Taxsoftware

Taxsoftware.com is the easiest, most secure, and most complete tax e-filing system available—and it’s the least expensive! Taxsoftware.com is an online web site designed by programmers who helped the IRS develop the standards for e-filing, and it’s been IRS tested and approved.

Taxsoftware.com will walk you through your tax return. It prompts you for every necessary input, guides you to each required form, does all the calculations, and flags any errors—before your return gets to the IRS. It makes e-filing easy and error-free. All you do is type in numbers.

Anyone can use Taxsoftware.com—individual or professional, personal or business—whether you’re filing one return or thousands. Because it’s online, you don’t have to worry about getting the latest software update, patch, or fix; it’s up-to-date all the time, every time, no matter when you log in. And Taxsoftware.com can transmit your tax return directly to the IRS, so you don’t even have to print it.

To keep your tax information safe—and make accessing your return easier—Taxsoftware.com uses digital ID certificates, or UPIDs, to identify users; there are no usernames or passwords to remember or have stolen. You can use any digital ID you already have or you can get one from Taxsoftware.com. Follow the instructions in Using Taxsoftware.com to get your digital ID.

Chapter 2: What Is Taxsoftware.com e-services?

Taxsoftware.com e-services is an online web site product designed for professionals looking for the easiest, fastest, most secure—and least expensive—system for tax preparation around. Taxsoftware.com offers all the forms and schedules you need—with none of the worry about software package updates. Because it’s online, you don’t have to worry about getting the latest software patch or fix; it’s up-to-date all the time, every time, no matter when you log in.

E-service means paperless tax returns. No more Forms 8453! When you sign up for Taxsoftware.com e-services, you can use a practitioner PIN method to e-file. This eliminates the Form 8453 requirements for all forms. Normally, you need to fax a Form 8453S for Form 1120s, Form 8453C for Form 1120, or Form 8453EO for Form 1120POL, and mail a Form 8453P for Form 1065, Form 8453OL for Form 1040, or Form 8453F for Form 1041. With Taxsoftware.com e-services you sign up for a practioner PIN and just enter your EFIN, PTIN, and PIN when you e-file. Then no Form 8453 is required. For more information see:

Practitioner PIN Method for e-file

After you e-file a Information Returns (Federal Information Returns) tax return you get Taxpayer Identification Number (TIN) matching. TIN matching is a pre-filing service offered to payers and/or authorized agents who submit any of six information returns subject to backup withholding (Forms 1099-B, INT, DIV, OID, PATR, and MISC). With Interactive TIN Matching authorized payers can match up to 25 payee TIN and name combinations against IRS records prior to submitting an information return. In order to participate in TIN matching, payers must be listed in the IRS Payer Account File (PAF) database. If your firm has not filed information returns with the IRS in one of the past two tax years, this application will not be available to you at this time.

After you e-file 100 IRS Form 1040/1040A/1040EZ tax returns next year, you will get access to the other IRS e-services products, such as:

Disclosure Authorization: Eligible tax professionals may complete authorization forms, view and modify existing forms, and receive acknowledgement of accepted submissions immediately - all online. Disclosure authorization allows tax professionals to electronically submit Form 2848, Power of Attorney and Declaration of Representative, and Form 8821, Tax Information Authorization. This e-service expedites processing and issues a real-time acknowledgment of accepted submissions.

Electronic Account Resolution: Electronic account resolution allows tax professionals to expedite closure on clients’ account problems by electronically sending/receiving account-related inquiries. Tax professionals may inquire about individual or business account problems, refunds, installment agreements, missing payments, or notices. Tax professionals must have a power of attorney on file before accessing a client’s account. The IRS response will be delivered to an electronic secure mailbox within 72 hours.

Transcript Delivery System: Use the transcript delivery system to request tax return transcripts, account transcripts, and a record of account for your individual and business taxpayers. Resolve your clients need for account information quickly in a secure, online session. Tax professionals must have authorization on file with the IRS before accessing a client's account.

Who Should Use E-services

The Taxsoftware.com e-services product is designed for tax preparers who prepare 100 returns or more per tax year. If you prepare fewer than 100 tax returns per year, use the Pay Per Return Preparer pricing package.

Taxsoftware.com transmits returns directly to the IRS—no need to print pages of paper. And when you sign up for Taxsoftware.com e-services, you can use the IRS’s practitioner PIN method to e-file. That means no more Forms 8453—a truly paperless return!

To secure your data—and the confidence of your clients—Taxsoftware.com uses digital ID certificates, or UPIDs, to identify users; there are no usernames or passwords to remember or have stolen. You can use any digital ID you already have or you can get one from Taxsoftware.com. Follow the instructions in Using Taxsoftware.com to secure your UPID.

If you already have your IRS-designated EFIN (electronic filing identification number) and PTIN (preparer tax identification number), you’re ready to go. If not, sign up with the IRS for e-services at http://www.irs.gov/taxpros/article/0,,id=109646,00.html.

Electronic Signatures with Taxsoftware.com e-services

All tax returns submitted to the IRS—whether on paper or electronically—must be signed. The advantage to using Taxsoftware.com e-services is that you can sign electronically and do away entirely with the signed paper, Form 8453, that must accompany other electronic returns.

Taxpayers filing electronically must sign both the return and the Declaration of Taxpayer—the form that authorizes submission of the return before the return is actually transmitted. Taxsoftware.com offers users the chance to use the IRS’s Practitioner PIN method of signing both forms electronically. A taxpayer who has a Form 8878 or 8879, IRS e-file Signature Authorizations, on file with an ERO has authorized the ERO to sign forms electronically for the taxpayer. Taxsoftware.com allows EROs to enter the appropriate PINs on the return to make any further paper trail unnecessary. The ERO must also sign the return with a PIN and must retain copies of the taxpayers’ Forms 8878 or 8879 for three years.

The following taxpayers are ineligible to sign individual income tax returns with an electronic signature:

· $B"#(J Taxpayers who filed Form 1040-NR or 1040-SS the prior tax year; and

· $B"#(J Taxpayers required to file the following forms, which must be attached to Form 8453, U.S. Individual Income Tax Declaration for an IRS e-file Return or Form 8453 OL, U.S. Individual Income Tax Declaration for an IRS e-file Online Return:

· $B"#(J Form 3115, Application for Change in Accounting Method;

· $B"#(J Form 3468, Investment Credit, Historic Structure Certificate;

· $B"#(J Form 5713, International Boycott Report;

· $B"#(J Form 8283, Non-Cash Charitable Contribution, Section B Appraisal Summary;

· $B"#(J Form 8332, Release of Claim to Exemption for Children of Divorced or Separated Parents;

· $B"#(J Form 8858, Information Return of U.S. Persons With Respect To Foreign Disregarded Entities;
or

· $B"#(J Form 8885, Health Coverage Tax Credit.

If the taxpayer is ineligible to use an electronic signature or chooses not to do so, a signature on a paper declaration must be completed.

RALs with Taxsoftware.com

Taxsoftware.com e-services is an online web site product designed for professionals looking for

Taxsoftware.com e-services gives professionals a chance to offer their clients easy money: quick, low-cost RALs from a high-service bank. Taxsoftware.com has partnered with Refund-advantage and Republic Bank. User's must sign up directly with the bank entity to process your bank products through Taxsoftware.com. Clients get their money fast, with easy-to-use check cards—no long-standing bank accounts necessary for check cashing; no giant fees associated with non-standard check cashing. And each time your clients use their money, you get paid as well.

When you prepare the taxpayer's tax return you give the taxpayer an ATM Cash Connection card. When the taxpayer receives a refund your tax preparation fees can be automatically deducted from the refund and deposited into your bank account. Then the balance of the refund can be deposited onto the ATM Cash Connection Card. The taxpayer can then go to any ATM machine and withdraw the refund and no check cashing-in required!!

Chapter 3: Technical Specifications

Taxsoftware.com won’t tax your computer. If you can access the web site, you can file the returns. Following are the system and browser requirements. Microsoft Java™ yields best performance.

System Requirements

Microsoft Internet Explorer 4 or later

Microsoft Java™ or latest Sun Java™

Netscape 7.0 or later

With Sun Java™ 1.4 or later

To Print:

Adobe Acrobat Reader 5.05 or later

Also—you’ll need to add Taxsoftware.com to your list of Trusted Sites to print

Browser Requirements

Microsoft Net J Browser Controls version 1.1 or later

Chapter 4: Who Can E-File?

Individual taxpayers looking to e-file must be filing tax returns with prescribed due dates in the current year. An individual income tax return cannot be electronically filed after October 15^th following the close of the tax year, even if the taxpayer has been granted an extension to file a return beyond that date. If October 15^th falls on a Saturday, Sunday, or legal holiday, the due date is the next succeeding day that is not a Saturday, Sunday, or legal holiday.

State individual income tax returns that are filed as part of federal/state e-file become 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. EROs should process state paper documents according to applicable state rules.

Ineligible Returns

The following individual income tax returns and related return conditions cannot be processed using IRS e-file:

Other than current year tax returns;

Tax returns with fiscal year tax periods;

Amended tax returns;

Returns containing forms or schedules that cannot be processed by IRS e-file. Publication 1345A, Filing Season Supplement for Authorized IRS e-file Providers of Individual Income Tax Returns, published in December of each year, contains a list of accepted forms and schedules for the current tax year;

Tax returns with TINs 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 80 in the fourth and fifth digits; and

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, and Taxsoftware.com will alert you to these conditions if they arise.

Chapter 5: What Is an ERO?

The IRS does not have the capability to accept millions of returns submitted from millions of different electronic sources. Individuals and professional tax preparers may, however, submit returns to Taxsoftware.com, which is an Authorized IRS e-file Provider and is authorized to transmit returns directly to the IRS.

The IRS considers the person or entity that originates the electronic submission of returns it either prepares for taxpayers or collects from taxpayers who want to e-file to be the ERO—electronic return originator. The ERO may or may not be the individual taxpayer named on the return or the paid preparer of the return. With Taxsoftware.com, the ERO is the person who accesses Taxsoftware.com and completes returns with the Taxsoftware.com program. The ERO submits the returns to Taxsoftware.com, and Taxsoftware.com transmits the returns to the IRS.

An ERO that has merely collected returns for submission to a transmitter will become a tax return preparer if the ERO discovers errors in the return that require substantive changes and then makes the changes. Correction of transposition errors, misplaced entries, spelling errors, or arithmetic errors are not substantive changes and will not change the status of an ERO that makes them. All other changes are considered substantive by the IRS and may require the ERO to sign the tax return as the tax return preparer.

Chapter 6: Deadlines

E-filers must meet the same deadlines and due dates as paper filers. Taxsoftware.com is committed to ensuring prompt processing of all returns received from EROs. This means we transmit to the IRS every day. We do not stockpile returns received for massive weekly transmissions to the IRS.

Electronic Postmarks

Taxsoftware.com provides e-filers electronic postmarks, so you can rest assured that your return has been filed quickly and on time. If the electronic postmark is on or before the prescribed deadline but the return is received by the IRS after the deadline, the return will be considered on-time as long as all requirements for signing the return and completing a paper declaration—if necessary—are met. Corrected returns must be filed in accordance with rules for timely filing of corrected returns after rejection of an electronic return.

The IRS does not consider a return to be filed until the electronic portion of the return has been acknowledged by the IRS as accepted for processing and a signature for the return has been received, either electronically or on the appropriate version of Form 8453. However, if the electronic portion of a composite return is successfully transmitted on or shortly before the due date and the provider complies with the requirements for signing the return, the return will be considered timely filed. The requirements for signing the return include completing the applicable paper declaration, or Form 8453, in accordance with instructions.

To avoid any delays associated with filing Forms 8453, or paper signatures, Taxsoftware.com encourages the use of the IRS’s practitioner PIN e-signature feature. With an e-signature, the tax return is paperless and complete on the first transmission.

Chapter 7: Signing Returns

All tax returns submitted to the IRS—whether on paper or electronically—must be signed.

The IRS says that Form 8453, US Individual Income Tax Declaration for an IRS e-file Return, must be completed and signed before the electronic data portion of the return is submitted. All taxpayer information on Form 8453 must be identical to that on the return, and the form must be signed by both the taxpayer and the ERO. Any paid preparer must also sign Form 8453.

If the electronic data portion of the return has been submitted and accepted by the IRS before the Form 8453 has been filed, EROs must mail the Form 8453 within three business days of acceptance. The IRS states that a composite—electronic and paper—return is not considered filed until the Forms 8453 are received by the IRS. As a result, the IRS may choose to sanction EROs that do not timely file Forms 8453.

Chapter 8: Submitting Returns

As soon as you have completed a return—and collected from the taxpayer if necessary the appropriate signature authorizations and other forms, such as W-2s, W-2Gs, or 1099-Rs—the return is ready for submission. And with Taxsoftware.com, all it takes is a simple click of the mouse. Taxsoftware.com then transmits the return to the IRS—right away, every day. Taxsoftware.com transmits to the IRS on a daily basis; there’s no stockpiling of returns. Then, as soon as we know the returns have been accepted, or rejected, we e-mail you. There’s no lag time in the Taxsoftware.com system.

1) To Efile your tax return you must be on the start web page. From any page in the tax return click on the HOME button to go to the start web page.

2) Click on the taxreturn.tax file you want to e-file.

3) Click on taxreturn.tax file you want to e-file to the IRS and then click on e-file. You will get the Electronic Transmission Page:

Click on CONFIRM SEND to send the data to the IRS.

Chapter 9: Payments

Taxpayers who e-file must pay any tax balances due by the original due date of the return. If taxes are not paid on time, taxpayers will be subject to interest and penalty charges. The IRS may grant extensions of time to file, but these extensions will not extend the time to pay a balance due. The payment and the return may be sent at different times, as long as both arrive at the IRS before the due date; that is, you can e-file your return in January and mail your payment voucher in April, as long as the IRS receives both the return and the payment before the due date.

Taxpayers have several options for making payments. One of the easiest for e-filers is to authorize an electronic funds withdrawal. To do this, you must provide the IRS account numbers and routing transit numbers for qualified bank accounts that you intend to use. The IRS tax return instructions describe how to find and identify these numbers using official bank records, account cards, checks, or share drafts. Before forwarding electronic withdrawal authorization to the IRS, you must be certain that your bank will allow such transactions. With an electronic funds withdrawal, you can schedule your payment for a future date before the due date. (For any returns submitted after the due date, any electronic funds withdrawal must be scheduled for the date the return is transmitted.)

Payments can be made by electronic funds withdrawal for the following:

Current year Form 1040 series return;
Form 4868, Application for Extension of Time to File…;
Form 2350, Application for Extension of Time to File … Special Treatment; and
Form 1040-ES, Estimated Tax for Individuals. Only one estimated tax payment can be made at the time that the Form 1040 is electronically filed.

All information needed for the electronic funds withdrawal request must be included with the return. Taxpayers must provide all of the following:

Routing transit number (RTN);
Account number;
Type of account (checking or savings);
Date of scheduled electronic funds withdrawal (if applicable); and
Amount of the withdrawal.

Without all of this information, it will be necessary to make other arrangements to pay the balance due.

Taxpayers may also pay balances due using a credit card by phone or internet. Certain credit cards provide this service, though they may charge a convenience fee based on the amount of the tax payment. The fees will vary with service providers.

Credit card payments can be made for the following:

Current year Form 1040 series returns, including balance due notices;
Prior year Form 1040 series returns (applies to past-due payments where no Installment Agreement);
Form 4868, Application for Extension of Time to File;
Form 1040-ES, Estimated Tax for Individuals; and
Installment Agreement payments.

Taxpayers can also pay be check, mailing their payment with Form 1040-V, Payment Voucher. Payment vouchers are found in individual income tax return packages. Again, vouchers may be mailed after the return is e-filed, provided they are mailed before the final due date.

Electronic Federal Tax Payment System (EFTPS)

Taxpayers can pay balances due and estimated taxes year round using the Electronic Federal Tax Payment System (ETPS). You can enroll in EFTPS online via an official government web site. After enrollment, you will receive a confirmation package with instructions. A PIN will be mailed separately for security.

Installment Agreement Requests

Taxpayers who cannot pay the amount they owe for Form 1040 series returns may submit Form 9465, Installment Agreement Request, to the IRS. The IRS will charge a user fee for setting up the installment payments.

Chapter 10: Refunds

Taxpayers expecting refunds have several options. An individual income tax refund may be applied to the next year’s estimated tax, received as a direct deposit or paper check, or split so that a portion is applied to the next year and the remainder is received as a refund.

Direct deposit is the fastest way to receive refunds; many taxpayers prefer this method. To designate an account for direct deposit of refund, taxpayers must provide the account numbers and routing numbers for qualified accounts at eligible financial institutions. Qualified accounts include savings, checking, share draft, or consumer asset accounts (credit card accounts do not qualify). Eligible institutions are national banks, state banks, savings and loan associations, mutual savings banks, and credit unions. Certain financial institutions will not allow deposit of joint individual income tax refunds into individual accounts; taxpayers should determine if their designated institution has any restrictions on direct deposits.

Taxpayers cannot rescind their direct deposit designation after the IRS has accepted their tax return. Account and routing numbers must be current each year to avoid any problems with deposits.

Any refunds that cannot be direct deposited because of institutional bank refusal, erroneous account or routing numbers, closed accounts, bank mergers, or any other reason, will be issued as paper checks—resulting in refund delays of up to 10 weeks. The IRS reserves the right to issue a paper check and will not guarantee a specific date by which the refund will be deposited directly.

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 to pay off past-due child support or federal agency debts such as student loans. 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 refund, but do not delay the remainder. Taxpayers may contact any federal agency to determine if any debts have been submitted for refund offset. The IRS will indicate a debt and offset on the acknowledgement file it sends in receipt of an e-filed return. To dispute any offsets, taxpayers should contact the agency identified. If a refund is in a joint name, but only one spouse owes the debt, the other spouse should file Form 8379, Injured Spouse Claim and Allocation.

Refund Delays

Taxpayers can avoid refund delays by having all of their taxes and obligations paid, providing current and correct information to the tax preparer or on the Taxsoftware.com forms, 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.

Refunds can be delayed for a number of reasons, including:

Errors in direct deposit information (refunds will then be sent by check0;
Financial institution refusals of direct deposits or delays in crediting the deposit to the account;
Estimated tax payments differ from amount reported on tax return (for example, fourth quarter payments not yet on filed when return data are transmitted);
Bankruptcy;
Inappropriate claims for the Earned Income Tax Credit; or
Recertifications to claim the Earned Income Tax Credit.

Taxpayers will receive a letter or notice explaining the issue behind the refund delay and how to resolve it. The letter will contain the contact telephone number that the taxpayer can use for further assistance.

Taxpayers can call the Refund Hotline for more information about their refunds: 1-800-829-1954. Taxpayers should wait at least three weeks from the time the return is acknowledged as received before checking the hotline for information.

Chapter 11: Additional Information from the IRS

Taxsoftware.com—and the IRS—urge anyone filing tax returns electronically to stay informed of the latest requirements. Though you can count on Taxsoftware.com to keep the web site software and forms updated continuously, the IRS will occasionally release new information pertinent to tax preparers and taxpayers.

The IRS offers a number of ways to find out what you need to know. The quickest way to find current information about e-filing is to visit the IRS web site at www.irs.gov. Click on the “e-file for Tax Professionals” link, then click on the IRS e-file logo. There is a further link for more information on federal/state e-filing. Information on the IRS Nationwide Tax Forums is also available through the “Tax Professionals” link.

In addition, any correspondence from the IRS will have a contact telephone number. The number will reach the person best able to help you with your question.

Taxpayers will be interested in payment—and refund—information. At the IRS web site e-file logo, click on the “e-file for Tax Professionals” link, then access “Electronic Payment Options.” Refund information is available to taxpayers through the refund hotline number 1-800-829-1954, or through the “Where’s My Refund?” feature at irs.gov.

Chapter 12: Fraud and Abuse

The IRS requires Taxsoftware.com to be “diligent in recognizing and preventing fraud and abuse” in e-filing. The IRS requires tax preparers and e-file providers to report any suspicious activity to the IRS by calling 1-800-829-0433.

The IRS charges any ERO to be particularly diligent while acting in their capacity as the first contact with taxpayers filing a return. An ERO should always seek to recognize and prevent fraud and abuse of IRS e-file. An ERO 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. EROs must be sure to complete all required worksheets and meet all record-keeping requirements. A potentially abusive return is a return that is not fraudulent, is required to be filed by the taxpayer, 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 my not be entitled. Indicators of an abusive or fraudulent return include unsatisfactory answers to filing status questions, multiple returns with the same address, and missing or incomplete Schedules A and C income and expense documentation.

Confirm IDs and TINs

An ERO should confirm identities and taxpayer identification numbers (TINs) of taxpayers, spouses, and dependents listed on returns. TINs include SSNs, EINs, Adopted Taxpayer Identification Numbers (ATINs), and Individual Taxpayer Identification Numbers (ITINs). To confirm identities, an ERO might ask taxpayers not known to them to provide two forms of identification that include the taxpayer’s name and current address. EROs can check Social Security cards and other documents to make certain the TINs on returns are correct and correctly transcribed. TINS on W-2s must match TINs on the return.

Name Controls

TINs for taxpayers, spouses, and dependents are identified by a name control. 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 return rejections. 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.

Non-Standard Information Documents

The IRS has identified questionable Forms W-2 as a key indicator of potentially abusive and fraudulent returns. EROs must be on the lookout for suspicious or altered Forms W-2, W-2G, and 1099-R and forged or fabricated documents. EROs should enter the “non-standard form” code in the electronic record of individual income tax returns for forms that are altered, handwritten, or typed. An alteration includes any pen and ink change. The information must never be altered after the forms are given to the ERO.

Addresses on forms that differ from the taxpayer’s current address must be input into the electronic record of the return—even if the addresses are old or if the taxpayer has moved. EROs should inform taxpayers that the address on the first page of the return, once processed by the IRS, will be used to updated the taxpayer’s address of record. The IRS uses a taxpayer’s address-of-record for various notices that are required to be sent to a taxpayer’s “last known address.”

In addition, the ERO should be careful never to put the ERO’s address in fields reserved for taxpayers’ addresses in the electronic return record or on Form 8453. The only exceptions are if the ERO is the taxpayer or the address of a power of attorney for the taxpayer for the tax return is the same as the address of the ERO.

Chapter 13: ERO Responsibilities after Submission

The IRS has assigned the ERO certain duties to uphold after submission of any electronic returns. Most of these responsibilities pertain to the maintenance of records and communications with taxpayers. Because with Taxsoftware.com all of your data is stored on your computer and remains on your computer, compliance with these requirements is simple.

Following is a more complete discussion of ERO responsibilities taken from IRS Publication 1345.

Record Keeping and Documentation Requirements

EROs must retain and make available to the IRS upon request, until the end of the calendar year in which a return was filed, the following material at the business address from which the return was originated. An ERO may retain the required records at the business address of the Responsible Official during any period of time the office is closed.

· A copy of signed Form 8453, any supporting documents that are not included in the electronic return data and copies of Forms W-2, W-2G, and 1099-R;

· A copy of signed IRS e-file consent to disclosure forms for taxpayers who signed using an electronic signature;

· A 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

· The acknowledgment file for IRS accepted returns.

Forms 8879 and 8878 must be available to the IRS in the same manner described above, for three years from the due date of the return or the IRS received date, whichever is later.

EROs may electronically image and store all paper records they are required to retain for IRS e-file. This includes signed 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, 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. All records must be able to be reproduced with a high degree of legibility and readability (including the taxpayers’ signatures) when displayed on a video terminal and when reproduced in hard copy.

Providing Information to the Taxpayer

The ERO must provide a complete copy of the return to the taxpayer. However, 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 cannot be electronically transmitted, 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, data entries must be referenced 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, a printout of the electronic portion of the return does not have to be provided 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 the taxpayer that an amended return, if needed, must be filed as a paper return and mailed 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 are considered “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 are considered “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. Publication 1345A, Filing Season Supplement for Authorized IRS e-file Providers is issued annually and contains information to help identify the cause of the reject.

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, if the taxpayer’s refund will be applied to a debt, if an elected electronic funds withdrawal paid a balance due, and if the IRS approved a request for extension on Form 2688. The ERO should check acknowledgement records regularly to identify returns requiring follow up action. The ERO should take reasonable steps to address issues identified on acknowledgement records. For example, if the IRS does not accept a PIN of an individual income tax return, the ERO must provide a completed and signed Form 8453 for the return.

Electronic Return Origination

The ERO must, at the request of the taxpayer, provide the Declaration Control Number (DCN) and the date the electronic individual income tax return data was accepted by the IRS. Form 9325, Acknowledgment and General Information for Taxpayers Who File Returns Electronically, may be used 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 in the electronic portion of the 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.” Taxpayers must be given copies of the new electronic return data. If new signatures are required, the taxpayer must be given copies of the new signatures.

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 state electronic return data is rejected by the IRS because of error, the Federal electronic return data also rejects. Once both the Federal and state electronic return data is accepted by the IRS, the subsequent rejection of state electronic return data by a state tax administration agency will not impact the accepted Federal electronic return data. States determine when state electronic return data received from the Federal/State e-file Program is accepted as filed. Contact the state tax administration agency when problems or questions arise.

Resubmission of Rejected Tax Returns Rejected Tax Returns

If the IRS rejects the electronic portion of a taxpayer’s individual income tax return for processing and the reason for the rejection cannot be rectified, the ERO must take reasonable steps to inform the taxpayer of the rejection within 24 hours. When the ERO advises the taxpayer that the return has not been filed, 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 it cannot be accepted for processing by the IRS, the taxpayer must file a paper return. In order to be filed timely, the paper return must be filed by the later of the due date of the return or ten calendar days after the date the IRS gives notification that the electronic portion of the return is rejected or that it cannot be accepted for processing. The paper return should include an explanation of why the return is being filed after the due date.

Chapter 14: Taxsoftware.com Responsibilities

Taxsoftware.com is required by the IRS to perform certain functions and provide certain services as an Authorized IRS e-services Provider and Transmitter. Taxsoftware.com has been tested and accepted as a provider by the IRS because it has consistently demonstrated its ability to service both the IRS and the taxpayers and filers. The Taxsoftware.com system integrates seamlessly with IRS e-services, making transmission rapid and effective.

Following is a discussion, taken from IRS Publication 1345, of the requirements of a provider participating in IRS e-services as a transmitter.

In fulfilling the requirements of a Provider participating in IRS e-file as a Transmitter you must:

1. 1. Transmit all electronic portions of returns to the appropriate IRS center within
three calendar days of receipt;

2. 2. Retrieve the acknowledgment file within two work days of transmission;

3. 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 PIN, etc. to the ERO or Intermediate Service Provider within two work days of retrieving the acknowledgment file;

4. 4. Retain an acknowledgment file received from the IRS until the end of the calendar year in which the electronic return was filed;

5. 5. Immediately contact the IRS at its e-Help toll-free number 1-866-255-0654 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. 6. Promptly correct any transmission error that causes an electronic transmission
to be rejected;

7. 7. Contact the IRS at its e-Help toll-free number 1-866-255-0654 for assistance if
the electronic portion of the return has been rejected after three transmission
attempts;

8. 8. Ensure the security of all transmitted data;

9. 9. Ensure against the unauthorized use of its EFIN or ETIN. A Transmitter must not transfer its EFIN or ETIN by sale, merger, loan, gift, or otherwise to another entity; and

10. 10. Use only software that does not have an IRS assigned production password built into the software.

Additional Requirements for Participants 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. 1. Ensure that it uses an EFIN or ETIN obtained for Online Filing;

2. 2. Ensure that Intermediate Service Provider’s EFIN is included in the electronic return data, when applicable;

3. 3. Transmit in separate batches returns filed via Online Filing and returns filed using an
ERO;

4. 4. Assign a Declaration Control Number (DCN) to the electronic portion of each return
received from a taxpayer;

5. 5. Include the assigned DCN in the transmission of the electronic return data to the IRS;

6. 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. 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. 8. Provide the Internet Protocol (IP) information. The information consists of the IP
Address, IP Date, IP Time and IP Time Zone;

9. 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, time zone of the computer receiving it;

10. 10. Include the letter “O” in the “Transmission Type Code” field of the Trans Record “A.”

The Transmitter must notify the taxpayer of the following if the IRS accepts the electronic portion of a taxpayer’s return:

· $B"# The date the transmission was accepted;

· $B"#(J The DCN;

· $B"#(J Where to put the DCN on Form 8453-OL;

· $B"#(J The requirement to properly complete and timely submit a Form 8453-OL with accompanying paper documents within one business day;

· $B"#(J The appropriate submission processing center’s address to which Form 8453-OL with accompanying paper documents must be sent;

· $B"#(J That a Form 8453-OL must be received by the IRS, when applicable, 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:

· $B"#(J That the IRS rejected the electronic portion of the taxpayer’s return;

· $B"#(J The date of the rejection;

· $B"#(J What the reject code(s) means;

· $B"#(J What steps the taxpayer needs to take to correct the errors that caused the rejection; and

· $B"#(J That if the taxpayer chooses not to have the electronic portion of the return corrected and transmitted to the IRS, or, if the electronic portion of the return cannot be accepted for processing by the IRS, the taxpayer must file a paper return. In order to be filed timely, the paper return must be filed by the later of the due date of the return or ten calendar days after the date the IRS gives notification that the electronic portion of the return is rejected or that it cannot be accepted for processing. The paper return should include an explanation of why the return is being filed 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.

The following list, while not all-inclusive, applies to all Authorized IRS e-file Providers of Individual Income Tax Returns, excepting Software Developers that do not engage in any other IRS e-file activity other than software development.

A Provider must:

1. 1. Maintain an acceptable cumulative error or reject rate;

2. 2. Adhere to the requirements for ensuring that tax returns are properly signed and when applicable, provide legible and complete paper declarations;

3. 3. Properly use the standard/non-standard Form W-2 indicator;

4. 4. Properly use the Refund Anticipation Loan (RAL) indicator;

5. 5. Include the ERO’s EFIN as the return EFIN for returns the ERO submits to an Intermediate Service Provider or Transmitter;

6. 6. Include the Intermediate Service Provider’s EFIN in the designated Intermediate Service Provider field in the electronic return record; and

7. 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 and when applicable, the paper declaration.

In addition to the above, participants in Online Filing must adhere to the following:

1. 1. Ensure that no more than five electronic returns are filed from one software package or one e-mail address;

2. 2. Supply a taxpayer with an accurate DCN;

3. 3. Provide effective instructions to a taxpayer concerning the entry of the DCN on Form 8453-OL; and

4. 4. Submit any changes to the following information to the IRS Headquarters Online Filing Analyst, SE:W:CAS:SP:IEF:P, 5000 Ellin Road, Lanham, MD 20706, by the 31st day of December preceding the filing season:

· The brand name of the software the Provider will be using, has developed, or will use for transmission. Required information about the software includes its Software 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;

· The Provider’s point of contact for matters relating to Online Filing and the
telephone number for the point of contact;

· The applicant’s customer service number; and

· The procedures the applicant will use to ensure that no more than five returns are transmitted from one software package or from one e-mail address.