Federal Electronic Filing of Tax Returns and E-Services

By Stewart Berger

The first step to electronic filing is to register with the IRS by filing Form 8633, Application to Participate in the IRS E-file Program. Preparers can file Form 8633 online. Individuals, not companies, register with the IRS to e-file tax returns.

Most tax returns, including information returns, can be filed electronically. These returns include individuals, first and second individual extensions, corporations, partnerships, and most exempt organizations. Before electronically filing a tax return, the taxpayer must sign Form 8878, the signature form. Notification of acceptance or rejection of the tax return is usually given within two days after submission. If for any reason the IRS rejects the tax return, it can be corrected and resubmitted. The tax return filing date is the date of the e-filing.

E-Services

As an outgrowth of e-filing, the IRS has expanded its e-services to include disclosure authorization and the Electronic Account Resolution, new online tools that give tax professionals additional ways to work with the IRS.

Disclosure authorization. Eligible tax professionals can complete authorization forms, view and modify existing forms, and receive acknowledgement of accepted submissions, all online. Disclosure authorization (DA) allows tax professionals to electronically submit Form 2848, Power of Attorney, and Form 8821, Tax Information Authorization. These authorizations provide for convenient electronic signature by taxpayers, which allows a tax preparer to act more quickly on behalf of a client.

Electronic account resolution. EAR allows tax professionals a secure method of electronically corresponding with the IRS and inquiring about specific account problems. Account-related questions or problems about refunds, installment agreements, assessments, or missing payments can be resolved by IRS representatives after EAR verifies that the tax professional has authority to represent the taxpayer. The IRS response is delivered to an electronically secure mailbox within three business days, and the tax professional is notified by e-mail.

Other basic e-services available to tax professionals are:

• Online registration to use other e-services.
• Electronic applications for a preparer tax identification number (PTIN). PTIN numbers are used in place of the preparer’s Social Security number on tax returns.
• Interactive tax identification number (TIN) matching allows payee and agents submitting information returns to match up to 25 payee TIN and name combinations against IRS records. This is a prefiling service and is available for Forms 1099-B, 1099-INT, 1099-DIV, 1099-PATR, and 1099-MISC. Bulk TIN matching allows payers and agents that file 1099s to match up to 100,000 TIN and name combinations against IRS records within 24 hours.

Only approved IRS partners, such as e-filing tax professionals and taxpayers, are eligible to use e-services. They are available 24 hours a day, seven days a week. The only caveat is that the disclosure authorization and EAR services are currently available only to tax professionals that successfully e-file 100 or more individual tax returns.

Electronic Federal Tax Payment System

Employers that have been paying penalties on late filings of Form 941, Employer’s Quarterly Federal Tax Return, can obtain a refund on penalties by enrolling in the Electronic Federal Tax Payment System (EFTPS). An employer enrolls in EFTPS by either going to the EFTPS website (www.eftps.gov) or calling 800-555-4477 to receive an enrollment form. The employer must make timely deposits for four quarters. The federal tax deposit should be called into the EFTPS program at least one business day before the deposit is due; the funds are withdrawn the next business day. After four quarters in the program, the IRS will look back to see if there were any penalties in the four preceding quarters. If so, the IRS will refund the deposit penalty charged and paid (minus any offsets for outstanding taxes).

E-Mail Technical Guidance

The IRS is launching a new service to make technical guidance available via e-mail to tax professionals whenever documents are issued.

Through the IRS’ GuideWire list server, subscribers will receive notification of, and links to, IRS announcements, notices, revenue procedures, and revenue rulings as they are issued. Tax preparers can subscribe to the list server through the IRS, at www.irs.gov. The IRS also sends out a weekly summary of technical guidance to subscribers of its Digital Dispatch service.

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