Chapter 5 – Other Authorized IRS e-fle Provider Activities

In addition to electronic return origination and transmission previously discussed, there are other activities performed by Providers, including intermediate service and software development.

An Intermediate Service Provider receives tax information from an Electronic Return Originator (ERO) (or from a taxpayer who files electronically using a personal computer and commercial tax preparation software), processes the tax return information and either forwards the information to a Transmitter or sends the information back to the ERO or taxpayer (for Online Filing).

A Provider participating as an Intermediate Service Provider must meet the following responsibilities to take part in IRS e-file . The Intermediate Service Provider must:

1. Deliver all electronic returns to a Transmitter or the ERO who gave the electronic returns to the Intermediate Service Provider within three calendar days of receipt;

2. Retrieve the acknowledgment file from the Transmitter within one calendar day of receipt by the Transmitter and send the acknowledgment file to the ERO (whether related or not) within one workday of retrieving it;

3. Retain each acknowledgment file received from a Transmitter until the end of the calendar year in which the electronic return was filed;

4. Input the TINs and addresses on a Form W-2, W-2G, 1099-R or Schedule C as applicable in the electronic return record when they differ from the taxpayer’s TIN or address in the electronic individual income tax return as described in “Verifying Taxpayer Identify and Taxpayer Identification Numbers (TINs)” and “Be Careful with Addresses” if inputting the electronic data; and

5. Send any return needing changes as described in “Electronic Return Originator” back to the ERO for correction.

Additional Requirements for Intermediate Service Providers Participating in Online Filing

When the taxpayer files a return using Online Filing, the Intermediate Service Provider processes information for a taxpayer so that a Transmitter can send the electronic return(s) to the IRS. In so doing, the Intermediate Service Provider must:

1. Ensure that it uses an Online Filing EFIN which begins with 10, 21, 32, 44 or 53;

2. Ensure that its Online Filing EFIN is included in the appropriate field in the electronic return data;

3. Send the transmission to the Transmitter within 24 hours of the receipt of the return from the taxpayer;

4. Ensure that no more than five tax returns are filed electronically by one software package or from one e-mail address;

5. Ensure that software used by the taxpayer does not have an IRS-assigned production password built into the software; and

6. Immediately forward to the taxpayer information received from the Transmitter as required for Online Filing. For example, this requirement applies when a Transmitter receives information from the IRS about the status of the electronic portion of a taxpayer’s return. See “ Additional Requirements for Participants in Online Filing .”

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Specific Requirements for Intermediate Service Providers Participating as Resellers

Providers that resell software (e.g., rebranding, white label, etc.) are also considered by the IRS as Intermediate Service Providers as they provide package deals that usually include additional services to EROs such as education and support. “Reseller” is defined as a firm that purchases software with the intent of selling it to a Tax Preparer or ERO instead of using it.

An Intermediate Service Provider that only meets this role because it resells software must meet the following responsibilities to take part in IRS e-file:

1. Select the role of Intermediate Service Provider on its e-file application;

2. Must not provide an EFIN with the software package sold (EROs are required to get their own EFINs);

3. Ensure that its EFIN is included in the appropriate field in the electronic return data.

A Software Developer develops software for the purposes of formatting electronic return information according to IRS e-file specifications and/or transmitting electronic return information directly to the IRS. Software Developers may find information about Modernized e-file (MeF) schemas in Publication 4164 , Modernized (MEF) E-file Guide for Software Developers and Transmitters, and on IRS.gov . Software Developers must pass testing in Assurance Testing System (ATS) as prescribed in Publication 1436, Assurance Testing System (ATS) Guidelines for Modernized e-File (MeF) Individual Tax Returns for Tax Year 2023.

‘A Software Developer must:’

1. Promptly correct any software error which causes the electronic part of a return to be rejected and then promptly distribute that correction.

2. Ensure that its software contains proper language and version indicators for Consent to Disclose and Jurat statements.

3. Ensure software contains IRS e-file Signature Authorization.

4. Ensure its software allows for input of different addresses on forms and schedules when they differ from the taxpayer’s address in the electronic individual income tax return. Also, the software must require the manual key entry of the Taxpayer Identification Number (TIN) as it appears on Form W-2 for taxpayers with Individual Taxpayer Identification Numbers (ITINs) who are reporting wages.

5. Ensure software packages that support the Form 1040-SR use the Form 1040 schema to submit the return electronically. The Form 1040 schema has a Form 1040-SR Indicator checkbox that must be marked to show Form 1040-SR is being electronically filed. Form 1040 schema will be completed as usual; however, MeF will process the return as a Form 1040-SR. Taxpayers age 65 or older have the choice to submit Form 1040-SR electronically. All Form 1040 Business Rules will apply to the Form 1040-SR.

6. Software Developers are being asked to default the “Routing and Account Numbers” in the software packages on Forms 1040/1040-SR/1040-NR/1040-SS, to “XXXXXXXX” (capital X’s), when taxpayers choose not to have their refund directly deposited into an account. These fields should never be blank.

7. When selling software for resale (rebranding, white label, etc.), the software developer must ensure that the original purchaser does not resell the software with the original “purchaser’s” EFIN. When the software is activated, the EFIN should not owned by the original purchaser (reseller). The person buying the resold software must obtain their own EFIN.

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Additional Requirements for Software Developers Participating in Online Filing

A Software Developer that participates in Online Filing must also:

1. Ensure that its software package can’t be used to transmit more than five electronic returns.

2. Ensure that its software, if available for use on the Internet, can’t be used to file more than ten electronic returns from one e-mail address. The email address used to create the account with the software provider should be used when determining the number of uses.

Note: It is strongly recommended that the software provider normalize email address handles (email address text excluding the domain) prior to determining how many electronically filed returns have been submitted using the same email address. Normalizing the email address can be done by applying the following text preprocessing measures. These measures are applied to remove features that can obscure that apparently-distinct email handles may resolve to the same inbox, depending on domain handling.

• Remove dots (R.o.b.e.r.t -> Robert)

• Ignore characters after the first plus sign (“+”) (Robert+White -> Robert)

• Ignore characters after the first hyphen (“-”) (Robert-White -> Robert)

3. Ensure that its software, if available for use on the Internet, can’t be used to file more than ten electronic returns from one phone number. The phone number used to create the account with the software should be used when determining the number of uses.

4. Ensure that its software contains a Form 8453, U.S. Individual Income Tax Transmittal for an IRS e-file Return, that can be printed and used by a taxpayer to mail supporting documents to the IRS.

5. Ensure that its software contains a payment voucher that can be printed and used by a taxpayer to file with the IRS.

6. Ensure the Internet Protocol (IP) statement is present.

7. Ensure online software packages that support 1040-SR provide this choice to taxpayers age 65 or older.

Additional Requirements for Software Developers Enabling Electronic Signatures for Forms 8878 and 8879

A Software Developer that enables electronic signatures for Forms 8878 and 8879 must:

1. Provide the following in an accessible format (including print capability) for the Electronic Return Originator:

• 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.

2. Follow the identity verification requirements.

3. Ensure software disables identity verification after three attempts.

4. Ensure identity verification transactions occur in a secure portal.

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5. Ensure the electronic record that has been signed is tamper-proof.

6. Ensure storage system has secure access controls.

7. Ensure storage system has a retrieval system that includes an indexing system.

8. Ensure software can reproduce legible and readable hardcopies of Form 8878 or 8879.

9. Ensure software does not allow tax return transmission until Form 8879 is signed.

Also, a Software Developer that enables electronic signatures for Forms 8878 and 8879 should:

• Follow best practices and clearly provide information for taxpayers on use of third-party data and “soft inquiries” prior to beginning the identity verification process.

• Follow best practices and clearly provide information for taxpayers that 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.

See “ Electronic Signature Guidance for Forms 8878 and 8879 ” section for detailed information.

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