The IRS recognizes a number of different e-filer categories. Depending on the background and practice, a CPA firm interested in becoming an authorized e-filer can serve as an electronic return originator (ERO), intermediate service provider, transmitter, and/or a software developer.
EROs originate the electronic submission of income tax returns to the IRS. An intermediate service provider, on the other hand, receives return information from an ERO or taxpayer and electronically files ( using a personal computer, modem and commercial tax software) by processing then sending information to a transmitter, ERO, or taxpayer.
CPAs that are considered IRS authorized transmitters have hardware and software that interacts directly with IRS computers and sends data to the IRS or contracts with acceptable third-party transmitters who will, in turn, transmit the data for them.
Transmitters should not be confused with taxpayers that transmit their returns from home, using tax preparation software. These taxpayers are called: “On-Line Fillers”. CPA’s can transmit Returns for these filers, but an additional box on the top of Form 8633 needs to be checked off.
Practicing with the status of being a Federal/State electronic tax filer has a number of benefits. Some of the advantages of being part of the IRS program include:
- Providing one-stop service for filing of Federal and State income tax returns;
- Returns are filed faster and with fewer errors;
- Quicker refunds with less IRS involvement (refunds are usually issued within three weeks, even faster when using the direct deposit option);
- IRS acknowledges and gives proof of receipt of return within 24 to 48 hours;
- First and second extension available (August 15 and October 15);
- Included are electronic payment options, such as direct debit and credit card payments
- The CPA practitioner can electronically file returns early while still retaining control of payment methods based upon their clients’ situations. (For example, a CPA can choose to schedule a payment for a future date by the direct-debit method or choose payment through a credit card. A payment can then be “warehoused” for up to 105 days.)
Use of the Federal/State electronic filing program does include some risks, including:
- The application processing time (processing of an e-file application can take up to 45 days);
- Suitability background checks are done on all applicants. If an applicant has failed to file their personal income tax return or has an outstanding balance due to the IRS (valid installment agreements are considered being in compliance) the applicant can be rejected from the program.
CPA firms interested in becoming an authorized IRS e-filer in one or all of the categories should complete Form 8633, entitled: “Application to Participate in the IRS E-File Program.”
To apply for use of the Federal/State e-file option, applicants will need to answer “Yes” on Form 8633’s question number 5. In addition, the CPA applicant will need to identify the processing centers needed for the State returns. The ANDOVER service center, for example, supports Delaware, New York, and New Jersey filers.
Interested CPAs can get more information by attending a scheduled IRS free e-file seminar. Seminar attendees can also earn up to three CPE credits for attending the local seminars.
For more information on the seminar dates and times, call Barbara Goins at (718) 488-2914.
Barbara Goins is the IRS E-File Coordinator. Janice Carlino is the Sub-Chair
for Tax for the NYSSCPA Emerging Technologies Committee. 
