If you are one of the over 700,000 tax preparers with an IRS PTIN, you are probably familiar with the e-filing process. A critical part of this process is safeguarding both the Electronic Filing Identification Number (EFIN) used by you to electronically transmit tax returns to the IRS and other e-filing documents. Recently, the IRS released important information on people leaving their tax practice behind. Here’s what you should know.
In the QuickAlert for Tax Professionals dated May 21, 2019, the IRS laid out e-file-related instructions for tax preparers, etc. who are either:
- Temporarily closing their tax offices after tax season or
- Permanently closing their tax offices.
Instructions for preparers, etc. who are closing their tax office for the year. Preparers, etc. who are planning to close their tax office for the year but planning to re-open later should:
- Update their IRS e-file Application to allow IRS to communicate with them and prevent their Electronic Filing Identification Number (EFIN) from being inactivated. They should verify and, if needed, update their firm’s Principals, Responsible Officials, addresses and telephone numbers.
- Be sure your application includes a mailing address if you want correspondence sent to a specific address other than the physical address.
- Keep all Forms 8879 (IRS e-file Signature Authorization) and acknowledgment reports for three years.
- Keep copies of all clients’ tax returns until the end of the calendar year as the electronic return originator (ERO).
- Check their EFIN status page to verify the number of returns they filed matches the number of returns received by IRS. While their office is closed, it is a good practice to periodically verify their EFIN is not being used by anyone else.
Instructions for preparers etc. who will be permanently closing their tax office. Preparers who are planning to permanently close their doors should note that:
- The easiest way to notify IRS of the closing is to use the “Close Office” feature on the IRS e-file Application.
- Providers may not sell or transfer EFINs, other identification numbers, or passwords when selling, transferring or otherwise discontinuing an IRS e-file business.
Need more information? IRS refers all tax preparers to Publication 3112 (IRS e-file Application and Participation).
Don’t forget these final steps before locking your Tax Practice’s front door and leaving your tax practice behind! If you need more guidance, your friendly Henry+Horne professional is only a click away. For more on how Henry+Horne can use its decades of tax experience to your benefit, check out our Accounting Services page.
Melinda Nelson, CPA