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IRS e-file providers

IRS e-file providers. Providers are firms and organizations that develop software, originate and/or transmit electronic returns to the IRS, and provide services to a multitude of taxpayer clients. The roles and responsibilities of Providers vary according to the e-file activities that firms conduct. Each Provider Option entails a different role and may have different responsibilities that relate specifically to the e-file activity of the firm. Some Providers may have more than one e-file business activity. For example, an Electronic Return Originator (ERO) may also be a Transmitter. Providers must adhere to all IRS e-file rules and requirements applicable to their multiple e-file roles. The following details the roles and responsibilities of each Provider Option.

Electronic Return Originator (ERO). The ERO is the Provider who originates the electronic submission of a return to the IRS. The ERO is usually the first point of contact for most taxpayers filing a return using IRS e-file.

RESPONSIBILITIES: Origination of an Electronic Return. Although an ERO may also engage in return preparation, that activity is separate and distinct from the origination of the electronic submission of the return to the IRS. An ERO originates the electronic submission of a return after the taxpayer authorizes the filing of the return via IRS e-file. An ERO must originate the electronic submission of only returns that the ERO either prepared or collected from a taxpayer. An ERO originates the electronic submission by any one of the following:

  • Electronically sending the return to a Transmitter that will transmit the return to the IRS (most taxpayers use this method); or
  • Directly transmitting the return to the IRS (rarely used); or
  • Providing a return to an Intermediate Service Provider (ISP) for processing, prior to transmission to the IRS (rarely used).

In originating the electronic submission of a return, the ERO has a variety of responsibilities including, but not limited to:

  • Timely originating the electronic submission of returns;
  • Submitting required supporting paper documents to the IRS;
  • Providing copies to taxpayers;
  • Retaining records and making records available to the IRS;
  • Accepting returns only from taxpayers and Providers; and
  • Working with the taxpayer and/or the Transmitter to correct rejected returns.
If the taxpayer chooses not to have the electronic portion of a return corrected and retransmitted to the IRS or if the electronic portion of a return cannot be accepted for processing by the IRS, the taxpayer must file a paper return.

Software Developer. A Software Developer creates software that formats electronic return information according to IRS e-file specifications and/or transmits electronic return information directly to the IRS. Software Developers must pass the Assurance Testing System (ATS) which is an IRS test environment system for electronic forms. If a Software Developer performs the function of any provider, in addition to software development, suitability checks apply.

RESPONSIBILITIES: A Software Developer has a variety of responsibilities that include, but are not limited to:

  • Adhering to specifications provided in official IRS publications;
  • Ensuring its software creates accurate electronic returns;
  • Promptly correcting all software errors that cause tax returns to reject; and
  • Distributing the corrections to all affected parties.

Transmitter. A Transmitter sends the electronic return data directly to the IRS. EROs may apply to be Transmitters and transmit return data themselves, or they may contract with an accepted third-party Transmitter to transmit the data.

RESPONSIBILITIES: A Provider participating in MeF as a Transmitter has a variety of responsibilities that include, but are not limited to:

  • Conducting a one-time communication test;
  • Transmitting all electronic portions of returns to the IRS within three calendar days of receipt;
  • Retrieving the acknowledgement file within two business days of transmission;
  • Matching the acknowledgement file to the original transmission file and sending, or making available, the acknowledgement file to the ERO, ISP or Large Taxpayer for all rejected and accepted returns, within two business days of retrieval;
  • Retaining an acknowledgement file received from the IRS until the end of the calendar year in which the electronic return was filed, or, for fiscal year filers, for nine (9) months after the transmission date, whichever is later;
  • Immediately contacting the IRS e-help Desk toll-free number 1-866-255-0654 for further instructions if an acknowledgement has not been received within 24 hours of transmission;
  • Working with the ERO or Large Taxpayer to promptly correct any transmission error that caused an electronic transmission to be rejected;
  • Contacting the IRS e-help Desk for assistance if the electronic portion of the return has been rejected after three transmission attempts;
  • Ensuring the security of all transmitted data; and
  • Ensuring against the unauthorized use of its EFIN or ETIN. A Transmitter must not transfer its EFIN or ETIN by sale, merger, loan, gift, or any other transaction to another entity.

Online Provider. An Online Provider transmits business income tax return information prepared by a taxpayer using commercially purchased software or software provided by an Internet site.

RESPONSIBILITIES: An Online Provider has a variety of responsibilities that include, but are not limited to:

  • Ensuring the use of an EFIN or ETIN obtained for online filing;
  • Ensuring the EFIN of the ISP is included in the electronic return data when applicable;
  • Transmitting online returns electronically to the IRS;
  • Notifying the taxpayer of the status of a return by:
    • Sending an electronic transmission to the taxpayer or the ISP, when applicable, within two business days of retrieving the acknowledgment file from the IRS, or
    • Mailing a written notification to the taxpayer within one business day of retrieving the acknowledgment file;
  • Providing the Internet Protocol (IP) information, which consists of the IP Address, IP Date, IP Time and IP Time Zone;
  • Entering into agreements with companies to allow access to online filing only if the company correctly captures the IP Address of the computer submitting the return and the date, time, and time zone of the computer receiving it; and
  • Including the Originator Type “Online Filer” in the Return Header.

Intermediate Service Provider (ISP). An ISP assists with processing return information between an ERO, or the taxpayer in the case of Online Filer, and a Transmitter.

RESPONSIBILITIES: An ISP has a variety of responsibilities that include, but are not limited to:

  • Including its EFIN and the ERO’s EFIN with all return information forwarded to a Transmitter;
  • Serving as a contact point between its client ERO and the IRS, if requested;
  • Providing the IRS with a list of each client ERO, if requested; and
  • Adhering to all applicable rules that apply to Transmitters.

Reporting Agent. A Reporting Agent originates the electronic submission of certain returns for its clients, and/or transmits the returns to the IRS. A Reporting Agent must be an accounting service, franchiser, bank, or other entity that complies with Rev. Proc. 2012-32, IRB 2012-34, and is authorized to perform one or more of the acts listed in Rev. Proc. 2012-32 on behalf of a taxpayer. Reporting Agents must submit Form 8655, Reporting Agent Authorization to the IRS prior to updating or submitting an IRS e-file application.

Large Taxpayer. A Large Taxpayer is also a Provider Option on the IRS e-file Application but it is not a Provider. The creation of an IRS e-file Application for Large Taxpayers is different from the Authorized IRS e-file Providers Application. For purposes of electronic filing, the IRS defines a Large Taxpayer as a business or other entity (excluding partnerships) with assets of $10 million or more, or a partnership with more than 100 partners (asset criteria does not apply to partnerships), which originates the electronic submission of its own return(s).