An authorized IRS e-file Provider electronically files taxes directly to the Internal Revenue Service. Do you want information on how to become an authorized IRS e-file Provider? This handy guide will help you learn the steps and requirements necessary to provide this tax filing service.

The yearly ritual of filing taxes in the United States requires processing paperwork and submitting the completed forms to the Internal Revenue Service (IRS). For some, the ritual also includes consulting a tax accountant or tax lawyer, while others use software programs, online resources or paper and pen to complete the required forms.

With the rise in popularity and ease of the Internet, the IRS developed a system that allows individual taxpayers, businesses, tax professionals and some licensed software products to file taxes electronically through a program called IRS e-file.http://www.irs.gov/efile/index.html Filing taxes electronically allows returns to be processed faster and less prone to errors, according to the IRS.http://www.irs.gov/taxpros/providers/article/0,,id=97657,00.html

The electronic process has built in error checking mechanisms for some of the most common errors such as incorrect data field completion and data validity such as the Social Security Number matching the name and number on file in the IRS database. http://www.irs.gov/efile/article/0,,id=118979,00.html Filing electronically also provides filing proof through an electronic IRS acknowledgement, and multiple payment options including credit card payments and direct debit. http://www.irs.gov/taxpros/providers/article/0,,id=97657,00.html E-file may also allow clients to receive their refunds faster.

Due to the demand for e-file by consumers and businesses, it is imperative for most professional tax preparers to become authorized IRS e-file providers to meet their customers’ needs. Being an authorize IRS e-filers may also open up additional business opportunities and can help streamline the submission process to allow you to complete more returns in less time.

Participation in the authorized IRS e-file provider program requires having a responsible official and principals. Principals can also serve in the responsible official role. To be accepted in each role, participants must be a legal permanent resident or United States Citizen and be at least 21 years old at the time of filing. Participants must also meet state and local bonding and licensing requirements for collecting and preparing tax returns.

Individuals in these roles must also present evidence of professional status such as being an attorney, certified public accountant (CPA), enrolled agent, officer in a public company or a bonded banking official. http://www.irs.gov/pub/irs-pdf/p3112.pdf

Other requirements include not having a federal criminal background and having a clean credit history. You must also have no outstanding balances or issues with the IRS on a personal or business level. If you have previously participated in the e-file provider program, you must have no history of non-compliance with electronic filing requirements. http://www.irs.gov/taxpros/providers/article/0,,id=97657,00.html

These requirements must be met for all individuals who will access the e-file program. If you have employees who will process tax documents, you may be required to have them pass basic requirements as well, depending on their level of involvement.

There are multiple e-file provider options depending on your submission needs and transmission methods. Review your options below and decide which option is best suited to your filing style.

1. Electronic Return Originator- If you plan to submit tax returns that you prepare for clients, or are prepared by a taxpayer, you need to request Electronic Return Originator (ERO) status.
2. Transmitter-Apply for transmitter status if you want to physically provide the tax transmission services through approved software and a modem. EROs can apply to be transmitters, or they can utilize a third party approved transmitter. Subsections of transmitters are called online providers. These providers transmit returns from individual taxpayers who use software programs to complete and electronically submit their tax returns.
3. Software Developer- If you or your company develops software that is used to perpare tax returns and include e-file options, you must apply for software developer authorization. Software must pass yearly tests with federal and state IRS officials to be granted authorization.
4. Intermediate Service Provider-If you will be the ‘middle man’ between the tax preparer and transmitters, apply for intermediate service provider status. Preparers can be individual taxpayers who use online or commercial software, or they can be EROs.
5. Reporting Agent- Apply for reporting agent status if you are a business that falls under the Rev. Proc. 2007-38 revenue procedures.http://www.irs.gov/taxpros/providers/article/0,,id=97657,00.html

The IRS website offers an online electronic application for Form 8633 through their e-services section. To fill out the application, you must create an online account and then provide basic information about your business. You will also need to select the provider options that you will need to effectively provide e-file services for your clients.

Passing a background check is required to become an authorized e-file provider. You will need to submit fingerprint cards and professional status evidence as part of your application and mail them to the IRS. These fingerprint cards must be obtained from the IRS by calling 866-255-0654. The background check will include an FBI criminal check, credit history check, IRS check including prior non-compliance issues with e-file participation. http://www.irs.gov/taxpros/providers/article/0,,id=97657,00.html If you are applying to be a transmitter or software developer provider, you will also be required to complete a testing process as part of your application. If your information changes at any time, you are required to update the information within 30 days. http://www.irs.gov/taxpros/providers/article/0,,id=97657,00.html

The processing of your application and background check can take up to 45 days, so be sure to allow ample time before you will need to processes tax forms electronically. You will be notified in writing regarding your acceptance and you will receive a promotional kit that helps you identify yourself as an authorized IRS e-file provider. http://www.irs.gov/taxpros/providers/article/0,,id=97657,00.html