Many Paid Preparers Must E-file Federal Income Tax Returns - Starting January 1, 2012, the 100-return threshold will be reduced to 11 or more income tax returns that the preparer, or the preparers firm in the aggregate, expect to file in 2012 for individuals, trusts and estates.
Many Paid Preparers Must E-file Federal Income Tax Returns
By Sandi Lattin
Dec 6, 2010 - 2:12:20 PM
The IRS today explained how, starting
January 1, 2011, paid tax return preparers can comply with a new law
that requires paid tax return preparers who meet the definition of
“specified tax return preparer” under the new law to
electronically file (e-file) federal income tax returns that they
prepare and file for individuals, trusts and estates. The e-file
requirement will be phased in over 2 years.
Starting January 1, 2011, paid
preparers who prepare income tax returns for individuals, trusts and
estates, such as Forms 1040, 1040A, 1040EZ, and Forms 1041, and who
reasonably expect to file 100 or more of these income tax returns in
2011 are specified tax return preparers required to file these
returns electronically.
Tax return preparers who are members of
a firm are specified tax return preparers and must electronically
file the income tax returns they prepare and file if the firm's
preparers, in the aggregate, expect to file 100 more of these income
tax returns in 2011.
Starting January 1, 2012, the
100-return threshold will be reduced to 11 or more income tax returns
that the preparer, or the preparers firm in the aggregate, expect to
file in 2012 for individuals, trusts and estates. To comply with the
new lay, a tax return preparer who is subject to the electronic
filing requirement and does not already provide e-file for clients
must become an authorized IRS e-file provider, which means he, she,
or the firm, if the preparer is a member of a firm, must obtain an
electronic filing identification number (EFIN). It takes up to 45
days to obtain an EFIN so return preparers who have not started the
process should start immediately.
Proposed regulations issued today
detail the two-year phase-in plan and provide exclusions from the
e-file requirement for undue hardship waivers approved by the IRS and
for certain administrative exemptions. In addition, under the
proposed regulations, the e-file requirement does not apply to an
individual income tax return when a tax return preparers
taxpayer-client chooses to have the return completed in paper format
and the taxpayer-client, and not the preparer, will file the paper
return with the IRS. A notice issued with the proposed regulations
contains a proposed revenue procedure on undue hardship waivers and
taxpayer choice statements to file in paper format and the
taxpayer-client, and not the preparer, will file the paper return
with the IRS. A notice issued with the proposed regulations contains
a proposed revenue procedure on undue hardship waivers and taxpayer
choice statements to file in paper format.
Tax professionals and other interested
parties have until January 3, 2011 to submit comments regarding the
proposed regulations and the notice of proposed revenue procedure.
Final regulations will be published in early 2011, but will be
retroactively effective as of January 1, 2011, as described in the
proposed regulations.
Advantages of IRS e-file
The e-file requirements for paid tax
return preparers was approved by Congress in 2009, based on
recommendations from the IRS. In 1998, Congress set a goal of having
80 percent of tax returns electronically filed. Last year, two of
every three individual tax returns were transmitted through IRS
e-file. IRS e-file benefits taxpayer's and tax return preparers.
For the tax return preparer, it can mean a more efficient, productive
business and fewer errors on the tax return. It is safe and secure.
For taxpayers, it can mean faster refunds, the ability to file now
and pay later and peace of mind that comes with a receipt
acknowledgment.
This year marks the 20th
anniversary of IRS e-file as a national program. And in those 20
years, IRS e-file has transmitted more than 800 million tax returns
safely and securely.
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