Chapter 3 – Electronic Return Origination

An Electronic Return Originator (ERO) begins the process of electronic submission of returns it either prepares or collects from taxpayers who want to e-file their returns. An ERO starts the electronic submission of a return after the taxpayer authorizes the filing of the return via IRS e-file . The ERO must have either prepared the return or collected it from a taxpayer or another authorized ERO. An ERO begins the electronic submission by:

• electronically sending the return to a Transmitter that transmits the return to the IRS;

• directly transmitting the return to the IRS (must also have a Transmitter role); or,

• providing a return to an Intermediate Service Provider for processing prior to transmission to the IRS.

The ERO must always identify the paid tax return preparer (if any) in the proper field of the electronic record of returns. The ERO must enter the paid preparer’s identifying information (name, address, Employer Identification Number (EIN), when applicable, and Preparer Tax Identification Number (PTIN)) EROs may either transmit returns directly to the IRS or arrange with another Provider to transmit the electronic return to the IRS.

A Provider, including an ERO, may disclose tax return information to other Providers relating to e-filing a tax return under Treas. Reg. §301.7216-2(d)(1) without obtaining the taxpayer’s consent. For example, an ERO may pass on return information to an Intermediate Service Provider or a Transmitter for the purpose of having an electronic return formatted or transmitted to the IRS.

An ERO that chooses to originate returns that it has not prepared, but only collected, becomes a tax return preparer of the returns when, as a result of entering the data, it discovers errors that require substantive changes and then makes the changes. A non-substantive change is a correction limited to a transposition error, misplaced entry, spelling error or arithmetic correction. The IRS considers all other changes substantive, and the ERO becomes a tax return preparer. As such, the ERO must sign the tax return as a tax return preparer.

Safeguarding taxpayers and IRS e-file from identity theft refund fraud requires that Providers be diligent in detecting and preventing identity theft fraud patterns and schemes. Early detection of these patterns and schemes is critical to stopping them and their adverse impacts, and to protecting taxpayers and IRS e-file . While all Providers must be on the lookout for fraud and abuse in IRS e-file, EROs must be particularly diligent while acting in their capacity as the first contact with taxpayers filing a return. An ERO must be diligent in recognizing fraud and abuse, reporting it to the IRS and preventing it when possible. This includes not submitting returns to the IRS when there is a high likelihood the return is related to identity theft refund fraud. Providers must cooperate with IRS investigations by making available to the IRS, upon request, information and documents related to returns with potential fraud or abuse.

Indicators of abusive or fraudulent returns may be unsatisfactory responses to filing status questions, multiple returns with the same address, and missing or incomplete Schedules A and C income and expense documentation. A “fraudulent return” includes a return in which the individual is attempting to file using someone else’s name or SSN on the return or the taxpayer is presenting documents or information that have no basis in fact. A potentially abusive return is a return that the taxpayer is required to file but contains inaccurate information that may lead to an understatement of a liability or the overstatement of a credit resulting in a refund to which the taxpayer may not be entitled.

An ERO that is also a tax return preparer should exercise due diligence in the preparation of returns involving the Earned Income Tax Credit (EITC), as it is a popular target for fraud and abuse. Section 6695(g) of the Internal Revenue Code requires paid preparers to exercise due diligence in the preparation of returns claiming the head of household filing status or certain credits including the EITC. Paid preparers must complete all required worksheets and meet all record keeping requirements.

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To safeguard IRS e-file from fraud and abuse, an ERO should confirm identities and SSNs, Adoption Taxpayer Identification Numbers (ATINs) and Individual Taxpayer Identification Numbers (ITINs) of taxpayers, spouses and dependents listed on returns prepared by its firm. To prevent filing returns with stolen identities, an ERO should ask taxpayers not known to them to provide two forms of identification (photo IDs are preferable) that include the taxpayer’s name and current or recent address. Also, seeing Social Security cards, ITIN letters and other documents for taxpayers, spouses and dependents avoids including incorrect TINs on returns. Providers should take care to ensure that they transcribe all TINs correctly.

The TIN entered in the Form W-2, Wage and Tax Statement, in the electronic return record must be identical to the TIN on the version provided by the taxpayer. The TIN on the Form W-2 should be identical to the TIN on the electronic return unless otherwise allowed by the IRS. The IRS requires taxpayers filing tax returns using an ITIN to include the TIN, usually a SSN, shown on Form W-2 from the employer in the electronic record of the Form W-2. This may create an identification number (ITIN/SSN) mismatch as taxpayers must use their correct ITIN as their identifying number in the individual income tax return. The IRS e-file system can accept returns with this identification number mismatch. EROs should enter the TIN/SSN in the electronic record of the Form W-2 provided to them by taxpayers. Software must require the manual key entry of the TIN as it appears on Form W-2 reporting wages for taxpayers with ITINs. EROs should ascertain that the software they use does not auto-populate the ITIN in the Form W-2 and if necessary, replace the ITIN with the SSN on the Form W-2 the taxpayer provided.

Incorrect TINs, using the same TIN on more than one return or associating the wrong name with a TIN are some of the most common causes of rejected returns (see “ Acknowledgments of Transmitted Return Data ”).

Additionally, Name Control and TINs identify taxpayers, spouses and dependents. A Name Control is the first four significant letters of an individual taxpayer’s last name or a business name as recorded by the Social Security Administration (SSA) or the IRS. Having the wrong Name Control in the electronic return record for a taxpayer’s TIN contributes to a large portion of TIN related rejects. The most common example for a return rejecting due to a mismatch between a taxpayer’s TIN and Name Control involves newly married taxpayers. Typically, the taxpayer may file using a correct SSN along with the name used in the marriage, but the taxpayer has failed to update the records with the SSA to reflect a name change. To minimize TIN related rejects, it is important to verify taxpayer TINs and Name Control information prior to submitting electronic return data to the IRS.

The IRS has identified questionable Forms W-2 as a key indicator of potentially abusive and fraudulent returns. Be on the lookout for suspicious or altered Forms W-2, W-2G, 1099-R and forged or fabricated documents. EROs must always enter the non-standard form code in the electronic record of individual income tax returns for Forms W-2, W-2G or 1099-R that are altered, handwritten or typed. An alteration includes any pen-and-ink change. Providers must never alter the information after the taxpayer has given the forms to them.

Providers should report questionable Forms W-2 if they see or become aware of them.

Addresses on Forms W-2, W-2G or 1099-R; Schedule C; or on other tax forms supplied by the taxpayer that differ from the taxpayer’s current address must be input into the electronic record of the return. Providers must input addresses that differ from the taxpayer’s current address even if the addresses are old or if the taxpayer has moved. EROs should inform taxpayers that, when the return is processed, the IRS uses the address on the first page of the return to update the taxpayer’s address of record. The IRS uses a taxpayer’s address of record for various notices that it is required to send to a taxpayer’s “last known address” under the Internal Revenue Code and for refunds of overpayments of tax (unless otherwise specifically directed by taxpayers, such as by Direct Deposit).

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Providers must never put their address in fields reserved for taxpayers’ addresses in the electronic return record or on Form 8453, U.S. Individual Income Tax Transmittal for an IRS e-file Return. The only exceptions are if the Provider is the taxpayer or the power of attorney for the taxpayer for the tax return.

EROs should advise taxpayers that they can avoid refund delays by having all their taxes and obligations, such as child support and student loan debt, paid, providing current and correct information to the ERO, ensuring that all bank account information is up to date, ensuring that their Social Security Administration records are current and carefully checking their tax return information before signing the return.

EROs can do many things for clients and customers to avoid rejects and refund delays. Here are some suggestions:

• Require documentation of social security and other identification numbers and associated names for all taxpayers and dependents;

• Exercise care in the entry of tax return data into tax return preparation software and carefully check the tax return information before signing the tax return;

• Confirm that any ITINs reported on the return haven’t expired due to non-use or under the announced IRS schedule;

• Review information provided and don’t submit returns claiming false items on tax returns or present altered or suspicious documents;

• Ask taxpayers if there were problems with last year’s refund; if so, see if the conditions that caused the problems have been corrected or can be avoided this year;

• Track client issues that result in refund delays and analyze for common problems; counsel taxpayers on ways to address these problems.

When taxpayers are entitled to refunds, Providers should inform them that they have several options. An individual income tax refund may be applied to next year’s estimated tax, received as a Direct Deposit or paper check or be split so that a portion is applied to next year’s estimated tax and the rest received as a Direct Deposit or paper check.

Providers must not direct the payment (or accept payment) of any monies issued to a taxpayer client by the government in respect of a Federal tax liability to the Provider or any firm or entity with which the Provider is associated. The IRS may sanction Providers and individuals who direct or accept such payment.

When filing and/or printing a paper return, Software Developers are being asked to default the “Routing Transit and Account Numbers” in the software packages on Forms 1040/1040SR/1040NR/1040SS, with all capital X’s, when taxpayers choose not to have their refund directly deposited. These fields should never be blank on paper filed returns.

Taxpayers often elect the Direct Deposit option because it is the fastest way of receiving refunds. Providers must accept any Direct Deposit election to qualified accounts in the taxpayer’s name at any eligible financial institution designated by the taxpayer. Amended Forms 1040 and 1040-SR Returns (with attached 1040-X) resulting in a refund are not yet eligible for direct deposits. Qualified accounts include savings, checking, share draft or consumer asset accounts (for example, IRA or money market accounts). Taxpayers should not request a deposit of their refund to an account that isn’t in their own name (such as their tax return preparer’s own account). The taxpayer may not designate refunds for Direct Deposit to credit card accounts.

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Qualified accounts are accounts held by financial institutions within the United States and established primarily for personal, family or household purposes. Qualifying institutions may be national banks, state banks (including the District of Columbia and political sub-divisions of the 50 states), savings and loan associations, mutual savings banks and credit unions.

By completing Form 8888 , Allocation of Refund, the taxpayer may split refunds between up to three qualified accounts. A qualified account can be a checking, savings or other account such as an individual retirement arrangement (IRA), health savings account (HSA), Archer MSA or Coverdell education savings account (ESA). For example, a taxpayer expecting a refund of $400 may choose to deposit $150 into a checking account, $150 into a savings account and $100 into an IRA account. Taxpayers may choose the refund splitting option regardless of which Form 1040 series tax form they file.

Providers should caution taxpayers that some financial institutions do not permit the deposit of tax refunds into an account opened in someone else’s name, the deposit of joint individual income tax refunds into individual accounts or the deposit of tax refunds into checking or share draft accounts that are “payable through” another institution. Taxpayers should verify their financial institution’s Direct Deposit policy before they elect the Direct Deposit option. The IRS isn’t responsible if the financial institution refuses Direct Deposit for this reason.

Taxpayers who choose Direct Deposit must provide Providers with account numbers and routing transit numbers for qualified accounts. The IRS tax return instructions show how to find and identify these numbers. The taxpayer can best obtain this information from official financial institution records, account cards, checks or share drafts that contain the taxpayer’s name and address. The sole exception involves accounts specifically created to receive refunds that repay refund products offered by financial institutions. In those cases, Providers may supply the identifying account data.

To combat fraud and identity theft, the IRS limits the number of refunds electronically deposited into a single financial account or pre-paid debit card to three. The fourth and subsequent refunds automatically will convert to a paper refund check and be mailed to the taxpayer.

Providers with repeat customers or clients should check to see if taxpayers have new accounts. Some software stores prior year’s information and reuses it unless it is changed. If account information isn’t current, taxpayers do not receive Direct Deposit of their refunds.

Providers must advise taxpayers that they can’t cancel a Direct Deposit election or make changes to routing transit numbers of financial institutions or to their account numbers after the IRS has accepted the return. Providers must not alter the Direct Deposit information in the electronic record after taxpayers have signed the tax return.

Note: Providers must never charge a separate fee for Direct Deposit.

Refunds that are not direct deposited because of institutional refusal, wrong account or routing transit numbers, closed accounts, bank mergers or any other reason are issued as paper checks, resulting in refund delays of up to ten weeks. While the IRS ordinarily processes a request for Direct Deposit, it reserves the right to issue a paper check and does not guarantee a specific date for deposit of the refund into the taxpayer’s account.

Treasury’s Bureau of the Fiscal Service issues federal income tax refunds. Neither the IRS nor Fiscal Service is responsible for the misapplication of a Direct Deposit that results from error, negligence or malfeasance on the part of the taxpayer, the Provider, financial institution or any of their agents.

Taxpayers who owe additional tax must pay the taxes they owe by the original due date of the return or be subject to interest and penalties. An extension of time to file may be filed electronically by the original return due date, but it is an extension of time to file the return, not an extension of time to pay. Providers should inform taxpayers of their obligations and options for paying balances due. Taxpayers have several options when paying taxes.

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Electronic Funds Withdrawal

Taxpayers can e-file and, at the same time, authorize an electronic funds withdrawal (EFW). Taxpayers who choose this option must provide account numbers and routing transit numbers for qualified savings, checking or share draft accounts to the Provider. The IRS tax return instructions describe how to find and identify these numbers. Providers should encourage their clients to confirm their account numbers and routing transit numbers with their financial institution. If a financial institution is unable to locate or match the numbers entered in a payment record with account information they have on file for a given taxpayer, they reject (return) the direct debit request.

Providers should caution taxpayers to ensure, before they e-file, that their financial institution allows EFW requests from the designated account. Some credit unions do not allow direct debits from share accounts.

Taxpayers can schedule a payment for withdrawal on a future date. Scheduled payments must be effective on or before the return due date. For example, the Provider may transmit an individual income tax return in March and the taxpayer can specify that the withdrawal be made on any day on or before the return due date. The taxpayer does not have to remember to do anything later. For returns transmitted after the due date, the payment date must be the same as the date the Provider transmitted the return. The taxpayer must authorize EFW payments by completion of a payment record at the time the balance due return or other form is e-filed.

Taxpayers can make payments by EFW for the following:

• Current year – Form 1040 series return.

• Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return.

• Form 2350 , Application for Extension of Time to File U.S. Income Tax Return

• Form 1040-ES, Estimated Tax for Individuals. Taxpayers can make up to four advance quarterly estimated tax payments at the same time that they electronically file the Form 1040 series return. For example, four Form 1040-ES quarterly tax payments for tax year 2025 may be submitted with the electronic filing of the taxpayer’s tax return for tax year 2024.

Providers should be careful to ensure that all the information needed for the EFW request is included with the return. The payment record must include the following:

• Routing Transit Number (RTN);

• Bank account number;

• Type of account (checking or savings);

• Requested payment date (i.e., YYYYMMDD); and

• Amount of tax payment for balance due payments sent after the due date; this amount may include interest and penalty payment.

If taxpayers do not provide all the needed information, Providers must contact the taxpayers. If the Provider is unsuccessful in obtaining or transmitting the EFW information, but the return is otherwise complete, the Provider should proceed with the origination of the electronic return data to the IRS. The Provider must inform their clients that they need to make other arrangements to pay the balance due and/or estimated payments. See below for other payment options.

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IRS Direct Pay

With this secure online service, taxpayers can pay their individual tax bill or estimated tax payments directly from their checking or savings account at no cost. They will receive instant confirmation after they submit their payment.

Taxpayers can make payments with IRS Direct Pay for the following:

• Current and prior year Form 1040 series returns

• Installment agreements

• Form 1040–ES (estimated tax for individuals)

• Form 4868 (extension payments)

More options are available at IRS.gov/payments .

Credit or Debit Card Payments

Taxpayers can make credit or debit card payments when e-filing or separately online or by phone.

• Integrated e-file and e-pay: Taxpayers can e-file and pay their balance at the same time by debit or credit card if the tax software used includes this option. The software prompts taxpayers to enter the necessary card information. The service provider charges taxpayer convenience fees based on the amount of the tax payment and informs them of these fees before taxpayers authorize the payments.

• Online by Phone: Taxpayers may pay online at IRS.gov/payments or by phone, credit or ATM/debit card (American Express® Card, Discover® Card, MasterCard® or Visa® card) and NYCE®, PULSE® or STAR® logos. This service is available through credit card service providers. The service provider charges a convenience fee based on the amount of the tax payment. The software informs taxpayers of this fee during the transaction, and they can choose to end the transaction before the payment is completed and confirmed. The software provides a confirmation number at the end of the transaction. EROs should inform taxpayers of this option and tell them that fees may vary between service providers.

Further detailed information on payment options is available on IRS.gov/payments .

Electronic Federal Tax Payment System (EFTPS)

Individual taxpayers, who make more than one tax payment per year, particularly installment or Form 1040 estimated payments, find EFTPS very convenient. Taxpayers can enroll in EFTPS via the Internet at EFTPS. gov or by completing Form 9783 , Electronic Federal Tax Payment System Individual Enrollment, and mailing it to the EFTPS Enrollment Center. After EFTPS processes the enrollment, taxpayers receive two separate mailings. One is a Confirmation/Update Form. The other is a letter that includes the taxpayers’ Enrollment Trace Number, Personal Identification Number (PIN) and instructions on how to obtain an Internet Password. Once taxpayers receive the PINs, they may begin making payments by phone. After the taxpayers obtain their Internet Password, they may begin making payments via the Internet. With EFTPS, taxpayers only need to enroll once to make a payment by both telephone and the Internet as the payment methods are interchangeable. Payments can be made 24/7; however, taxpayers must submit their tax payment instructions to EFTPS before 8:00 p.m. ET at least one calendar day prior to the tax due date. Taxpayers can schedule individual tax payments up to 365 days in advance.

Pay with Cash

For taxpayers who are unbanked there is a cash option. Individuals wishing to take advantage of this payment option should visit the IRS.gov/payments page, select the cash option in the other ways you can pay section and follow the instructions.

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Pay by Check or Money Order

Taxpayers may pay the balance due by mailing a check accompanied by Form 1040-V, Payment Voucher. Providers must supply Form 1040-V to taxpayers, if needed, and help them identify the correct mailing address from the chart on the back of the form. Taxpayers do not have to mail these vouchers at the same time the Provider transmits the electronic return. For example, the return may be transmitted in January and the taxpayer may mail the payment and voucher at any time on or before the return due date. Further detailed information on paying by check or money order is available on the IRS.gov/payments page by selecting the check or money order option in the other ways you can pay section.

Installment Agreement

Taxpayers who can’t pay the amount they owe for Form 1040 series returns and owe $50,000 or less in combined taxes, interest and penalties may use the Online Payment Agreement (OPA) application to request a payment plan (installment agreement). Authorized representatives with a power of attorney may use OPA on the taxpayer’s behalf. OPA will result in immediate notification of whether the payment plan is approved. Alternatively, they can submit Form 9465 , Installment Agreement Request, to the IRS by mail. The Provider can transmit Form 9465 electronically (if supported by software) with the taxpayer’s electronic return data, or the form may be submitted later by mail. It may take 30 days or more for a response to Form 9465, regardless of how it is submitted. If the installment agreement is accepted, the IRS charges a user fee, which may be waived or reimbursed for low-income taxpayers. Taxpayers who apply through OPA are charged a lower user fee, and an even lower user fee if they use the direct debit payment option.

As with an income tax return submitted to the IRS on paper, the taxpayer and paid tax return preparer (if applicable) must sign an electronic income tax return. Taxpayers must sign individual income tax returns electronically. There are currently two methods for signing individual income tax returns electronically (see Elec- tronic Signature Methods ).

Taxpayers must sign and date the Declaration of Taxpayer to authorize the origination of the electronic submission of the return to the IRS prior to the transmission of the return to IRS. The Declaration of Taxpayer includes the taxpayers’ declaration under penalties of perjury that the return is true, correct and complete, as well as the taxpayers’ Consent to Disclosure. The Consent to Disclosure authorizes the IRS to disclose information to the taxpayers’ Providers. Taxpayers authorize Intermediate Service Providers, Transmitters and EROs to receive from the IRS an acknowledgment of receipt or reason for rejection of the electronic return, the reason for any delay in processing the return or refund and the date of the refund.

Taxpayers must sign a new declaration if the electronic return data on individual income tax returns is changed after taxpayers signed the Declaration of Taxpayer and the amounts differ by more than either (i) $50 to “Total income” or “AGI,” or (ii) $14 to “Total tax,” “Federal income tax withheld,” “Refund” or “Amount you owe.”

Electronic Signature Methods

There are two methods of signing individual income tax returns with an electronic signature available for use by taxpayers. Both the Self-Select PIN and Practitioner PIN methods allow taxpayers to use a Personal Identification Number (PIN) to sign the return and the Declaration of Taxpayer.

The Self-Select PIN method requires taxpayers to provide their prior year Adjusted Gross Income (AGI) amount or prior year PIN for use by the IRS to authenticate the taxpayers. EROs should encourage taxpayers who do not have their original prior year AGI or PIN to call IRS Tax Help at 800-829-1040.

This method may be completely paperless if the taxpayers enter their own PINs directly into the electronic return record using keystrokes after reviewing the completed return. Taxpayers may also authorize EROs to enter PINs on their behalf, in which case the taxpayers must review and sign a completed signature authorization form after reviewing the return. Also see IRS e-fle Signature Authorization (Forms 8878 and 8879) .

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The Practitioner PIN method does not require the taxpayer to provide their prior year AGI amount or prior year PIN. Instead, taxpayers must always sign a completed signature authorization form (see IRS e-fle Signature Authorization (Forms 8878 and 8879) ). Taxpayers who use the Practitioner PIN method must sign the signa- ture authorization form even if they enter their own PINs in the electronic return record using keystrokes after reviewing the completed return.

Regardless of the method of electronic signature used, taxpayers may enter their own PINs; EROs may select and enter the taxpayers’ PINs; or the software may generate the taxpayers’ PINs in the electronic return. After reviewing the return, the taxpayers must agree by signing an IRS e-file Signature Authorization containing the PIN.

The following taxpayers are ineligible to sign individual income tax returns with an electronic signature using the Self-Select PIN:

• Primary taxpayers under age sixteen who have never filed; and

• Secondary taxpayers under age sixteen who didn’t file the prior tax year.

EROs should recommend that taxpayers keep a copy of their completed tax return to assist with authentication in the subsequent year.

IRS e-file Signature Authorization (Forms 8878 and 8879)

Anytime an ERO enters the taxpayer’s PIN on the electronic return, the ERO must, prior to submission of the return, complete an IRS e-file Signature Authorization form which must be signed by the taxpayer. Form 8879 , IRS e-file Signature Authorization, authorizes an ERO to enter taxpayers’ PINs on individual income tax returns and Form 8878 , IRS e-file Authorization for Form 4868 or Form 2350, authorizes an ERO to enter taxpayers’ PINs on Form 1040 extension forms. The ERO must keep Forms 8878 and 8879 for three years from the return due date or the IRS received date, whichever is later. EROs must not send Forms 8878 and 8879 to the IRS unless the IRS requests they do so.

Note: Form 8878 is only needed for Forms 4868 when taxpayers are authorizing an electronic funds withdrawal and want an ERO to enter their PINs.

The ERO may enter the taxpayers’ PINs in the electronic return record before the taxpayers sign Form 8878 or 8879, but the taxpayers must sign and date the appropriate form before the ERO originates the electronic submission of the return (or extension form). The taxpayer must sign and date the Form 8878 or Form 8879 after reviewing the return and ensuring the tax return information on the form matches the information on the return. The taxpayer may return the completed Form 8878 or Form 8879 to the ERO by hand delivery, U.S. mail, private delivery service, fax, email or an Internet website.

Only taxpayers who provide a completed tax return to an ERO for electronic filing may sign the IRS e-file Signature Authorization without reviewing the return originated by the ERO. The ERO must enter the line items from the paper return on the applicable Form 8878 or Form 8879 prior to the taxpayers signing and dating the form. The ERO may use these pre-signed authorizations as authority to input the taxpayer’s PIN only if the information on the electronic version of the tax return agrees with the entries from the paper return.

Electronic Signature Guidance for Forms 8878 and 8879

Taxpayers have the choice of using electronic signatures for Forms 8878 and 8879 if the software provides the electronic signature capability. If taxpayers use an electronic signature, the software and the Electronic Return Originator (ERO) must meet certain requirements for verifying the taxpayer’s identity.

Electronic signatures appear in many forms and may be created by many different technologies. No specific technology is required. Examples of currently acceptable electronic signature methods include:

• A handwritten signature input onto an electronic signature pad.

• A handwritten signature, mark or command input on a display screen by a stylus device.

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• A digitized image of a handwritten signature that is attached to an electronic record.

• A typed name (e.g., typed at the end of an electronic record or typed into a signature block on a website form by a signer).

• A shared secret (e.g., a secret code, password or PIN) used by a person to sign the electronic record.

• A digital signature.

• A mark captured as a scalable graphic.

The software must record the following data:

• Digital image of the signed form.

• Date and time of the signature.

• Taxpayer’s computer IP address (Remote transaction only).

• Taxpayer’s login identification – username (Remote transaction only).

• Identity verification: taxpayer’s passed results of knowledge-based authentication, and for in-person transactions, confirmation that government photo identification has been verified.

• Method used to sign the record (e.g., typed name); or a system log; or other audit trail that reflects the completion of the electronic signature process by the signer.

Note: The ERO must provide this information to the IRS upon request.

Digital Identity Verification Requirements

The electronic signing process must be associated with a person, and accordingly, ensuring the validity of any electronically signed record begins with identification and authentication of the taxpayer. The electronic signature process must be able to generate evidence of the person the electronic form of signature belongs to, as well as generate evidence that the identified person is associated with the electronic record.

If there is more than one taxpayer for the electronic record, the electronic signature process must be designed to separately identify and authenticate each taxpayer.

The identity verification requirements must be in accordance with National Institute of Standards and Technology, Special Publication 800-63, Electronic Authentication Guideline, Level 2 assurance level and knowledge-based authentication or higher assurance level.

Electronic Signature Via In-Person Transaction

An in-person transaction for electronic signature is one in which the taxpayer is electronically signing the form and the ERO is physically present with the taxpayer. The ERO must confirm the taxpayer’s identity for in-person transactions unless there is a multi-year business relationship. A multi-year business relationship is one in which the ERO has originated tax returns for the taxpayer for a prior tax year and has identified the taxpayer using the identity verification process described below.

For in-person transactions, the ERO must inspect a valid government photo identification; compare photo to the taxpayer and record the name, social security number, address and date of birth. Examples of government photo identification (ID) include a driver’s license, employer ID, school ID, state ID, military ID, national ID, voter ID, visa or passport.

Verify that the name, social security number or Individual Taxpayer Identification Number (ITIN), address, date of birth and other personal information on record are consistent with the information provided through record checks with the applicable agency or institution or through credit bureaus or similar databases. For in-person transactions, the identity verification through a record check is optional.

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Electronic Signature Via Remote Transaction

A remote transaction for electronic signature is one in which the taxpayer is electronically signing the form and the ERO isn’t physically present with the taxpayer. For remote transactions, the ERO must record the name, social security number, address and date of birth.

Verify that the name, social security number, address, date of birth and other personal information on record are consistent with the information provided through record checks with the applicable agency or institution or through credit bureaus or similar databases.

Note: An electronic signature via remote transaction does not include handwritten signatures on Forms 8878 or 8879 sent to the ERO by hand delivery, U.S. mail, private delivery service, fax, email or an Internet website.

Identity Verification

The software used for the electronic signature process may use credit records, also known as credit reports, to verify the taxpayer’s identity. Identity verification may consist of a record check with a credit reporting company. A credit reporting company uses information from the taxpayer’s credit report to generate knowledge-based authentication questions. This action may create an entry on the credit report called a “soft inquiry.”

The software used for the electronic signature process should include an advisory to taxpayers stating the use of third-party data for identity verification; how third-party data is used for identity verification; if a “soft inquiry” will be generated and the effect, if any, on the credit report, credit scores and reporting to lenders; and how the inquiry may appear on the credit report.

The software should also include an advisory to taxpayers stating the IRS won’t be given view of or access to a taxpayer’s credit report, nor will the credit reporting company or other identity verification third party have access to the taxpayer’s tax information.

The process of identity verification using a record check with a credit reporting company or other identity verification third party for purposes of electronically signing does not require additional consents from the taxpayer beyond those obtained for preparing and filing their taxes; nor does it violate the provisions of Internal Revenue Code section 7216 or its regulations.

Identity Verification Failure

The software will enable the identity verification using knowledge-based authentication questions when an ERO uses tax preparation software to interact with the taxpayer for purposes of obtaining an electronic signature on Form 8878 or 8879. If the taxpayer fails the knowledge-based authentication questions after three attempts, then the ERO must obtain a handwritten signature on Form 8878 or 8879.

Electronic Records

Electronic signatures must be linked to their respective electronic records to ensure that the signatures can’t be excised, copied or otherwise transferred to falsify an electronic record.

After the electronic record has been signed, it must be tamper-proof. Therefore, techniques must be employed that lock a document and prevent it from being changed. Storage systems must have secure access control to ensure that the electronic records can’t be changed.

Additionally, storage systems must also have a retrieval system that includes an indexing system, and the ability to reproduce legible and readable hardcopies of electronically stored records.

Electronic Signatures for EROs

EROs must also sign with a PIN. EROs should use the same PINs for the entire tax year. The ERO may manually input, or the software can generate the PIN in the electronic record in the location designated for the ERO Electronic Filing Identification Number (EFIN)/PIN. The ERO is attesting to the ERO Declaration by entering a PIN in the ERO EFIN/PIN field. For returns prepared by the ERO firm, return preparers are declaring under the penalties of perjury that they reviewed the returns, and they are true, correct and complete.

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EROs may authorize members of their firms or designated employees to sign for them, but the EROs are still responsible for all the electronic returns originated by their firms.

For returns prepared by other than the ERO firm that originates the electronic submission, the ERO attests that the return preparer signed the copy of the return and that the electronic return contains tax information identical to that contained in the paper return.

The ERO must enter the return preparer’s identifying information (name, address, EIN, and PTIN) in the electronic return.

EROs may sign Form 8878 and Form 8879 by rubber stamp, mechanical device (such as signature pen) or computer software program as described in Notice 2007-79 .

The signature must include either a facsimile of the individual ERO’s signature or of the ERO’s printed name. EROs using one of these alternative means are personally responsible for affixing their signatures to returns or requests for extension. This does not alter the requirement that taxpayers must sign Form 8878 and Form 8879 by a handwritten or electronic signature.

The ERO must keep Forms 8878 and 8879 for three years from the return due date or the IRS received date, whichever is later. EROs must not send Forms 8878 and 8879 to the IRS unless the IRS requests they do so.

Once signed, an ERO must originate the electronic submission of a return as soon as possible. EROs must not electronically file individual income tax returns prior to receiving Forms W-2 , Wage and Tax Statement, W-2G , Certain Gambling Winnings; or 1099-R , Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. If the taxpayer is unable to secure and provide a correct Form W-2 , W-2G , or 1099-R , the ERO may electronically file the return after the taxpayer completes Form 4852 , Substitute for Form W-2, Wage and Tax Statement or 1099-R , Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., in accordance with the use of that form. If Form 4852 is used, the nonstandard W-2 indicator must be included in the record, and the ERO must maintain Form 4852 in the same manner required for Forms W-2, W-2G and 1099-R.

An ERO must ensure that stockpiling of returns does not occur at its offices. Stockpiling is:

• collecting returns from taxpayers or from another Authorized IRS e-file Provider prior to official acceptance in IRS e-file ; or

• after official acceptance to participate in IRS e-file, stockpiling refers to waiting more than three calendar days to submit the return to the IRS once the ERO has all necessary information for origination.

The IRS does not consider as stockpiled current filing year returns held prior to the date the IRS accepts transmission of electronic returns. EROs must tell taxpayers that it can’t transmit returns to the IRS until the date the IRS accepts transmission of electronic returns. Although holding late returns during periods when IRS electronic filing isn’t available isn’t stockpiling, Providers should mail the returns to the IRS mailing addresses in the form’s instructions.

Internet Protocol (IP) information of the computer the ERO uses to prepare the return (or originate the electronic submission of collected returns) must be included in all individual income tax returns. The required Internet Protocol information includes:

• Public/routable IP address

• IP date

• IP time

• IP time zone

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With many different ERO e-filing business models, the computer used to prepare (or originate the electronic submission of collected returns) may not have a public/routable IP address. If the computer used for preparation (or origination of the electronic submission of collected returns) is on an internal reserved IP network, then the IP address should be the public/routable IP address of the computer used to submit the return. If the computer used for preparation (or origination of the electronic submission of collected returns) is used to transmit the return to the IRS, then the IP address should be the public/routable IP address of that computer. If it isn’t possible to capture the public/routable IP address, then the ERO or software may have to hard code the IP address into each return.

The IRS will reject individual income tax returns e-filed without the required IP address. Any return received by the IRS containing a private/non-routable IP address will be flagged in the acknowledgment File with an “R” in the Reserved IP Address Code field of the ACK key record indicating that a reserved IP address is present for the return.

The IRS has implemented a Device ID field for electronic return filers and preparers. The IRS will use this unique identifier; in addition to key elements we already collect to improve fraud and ID theft detection. Vendors implementing Device ID in their software should ensure that their privacy notice will cover Device ID.

IRS e-file returns must contain all the same information as returns filed completely on paper. Forms that have an electronic format must be submitted in the electronic format unless IRS identifies an exception during the tax year. If a form/document can’t be submitted electronically, IRS can accept forms/documents in PDF format. Check the software package to see if this option is offered. EROs are responsible for ensuring that they submit to the IRS all paper documents required to complete the filing of returns. If the documents aren’t submitted electronically, they may be mailed to IRS. Attach all appropriate supporting documents that the IRS requires to the Form 8453 , U.S. Individual income Tax Transmittal for an IRS e-file Return, and send them to the IRS. Refer to page 2 of Form 8453 for the current mailing address. Below is a list of these supporting documents:

• Form 1098-C , Contributions of Motor Vehicles, Boats, and Airplanes (or equivalent contemporaneous written acknowledgment);

• Form 2848 , Power of Attorney and Declaration of Representative (only for an electronic return signed by an agent);

• Form 3115 , Application for Change in Accounting Method;

• Form 3468 , Investment Credit – attach a copy of the first page of NPS Form 10-168a, Historic Preservation Certification Application (Part 2 – Description of Rehabilitation), with an indication that it was received by the Department of the Interior or the State Historic Preservation Officer, together with proof that the building is a certified historic structure (or that such status has been requested);

• Form 4136 , Credit for Federal Tax Paid on Fuels – attach the appropriate certificates and, if applicable, the appropriate reseller statements for biodiesel, renewable diesel, and sustainable aviation fuel claims;

• Form 5713 , International Boycott Report;

• Form 8283 , Noncash Charitable Contributions, Section A (if any statement or qualified appraisal is required) or Section B, Donated Property, and any related attachments (including any qualified appraisal or partnership Form 8283);

• Form 8332 , Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent (or certain pages from a divorce decree or separation agreement that went into effect after 1984 and before 2009, see form instructions);

• Form 8858 , Information Return of U.S. Persons With Respect to Foreign Disregarded Entities (FDEs) and Foreign Branches (FBs);

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• Form 8864 , Biodiesel, Renewable Diesel, or Sustainable Aviation Fuels Credit – attach the appropriate certificates and, if applicable, the appropriate reseller statements for biodiesel, renewable diesel, and sustainable aviation fuel claims and

• Form 8949 , Sales and Other Dispositions of Capital Assets, (or a statement with the same information) if you elect not to report your transactions electronically on Form 8949.

State income tax returns in the Federal/State Program often require that paper documents be prepared and forwarded to state tax administration agencies. Be sure to follow each state’s rules when state income tax returns are prepared.

Record Keeping and Documentation Requirements

EROs must retain the following material until the end of the calendar year at the business address from which it originated the return or at a location that allows the ERO to readily access the material as it must be available at the time of IRS request. An ERO may retain the required records at the business address of the Responsible Official or at a location that allows the Responsible Official to readily access the material during any period the office is closed.

• A copy of Form 8453, U.S. Individual Income Tax Transmittal for an IRS e-file Return, and supporting documents that are not included in the electronic records submitted to the IRS;

• Copies of Forms W-2, W-2G and 1099-R;

• A copy of signed IRS e-file consent to disclosure forms;

• A complete copy of the electronic portion of the return that can be readily and accurately converted into an electronic transmission that the IRS can process; and

• The acknowledgment file for IRS accepted returns.

Forms 8879 and 8878 must be available to the IRS in the same manner described above for three years from the due date of the return or the IRS received date, whichever is later. The Submission ID must be associated with Form 8879 and 8878:

• The Submission ID can be added to the Form 8879 and 8878 or

• the acknowledgment containing the Submission ID can be associated with Forms 8879 and 8878.

• If the acknowledgment is used to identify the Submission ID, the acknowledgment must be kept following published retention requirements for Forms 8879 and 8878.

EROs may electronically image and store all paper records they must retain for IRS e-file. This includes Forms 8453 and paper copies of Forms W-2, W-2G and 1099-R as well as any supporting documents not included in the electronic record and Forms 8879 and 8878. The storage system must satisfy the requirements of Revenue Procedure 97-22, 1997-1 C.C. 652, Retention of Books and Records. In brief, the electronic storage system must ensure an accurate and complete transfer of the hard copy to the electronic storage media. The ERO must be able to reproduce all records with a high degree of legibility and readability (including the taxpayers’ signatures) when displayed on a video terminal and when reproduced in hard copy.

Providing Information to the Taxpayer

The ERO must provide a complete copy of the return to the taxpayer. EROs may provide this copy in any media, including electronic, that is acceptable to both the taxpayer and the ERO. A complete copy of a taxpayer’s return includes Form 8453 and other documents that the ERO can’t electronically transmit, when applicable, as well as the electronic portion of the return. The electronic portion of the return can be contained on a replica of an official form or on an unofficial form. However, on an unofficial form, the ERO must refer

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ence data entries to the line numbers or descriptions on an official form. If the taxpayer provided a completed paper return for electronic filing and the information on the electronic portion of the return is identical to the information provided by the taxpayer, the ERO doesn’t have to provide a printout of the electronic portion of the return to the taxpayer. The ERO should recommend that the taxpayer retain a complete copy of the return and any supporting material. The ERO should also advise taxpayers that, if needed, they must file an amended return as a paper return and mail it to the submission processing center that would handle the taxpayer’s paper return. For tax years 2019 and forward, the ERO should also advise taxpayers that, if needed, an amended return can also be e-filed. Refer to the current year’s tax instructions for addresses and electronic filing.

Acknowledgments of Transmitted Return Data

The IRS electronically acknowledges the receipt of all transmissions. Returns in each transmission are either accepted or rejected for specific reasons. Accepted returns meet the processing criteria and IRS considers them “filed” as soon as the return is signed electronically or through the receipt by the IRS of a paper signature. Rejected returns don’t meet processing criteria and the IRS considers them not filed. The acknowledgment identifies the source of the problem using a system of business rules and element names (tag names). The business rules tell why the return rejected and the element names tell which fields of the electronic return data are involved. Information regarding business rules and correcting common errors is available on IRS.gov .

The acknowledgment record of an accepted individual income tax return has other information that is useful to the originator. The record confirms if the IRS accepted a PIN, if an elected EFW paid a balance due, and if a private/non-routable IP address is present in the return. The ERO should check acknowledgment records regularly to find returns requiring follow-up action and should take reasonable steps to address issues identified on acknowledgment records.

At the request of the taxpayer, the ERO must provide the Submission ID and the date the IRS accepted the electronic individual income tax return data. The ERO may use Form 9325 , Acknowledgment and General Information for Taxpayers Who File Returns Electronically, for this purpose. If requested, the ERO must also supply the electronic postmark if the Transmitter provided one for the return.

Rejected electronic individual income tax return data can be corrected and retransmitted without new signatures or authorizations if changes don’t differ from the amount on the original electronic return by more than $50 to “Total income” or “AGI,” or more than $14 to “Total tax,” “Federal income tax withheld,” “Refund” or “Amount you owe.” The ERO must give taxpayers copies of the new electronic return data.

If the State submission is linked to an IRS submission (also referred to as a Federal/State return), the IRS will check to see if there is an accepted IRS submission under that Submission ID. If there isn’t an accepted federal return for that tax type, the IRS will deny the State submission and an acknowledgment will be sent to the Transmitter. The state has no knowledge that the state return was denied (rejected) by the IRS. Subsequent rejection of state electronic return data by a state tax administration agency does not affect federal electronic return data accepted by the IRS. States determine when they accept as filed state electronic return data received from the Federal/State e-file Program. Contact the state tax administration agency when problems or questions arise.

Resubmission of Rejected Tax Returns

If the IRS rejects the electronic portion of a taxpayer’s individual income tax return for processing, and the ERO cannot fix the reason for the rejection, the ERO must take reasonable steps to inform the taxpayer of the rejection within 24 hours. When the ERO tells the taxpayer that it hasn’t filed the return, the ERO must provide the taxpayer with the business rule(s) accompanied by an explanation. A rejected individual income tax return that was submitted on or before the due date of the return will be considered timely filed if the taxpayer corrects the electronic portion of the return and resubmits the return by the fifth calendar day after the due date of the return. If the taxpayer chooses not to have the electronic portion of the return corrected and transmitted to the IRS, or if the IRS can’t accept the return for processing, the taxpayer must file a paper return. To timely file a

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rejected return submitted on or before the due date of the return, the taxpayer must file the paper return by the later of the due date of the return or ten calendar days after the date the IRS gives notification that it rejected the electronic portion of the return or that the return can’t be accepted for processing. Taxpayers should include an explanation in the paper return as to why they are filing the return after the due date.

Advising Taxpayers about Refund Inquiries

EROs should tell taxpayers how to follow up on returns and refunds by pointing out “ Where’s My Refund ” and providing taxpayers with the IRS tax refund hotline, 800-829-1954.

Taxpayers can start checking on the status of their return within 24 hours after the IRS received their e-filed return, or four weeks after they mail a paper return. EROs should advise taxpayers that “Where’s My Refund” updates once every 24 hours, usually overnight.

To check on refunds, taxpayers need to enter the first Social Security Number shown on their tax return, the filing status and the exact amount of the refund in whole dollars.

Refund Delays

Taxpayers often ask EROs to help them when refunds take longer than expected. The IRS may delay refunds for several reasons, including the following:

• Errors in Direct Deposit information (refunds then sent by check);

• Financial institution refusals of Direct Deposits (refunds then sent by check) or delays in crediting the Direct Deposit to the taxpayer’s account;

• Claims of the Earned Income Tax Credit or Additional Child Tax Credit require the IRS to hold the entire refund until mid-February when the returns are filed early in the filing season;

• Estimated tax payments differ from the amount reported on tax return (for example, fourth quarter payments not yet on file when return data is transmitted);

• Bankruptcy;

• Improper claims for the Earned Income Tax Credit, Additional Child Tax Credit, Credit for Other Dependents, or American Opportunity Tax Credit; or

• Recertifications to claim the Earned Income Tax Credit, Child Tax Credit, Additional Child Tax Credit, Credit for Other Dependents, or American Opportunity Tax Credit.

The IRS sends a letter or notice explaining the issue(s) and how to resolve the issue(s) to the taxpayer when it delays a refund. The letter or notice has the contact telephone number and address for the taxpayer to use for further assistance.

If taxpayers’ refunds are lost or misapplied, taxpayers do not receive notices or letters or there is no information on Where’s My Refund or the Refund Hotline (see Advising Taxpayers about Refund Inquiries above), EROs should advise taxpayers to call the IRS taxpayer assistance number.

Refund Offsets

The IRS offsets as much of a refund as is needed to pay overdue taxes owed by taxpayers and lets them know when this occurs. The Bureau of the Fiscal Service offsets taxpayers’ refunds through the Treasury Offset Program (TOP) to pay off past-due child support, federal agency non-tax debts such as student loans and unemployment compensation debts, and state income tax obligations. Offsets to non-tax debts occur after the IRS has certified the refunds to Fiscal Service for payment but before Fiscal Service makes the Direct Deposits or issues the paper checks. Refund offsets reduce the amount of the expected Direct Deposit or paper check, but they do not delay the issuance of the remaining refund (if any) after offset. If taxpayers owe non-tax debts, they may contact the agency they owe, prior to filing their returns, to determine if the agency submitted their debts for refund offset. Fiscal Service sends taxpayers offset notices if it applies any part of

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their refund to non-tax debts. Taxpayers should contact the agencies identified in the Fiscal Service offset notice when offsets occur if they dispute the non-tax debts or have questions about the offsets. If taxpayers need further clarification, they may call the Treasury Offset Program Call Center at 800-304-3107. If a refund is in a joint name but only one spouse owed the debt, the “injured spouse” should file Form 8379 , Injured Spouse Allocation.

Disposal of Taxpayer Information

After complying with records retention policies and standards for retaining the required records (electronic and paper format) for the required period, taxpayer information and sensitive data files must be destroyed by properly shredding, burning, mulching, pulping or pulverizing beyond recognition and reconstruction.

Destroy paper using crosscut shredders which produce particles that are 1 mm x 5mm (0.04 in. x 0.2 in.) in size (or smaller) or pulverize/disintegrate paper materials using disintegrator devices equipped with a 3/32 in. (2.4 mm) security screen.

IRS Sponsored Programs

Often individuals or organizations serve as unpaid tax return preparers in IRS sponsored programs including Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) . For IRS sponsored programs, unless otherwise noted, all requirements of a Provider apply. All tax returns prepared at a VITA/TCE site must be quality reviewed prior to electronically filing the tax return. The IRS may designate an individual for this purpose.

A VITA or TCE sponsor can only accept a return for electronic filing that meets the criteria for VITA or TCE assistance. A VITA or TCE sponsor may accept for electronic filing only the returns and accompanying forms and schedules included in a VITA or TCE training course.

See Publication 4299 , Privacy, Confidentiality and Civil Rights. It is designed to ensure Volunteers and their partnering organizations safeguard taxpayer information and understand their responsibilities.

Employers Offering IRS e-file as an Employee Benefit

The following procedures apply to employers who choose to offer electronic filing as an employee benefit to business owners and spouses, employees and spouses and/or dependents of business owners and employees. These rules do not apply if an employer contracts with an ERO to originate the electronic submission of the tax return.

• An employer may offer electronic filing as an employee benefit whether the employer chooses to transmit tax returns or contracts with a third-party to transmit the tax returns. If an employer contracts with a thirdparty to transmit the tax returns, the employer may collect from participating employees a fee that directly relates to defraying the actual cost of transmitting the electronic portion of the tax return.

• The employer must retain copies of tax returns, including Forms 8453 and IRS e-file Signature Authorizations. It must not give this information to a third-party, including a third-party Transmitter.

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