SECTION 5. RESPONSIBILITIES OF

AN ON-LINE FILER

.01 To ensure that complete returns are accurately and efficiently filed, an OnLine Filer must comply with all the publications and notices of the Service relating to the Form 1040 On-Line Filing Program. The Service will from time to time update such publications and notices to reflect changes to the program. It is the responsibility of the On-Line Filer to ensure that it complies with the latest version of all publications and notices. The publications and notices governing the Form 1040 On-Line Filing Program include:

(1) Publication 1345, Handbook for Electronic Return Originators of Individual Income Tax Returns, and Publication 1345A; (2) Publication 1346; (3) Publication 1436, Test Package for Electronic Filing of Individual Income Tax Returns; and

(4) Postings to the Electronic Filing System Bulletin Board (EFS Bulletin Board), and the IRS “Digital Daily” web site at:

http://www.irs.ustreas.gov

on the Internet.

.02 An On-Line Filer must maintain a high degree of integrity, compliance, and accuracy.

1998–38 I.R.B. 23 September 21, 1998

(2) include the assigned DCN in the transmission of the electronic portion of a return;

(3) send all electronic portions of returns within three calendar days of receipt to the appropriate service center based on the state code in the taxpayer’s return address;

(4) retrieve the acknowledgement file (in which the Service states whether it accepts or rejects the electronic portion of a taxpayer’s return for processing) within two work days of transmission;

(5) match the acknowledgement file to the original transmission file and notify the taxpayer of the status of a transmitted return as prescribed in section 5.19 of this revenue procedure;

(6) retain, until the end of the calendar year in which a return was filed, the acknowledgement file received from the Service;

(7) retain, until the end of the calendar year in which a return was filed, the complete copy of the electronic portion of the return (may be retained on magnetic media) that can be readily and accurately converted into an electronic transmission that the Service can process;

(8) immediately contact the appropriate service center for further instructions if an acknowledgement of acceptance for processing has not been received by the Transmitter within two work days of transmission or if the Transmitter receives an acknowledgement for a return that was not transmitted on the designated transmission;

(9) promptly correct any transmission error that causes an electronic transmission to be rejected;

(10) contact the service center that rejected the electronic portion of the return for assistance if that portion of the return has been rejected after three transmission attempts;

(11) ensure the security of all transmitted data;

(12) 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;

(13) ensure that the electronic portion of a return contains a completed consent to disclosure statement; and

(14) ensure that it does not use software that has a Service-assigned production password built into the software.

.03 An On-Line Filer may accept returns for the Form 1040 On-Line Filing Program only from the taxpayer filing the return or from another On-Line Filer.

.04 If an On-Line Filer charges a fee for the transmission of the electronic portion of a tax return, the fee may not be based on a percentage of the refund amount or any other amount from the tax return.

.05 An On-Line Filer must submit a revised Form 8633 (or a letter as provided in section 4.04 of this revenue procedure) to the Application Processing Center within 30 days of when any of the conditions or changes described in section 4.03 or 4.04 of this revenue procedure occur. See section 4.06 of this revenue procedure.

.06 An On-Line Filer must notify the Application Processing Center (at the address listed in the instructions for Form 8633) within 30 days of discontinuing its participation in the Form 1040 On-Line Filing Program. This does not preclude reapplication in the future.

.07 An On-Line Filer must ensure that it promptly processes returns submitted to it for electronic filing. See sections 5.09, 5.10, and 5.11 of this revenue procedure. However, an On-Line Filer that receives a return for electronic filing on or before the due date of the return must ensure that the electronic portion of the return is transmitted on or before that due date (including extensions). An electronically filed return is not considered filed until the electronic portion of the tax return has been acknowledged by the Service as accepted for processing and a completed and signed Form 8453–OL has been received by the Service. However, if the electronic portion of a return is successfully transmitted on or shortly before the due date and the taxpayer complies with section 7.01 of this revenue procedure, the return will be deemed timely filed. If the electronic portion of a return is transmitted on or shortly before the due date and is ultimately rejected, but the taxpayer complies with section 5.18 of this revenue procedure, the return will be deemed timely filed. For a balance due return, see section 10 of this revenue procedure for instructions on how to make a timely payment of tax.

.08 An On-Line Filer must ensure against the unauthorized use of its EFIN

or ETIN. An On-Line Filer must not transfer its EFIN or ETIN by sale, loan, gift, or otherwise to another entity.

.09 An On-Line Filer that participates as an On-Line Service Provider must:

(1) provide assistance to a subscriber in transmitting the electronic portion of a tax return;

(2) ensure that no more than five tax returns are filed electronically by one subscriber;

(3) not provide to a subscriber software that has a Service-assigned production password built into the software; and

(4) immediately send to a subscriber the information provided by a Transmitter under section 5.16 or 5.17 of this revenue procedure.

.10 An On-Line Filer that participates as a Software Developer must:

(1) promptly correct any software error which causes the electronic portion of a return to be rejected;

(2) promptly distribute any software correction;

(3) ensure that its software package cannot be used to transmit more than five electronic returns;

(4) ensure that its software, if available for use on an Internet web site, cannot be used to file more than five electronic returns from one e-mail address;

(5) ensure that its software contains a Form 8453–OL format that can be printed and used by a taxpayer to file with the Service;

(6) ensure that its software contains a Form 1040–V, Payment Voucher, that can be printed and used by a taxpayer to file with the Service;

(7) ensure that its software contains a consent to disclosure statement;

(8) not incorporate into its software a Service-assigned production password; and

(9) provide a copy of the software and accompanying documentation (a demonstration package is sufficient) to the IRS Headquarters On-Line Filing Analyst upon successful completion of the testing described in section 4.11 of this revenue procedure.

.11 An On-Line Filer that participates as a Transmitter must:

(1) assign (as prescribed in Publication 1346) a Declaration Control Number (DCN) to the electronic portion of each return received from a taxpayer;

September 21, 1998 24 1998–38 I.R.B.

.21 A Transmitter is responsible for ensuring that stockpiling does not occur. Stockpiling means collecting returns from taxpayers prior to official acceptance into the Form 1040 On-Line Filing Program, or, after official acceptance into the Form 1040 On-Line Filing Program, waiting more than three calendar days to transmit a return to the Service after receiving the information necessary for transmission of the electronic portion of a tax return.

.22 An On-Line Filer may not offer, nor in any way participate in or facilitate, a Refund Anticipation Loan (RAL) in connection with any return filed under the Form 1040 On-Line Filing Program. A RAL is money borrowed by a taxpayer that is based on a taxpayer’s anticipated income tax refund.

.23 An On-Line Filer may not charge a separate fee for a Direct Deposit. See section 9 of this revenue procedure.

.24 In addition to the specific responsibilities described in this section, an OnLine Filer must meet all the requirements in this revenue procedure to keep the privilege of participating in the Form 1040 On-Line Filing Program.