicate with the IRS.
Electronic Tax Administration Advisory Committee (ETAAC) An advisory group
established by the IRS Restructuring and Reform Act of 1998 to provide an organized
public forum for discussion of ETARC issues in support of the overriding goal that
paperless filing should be the preferred and most convenient method of filing tax
and information returns.
53
Chapter 8
Electronic Transmitter Identification Number (ETIN) An identification number
Glossary
assigned by the IRS to a participant in IRS e-file that performs activity of transmission
and/or software development.
Electronically Transmitted Documents (ETD) A system created to process
electronic documents that a Provider does not attach to a tax return and the
taxpayer files separately from the tax return.
Error Reject Code (ERC) Codes included on an Acknowledgment (ACK) Report
for returns that the IRS rejected. The IRS publishes explanations prior to the filing
season on IRS.gov. Providers can locate these on the e-file for Tax Professionals page
titled “2007 (or current year) Tax Year IRS e-file for Individual Income Tax Returns.”
In addition, the IRS also provides these in Publication 1346, Electronic Return File
Specifications and Record Layouts for Individual Income Tax Returns.
Federal/State e-file The Federal/State e-file option allows taxpayers to file federal
and state income tax returns electronically in a single transmission to the IRS.
Financial Institution For the purpose of Direct Deposit of tax refunds, the IRS
defines a financial institution as a state or national bank, savings and loan association, mutual savings bank or credit union. Only certain financial institutions and
certain kinds of accounts are eligible to receive Direct Deposits of tax refunds.
Financial Management Service (FMS) The agency of the Department of the
Treasury through which payments to and from the government, such as Direct
Deposits of refunds, are processed.
Form Field Number or Form Sequence (SEQ) Number The identifier of specific
data on an electronic tax return record layout as defined in Publication 1346,
Electronic Return File Specifications and Record Layouts for Individual Income Tax Returns.
Fraudulent Return 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.
Note: Taxpayers should not file fraudulent returns with the IRS.
Indirect Filer An Authorized IRS e-file Provider who submits returns to IRS via the
services of a Transmitter.
54
Chapter 8
Individual Taxpayer Identification Number (ITIN) A tax processing number that
Glossary
became available on July 1, 1996, for certain nonresident and resident aliens, their
spouses and dependents. The ITIN is only available from IRS for those individuals
who cannot obtain a Social Security Number (SSN). To obtain an ITIN, complete IRS
Form W-7, Application for IRS Individual Identification Number.
Intermediate Service Provider An Authorized IRS e-file Provider that receives
electronic tax return information from an ERO or a taxpayer who files electronically
using a personal computer and commercial tax preparation software, that processes
the electronic tax return information and either forwards the information to a
Transmitter or sends the information back to the ERO or taxpayer.
Internet Protocol (IP) Information The IP address, date, time and time zone of the
origination of a tax return filed through Online Filing via the Internet. IRS requires
Transmitters that provide Online Services via the Internet to capture the Internet
Protocol Information of Online returns. By capturing this information, it transmits
the location of the return’s originator with the individual’s electronic return. See
Publication 1346 for additional Information.
IRS e-file The brand name of the electronic filing method established by the IRS.
IRS e-file Marketing Tool Kit A specially designed kit containing professionally
developed material that EROs may customize for use in advertising campaigns and
promotional efforts.
IRS Master File A centralized IRS database containing taxpayers’ personal return
information.
Levels of Infractions (LOI) Categories of infractions of IRS e-file rules based on the
seriousness of the infraction with specified sanctions associated with each level.
Level One is the least serious, Level Two is moderately serious and Level Three is the
most serious.
Memorandum of Agreement (MOA) & Memorandum of Understanding (MOU)
The implementing document containing the set of rules established by the IRS for
participating in IRS pilot programs.
55
Chapter 8
Monitoring Activities the IRS performs in order to ensure that Authorized
Glossary
IRS e-file Providers are in compliance with the IRS e-file requirements. Monitoring
may include, but is not limited to, reviewing IRS e-file submissions, investigating
complaints, scrutinizing advertising material, checking signature form submissions
and/or recordkeeping, examining records, observing office procedures and conducting periodic suitability checks. IRS personnel perform these activities at IRS offices
and at the offices of Providers.
Name Control The first four significant letters of a taxpayer’s last name that the
IRS uses in connection with the taxpayer SSN to identify the taxpayer, spouse and
dependents.
Non-substantive Change A correction or change limited to a transposition error,
misplaced entry, spelling error or arithmetic correction which does not require new
signatures or authorizations to be transmitted or retransmitted.
Originate or Origination Origination of an electronic tax return submission occurs
when an ERO either: (1) directly transmits electronic returns to the IRS, (2) sends
electronic returns to a Transmitter or (3) provides tax return data to an Intermediate
Service Provider.
Participants Acceptance Testing (PATS) Required testing for all Software
Developers that participate in IRS e-file of individual income tax returns to assess
their software and transmission capability with the IRS prior to live processing.
See also Acceptance or Assurance Testing.
PATS Communications Test Required for all Transmitters using accepted IRS e-file
software for individual income tax returns to assess their transmission capability
with the IRS prior to live processing.
Pilot Programs An approach that the IRS uses to improve and simplify IRS e-file.
The IRS usually conducts pilot programs within a limited geographic area or within
a limited taxpayer or practitioner community. The IRS embodies rules for participating in pilot programs in an implementing document typically referred to as a
“Memorandum of Understanding” (MOU) or “Memorandum of Agreement” (MOA).
Pilot participants must agree to the provisions of the implementing document in
order to participate in the pilot program.
56
Chapter 8
Potentially Abusive Return A “potentially abusive return” is a return (1) that is not
Glossary
a fraudulent return; (2) that the taxpayer is required to file; or (3) that may contain
inaccurate information that 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. Note: The decision not to provide a RAL or other bank product
does not necessarily make it an abusive return.
Practitioner PIN Method An electronic signature option for taxpayers who use
an ERO to e-file. This method requires the taxpayer to create a five-digit Personal
Identification Number (PIN) to use as the signature on the e-filed return.
Note: Requires Form 8879 to be completed.
Preparer’s Tax Identification Number (PTIN) An identification number issued by
the IRS which paid tax return preparers may use in lieu of disclosing their Social
Security Number (SSN) on returns that they prepared. A PTIN meets the requirements under section 6109(a)(4) of furnishing a paid tax return preparer’s identifying
number on returns that he or she prepares. To obtain a PTIN, go to IRS.gov.
Refund Anticipation Loan (RAL) A Refund Anticipation Loan is money borrowed by
a taxpayer that lender bases on a taxpayer’s anticipated income tax refund. The IRS
has no involvement in RALs. A RAL is a contract between the taxpayer and the lender.
A lender may market a RAL under various commercial or financial product names.
Refund Cycle The anticipated date that the IRS would issue a refund either by Direct
Deposit or by mail to a taxpayer for a return included within a specific “drain.” However, neither the IRS nor FMS guarantees the specific date that Department of the
Treasury mails a refund or deposits it into a taxpayer’s financial institution account.
Request for Agreement (RFA) A solicitation, normally a written document, used in
establishing non-monetary memoranda of agreement. RFAs are not “acquisitions” as
defined by the Federal Acquisition Regulations (FAR).
Request for Procurement (RFP) A solicitation, normally a written document, used
in negotiated acquisitions estimated over $100,000 (as opposed to sealed bids) to
communicate government requirements to prospective contractors and to solicit
proposals to perform contracts.
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Chapter 8
Responsible Official An individual with authority over the IRS e-file operation of the
Glossary
office(s) of an Authorized IRS e-file Provider, who is the first point of contact with the
IRS and has authority to sign revised IRS e-file applications. A Responsible Official is
responsible for ensuring that the Authorized IRS e-file Provider adheres to the provisions of the Revenue Procedure and the publications and notices governing IRS e-file.
Revenue Protection A series of compliance programs designed to ensure that the
revenue the government collects and/or disburses in the form of refunds is accurate
and timely, and that it issues disbursement of revenue only to entitled taxpayers.
Routing Transit Number (RTN) A number assigned by the Federal Reserve to each
financial institution.
Sanction An action taken by the IRS to reprimand, suspend or expel from participation in IRS e-file, an Authorized IRS e-file Provider based on the level of infraction.
See also Level of Infraction.
Self-Select PIN Method An electronic signature option for taxpayers who e-file using
either a personal computer or an ERO. This method requires the taxpayer to create
a five-digit Personal Identification Number (PIN) to use as the signature on the e-file
return and to submit authentication information to the IRS with the e-file return.
Software Developer An Authorized IRS e-file Provider that develops software
for the purposes of (a) formatting the electronic portions of returns according to
Publication 1346 and/or (b) transmitting the electronic portion of returns directly
to the IRS. A Software Developer may also sell its software.
Stockpiling Stockpiling is waiting more than three calendar days to submit returns
to the IRS after the Provider has all necessary information for origination of the electronic return or collecting e-file returns prior to official acceptance for participation
in IRS e-file. The IRS does not consider collecting tax returns for IRS e-file prior to the
startup of IRS e-file as stockpiling. However, Providers must advise taxpayers that it
cannot transmit the returns to the IRS prior to the startup date.
Suitability A check conducted on all firms and the Principals and Responsible
Officials of firms when an application is initially processed, and on a regular basis
thereafter. The suitability check includes a background check conducted by the IRS
to ensure the firm and individuals are eligible for participation in IRS e-file.
Suspension A sanction revoking an Authorized IRS e-file Provider’s privilege to
participate in IRS e-file.
58
Chapter 8
Glossary
Transmitter An Authorized IRS e-file Provider that transmits the electronic portion
of a return directly to the IRS. An entity that provides a “bump-up” service is also
a Transmitter. A bump-up service provider increases the transmission rate or line
speed of formatted or reformatted information that it is sending to the IRS via a
public switched telephone network.
Treasury Offset Program (TOP) Public Law that established the Tax Refund
Offset Program which permits the government to offset overpayments against
delinquent child support obligations as well as debts owed to participating
federal and state agencies. Treasury’s Financial Management System (FMS) office
assumes responsibility and oversight for TOP.
Warning Written notice given by the IRS to an Authorized IRS e-file Provider
requesting specific corrective action be taken to avoid future sanctioning.
Written Reprimand A sanction for a level one infraction of the IRS e-file rules. It
reprimands a Provider for an infraction but does not restrict or revoke participation
in IRS e-file.
59
Department of the Treasury
Internal Revenue Service
w w w . i r s . g o v
Publication 1345 (Rev. 03-09)
Catalog Number 64382J
| File Type | application/pdf |
| File Title | Publication 1345 (Rev. 03-2009) |
| Subject | Handbook for Authorized IRS e-file Providers of Individual Income Tax Returns |
| Author | SE:W:ETARC:S:TP |
| File Modified | 2013-08-16 |
| File Created | 2009-04-02 |