SECTION 3. DEFINITIONS

.01 Authorized IRS e-file Provider. A participant in IRS e-file is referred to as an “Authorized IRS e-file Provider.” The five categories of Authorized IRS e-file Providers are:

(1) Electronic Return Originator. An Electronic Return Originator (ERO) originates the electronic submission of returns.

(2) Intermediate Service Provider. An Intermediate Service Provider receives tax return information from an ERO (or from a taxpayer or tax-exempt organization that files electronically using a personal computer, modem or the Internet, and commercial tax preparation software), processes the return information, and either forwards the information to a Transmitter, or sends the information back to the ERO (or taxpayer or tax-exempt organization).

(3) Software Developer. A Software Developer develops software for the purposes of (a) formatting electronic return

information according to publications issued by the Service that set forth electronic return file specifications and record layouts for tax returns; and/or (b) transmitting electronic tax return information directly to the Service.

(4) Transmitter. A Transmitter transmits electronic return information directly to the Service.

(5) Reporting Agent. A Reporting Agent is an accounting service, franchiser, bank, service bureau, or other entity that complies with Rev. Proc. 2007–38, 2007–25 I.R.B. 1442, and is authorized to perform one or more of the acts listed in Rev. Proc. 2007–38 on behalf of a taxpayer.

The five categories of Authorized IRS e-file Providers are not mutually exclusive. For example, an ERO can, at the same time, be a Transmitter, Software Developer, or Intermediate Service Provider depending on the function(s) performed.

.02 Responsible Official. A Responsible Official is an individual with authority over the IRS e-file operation of the office(s) of the Authorized IRS e-file Provider, is the first point of contact with the Service, and has authority to sign revised IRS e-file applications. A Responsible Official is responsible for ensuring that the Authorized IRS e-file Provider adheres to the provisions of this revenue procedure and the publications and notices governing the IRS e-file Program.

.03 Principal. The Principal for a business or organization includes the following:

(1) Sole Proprietorship. The sole proprietor is the Principal for a sole proprietorship.

(2) Partnership. Each partner who has a 5 percent or more interest in a partnership is a Principal. If no partner has at least a 5 percent or more interest in the partnership, the Principal is an individual authorized to act for the partnership in legal and/or tax matters.

(3) Corporation. The President, Vice–President, Secretary, and Treasurer are each a Principal of the corporation.

(4) Other. The Principal for an entity that is not a sole proprietorship, partnership, or corporation is an individual authorized to act for the entity in legal and/or tax matters.

June 25, 2007 1490 2007–26 I.R.B.

an ERO may pass on tax return information to an Intermediate Service Provider and/or a Transmitter for the purpose of having an electronic return formatted and transmitted to the Service.

.02 Other Preparer Penalties. (1) Preparer penalties may be imposed against an individual or firm meeting the definition of a tax return preparer under section 7701(a)(36) and section 301.7701–15. Preparer penalties that may be imposed under appropriate circumstances include, but are not limited to, those set forth in sections 6694, 6695, and 6713. Caution: The regulations cited in this section 6.02 do not reflect amend- ments to the definition of tax return preparer made by the Small Business and Work Opportunity Act of 2007.

(2) Under section 301.7701–15(d)(1), Authorized IRS e-file Providers are not tax return preparers for the purpose of assessing most preparer penalties as long as their services are limited to “typing, reproduction, or other mechanical assistance in the preparation of a return or claim for refund.”

(3) If an ERO, Intermediate Service Provider, Transmitter, or the product of a Software Developer alters the tax return information in a nonsubstantive way, this alteration will be considered to come under the “mechanical assistance” exception described in section 301.7701–15(d)(1), and will not cause an Authorized IRS e-file Provider to become a tax return preparer. A nonsubstantive change is a correction or change limited to a transposition error, misplaced entry, spelling error, or arithmetic correction.

(4) If an ERO, Intermediate Service Provider, Transmitter, or the product of a Software Developer alters tax return information in a way that does not come under the “mechanical assistance” exception, such Authorized IRS e-file Provider may be held liable for tax return preparer penalties.

.03 Other Penalties. In addition to the above specified provisions, the Service may impose all appropriate preparer, non-preparer, and disclosure penalties against an Authorized IRS e-file Provider as warranted under the circumstances.

(5) Publication 1437, Procedures for the 1041 e-file Program, U.S. Income Tax Return for Estates and Trusts ;

(6) Publication 1438, File Specifica- tions, Validation Criteria and Record Layouts for the Form 1041 e-file Program, U.S. Income Tax Return for Estates and Trusts ;

(7) Publication 1438–A, (Supplement) for the 1041 e-file Program, U.S. Income Tax Return for Estates and Trusts ;

(8) Publication 1474, Technical Specifi- cations Guide For Reporting Agent Autho- rization and Federal Tax Depositors ;

(9) Publication 1524, Procedures for 1065 e-file Program, U.S. Return of Part- nership Income ;

(10) Publication 1525, File Specifica- tions, Validation Criteria and Record Lay- outs for the 1065 e-file Program, U.S. Re- turn of Partnership Income ;

(11) Publication 1855, Technical Speci- fications Guide for the Electronic Filing of Form 941, Employer’s Quarterly Federal Tax Return ;

(12) Publication 3112, IRS e-file Appli- cation and Participation ;

(13) Publication 3416, 1065 e-file Pro- gram, U.S. Return of Partnership Income (Publication 1525 Supplement) ;

(14) Publication 3715, Technical Speci- fications Guide for the Electronic Filing of Form 940, Employer’s Federal Unemploy- ment (FUTA) Tax Return ;

(15) Publication 3823, Employment Tax e-file System Implementation and User Guide ;

(16) Publication 4162, Modernized e-file Test Package for Forms 1120/1120S ;

(17) Publication 4163, Modernized e-file (MeF) Information for Authorized IRS e-file Providers of Forms 1120/1120S ;

(18) Publication 4164, Modernized e-file (MeF) Guide for Software Develop- ers and Transmitters ;

(19) Publication 4206, Information for Authorized IRS e-file Providers of Exempt Organization Filings ; and

(20) Postings to the IRS web site at: http://www.irs.gov on the Internet, and published and future guidance in the Internal Revenue Bulletin and the Federal Register.

.02 The publications and notices listed in section 5.01 supplement this revenue procedure. A violation of any provision of these publications and notices is considered a violation of this revenue procedure

and may subject an Authorized IRS e-file Provider to the sanctions provided in section 7 of this revenue procedure.

.03 The security of taxpayer accounts and personal information is a top priority for the Service. It is the responsibility of each Authorized IRS e-file Provider to have security systems in place to prevent unauthorized access to taxpayer accounts and personal information by third parties. The Gramm-Leach-Bliley Act, codified at 15 U.S.C. §§ 6801–6827, includes rules applicable to Authorized IRS e-file Providers that are designed to ensure the security and privacy of taxpayer information. Violation of the provisions of the Gramm-Leach-Bliley Act and the implementing rules and regulations promulgated by the Federal Trade Commission, or violations of the non-disclosure rules contained in sections 6713 or 7216 or the regulations promulgated thereunder, are considered violations of this revenue procedure and may subject an Authorized IRS e-file Provider to penalties as set forth in section 6 of this revenue procedure or sanctions provided in section 7 of this revenue procedure.

.04 In addition to the responsibilities defined in 5.01, 5.02, and 5.03 above, additional Authorized IRS e-file Providers responsibilities may be defined in statutes and regulations, revenue procedures, publications, postings to the IRS web site at: http://www.irs.gov on the Internet, and published and future guidance in the Internal Revenue Bulletin and the Federal Register.