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Hello E-File!

In Accounting & Finances, Business, Taxes on January 9, 2012 by Sufen Wang Tagged: , , , , , ,

Good-Bye Paper Returns, The IRS Makes Its Digital Move

 

The IRS is doing everything it can to ensure e-filing remains alive and well.  In 2011, paid preparers who expected to file 100 or more individual income tax returns during the calendar year were required to file electronically. However, the new year means new requirements. As of January 1, 2012, paid preparers who expect to file just 11 or more individual, estate, or trust returns must file electronically.
 
Members of a firm will also have to play by these revamped rules. The e-file requirement applies if the firm’s members in the aggregate expect to file 11 or more covered returns in 2012. Basically, if your firm is doing any business at all, you’re probably going to be e-filing.
 
Indeed, almost every tax return counts when you’re checking for that magic number 11. The regulation covers income tax returns in the Form 1040 and Form 1041 series, and Form 990-T, the Exempt Organization Business Income Tax Return. However, forms such as 1040-NR and 1040X are considered automatic administrative exemptions because they still have to be mailed to the IRS the old-fashioned way, and so you shouldn’t include them in your estimate.
 
Remember that it’s ultimately up to the taxpayer to decide how he wants to submit his tax return.  Psssst, heads-up, keep in mind that most of your client(s) usually do not know what they want; specifically how they want their tax returns to be filed…  So, make sure you give sound advice to your clients in this regards.  However, for those clients who really do not want to go digital, because of the new regulations, you’ll need to acquire a written statement from the taxpayers on or before the date the return is filed. It must be signed and dated (a joint return need only be signed by one spouse) and should state that the taxpayer chooses to file the return in paper format and will be submitting it to the IRS –rather than the preparer. This way, the individual income tax return will not be treated as filed by you, the tax return preparer, and thus will not be included in your return tally.
 
It’s important that you don’t send this statement to the IRS or attach it to your client’s tax return – that’s the taxpayer’s responsibility; well, good luck with that… hoping that your client will do what he is supposed to do…  So, instead, make sure you do your part by attaching Form 8948, Preparer Explanation for Not Filing Electronically, to your client’s paper return and check box 1. You also need to include your PTIN on each tax return where requested. If your client does choose not to e-file, it’s important that he personally mails his return. The IRS is making it clear this year that once a taxpayer chooses not to e-file, it’s hands-off the paperwork for the tax preparer.
 
Hopefully you’re already an authorized e-file provider because that’s the only way you’re allowed to e-file with the IRS. If not, you might want to click on the following link and start applying for your
Electronic Filing Identification Number – it takes at least 45 days for the authorization process. Otherwise you’re going to have a lot of clients filing complaints against their unprepared tax preparer.

 

On the Money,
Sufen Wang
Wang Solutions

 

 

 

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