Understanding Basic Guide There’s no doubt that tax season can take a toll on anyone – from start-ups to the team of CPAs working at a Fortune 500 company. Either situation calls for the help of experts to get the books and numbers in order. Still, for a first-time tax preparer looking to break into the industry, what are some factors you need to consider getting your business going smoothly?
One of the first steps to get your business started on time for the upcoming tax season is to obtain all the requirements, such as your Electronic Filing Identification Number (EFIN) and Prepare Tax Identification Number (PTIN). Here is what you need to know about registering for an IRS EFIN PTIN:
First, What is an Electronic Filing Identification Number (EFIN)?
An EFIN is issued by the IRS, which is assigned to individuals who are authorized as IRS e-File providers. Completing the e-File applications will lead to the second confirmation email from the IRS, which contains the acceptance letter with the EFIN attached to the message.
What Should You Include on the e-File Application?
The application should have Understanding Basic Guide Responsible Official tag, which notes that you can handle the e-File operation from the designated EFIN. Consider this as the first point of contact with the IRS, which gives you the responsibility to manage all the returns e-Filed from where the EFIN is assigned. Other requirements include the following:
- Principals such as the sole proprietor to act for the tax matters.
- Partnership with five percent more interest.
- The President, Vice-President, Secretary, or Treasurer for a corporation.
Keep in mind that the process of becoming an Authorized e-File Provider can take up to 45 days, so be sure to apply early if you want to beat the clock once the tax season hits.
What are the EFIN Requirements?
- Anyone filing beyond ten tax returns must file electronically since the new mandate way back in 2011. As mentioned above, you must first apply to earn your authorization as an e-File Provider with the IRS and get approval for an EFIN.
- IRS EFIN PTINs should not represent electronic transmissions from multiple locations, especially when the preparer was given a “fixed” site. Only mobile preparers with an “other than fixed” location may cover different areas.
- After submitting your application to become an Authorized e-File Provider, you also need to submit a credit check, criminal background check, tax compliance check, along with your fingerprint. You also need to include your previous non-compliance e-File requirements with the IRS.
What is a Professional Preparer Tax Identification Number (PTIN)?
Once you become an official tax preparer, you need to apply for a PTIN since it is a critical identification number necessary to submit U.S. federal tax returns to the IRS. This requires a yearly renewal, often expiring by the 31st of December, so it’s better to get a renewal a month or earlier before since the process can take between four to six weeks.
What You Need To Apply for a PTIN
To apply for a PTIN, you need to provide some personal information and details about your previous tax returns. This includes your Social Security Number, personal contact information, business details, and information from your previous year’s individual tax return. You will also answer a few questions about your tax obligations and any potential felony convictions. Remember, it’s important to be truthful because the IRS reviews applications for accuracy.
The Bottom Line: The Road to Becoming a Responsible and Successful Tax Preparer
Understanding Basic Guide Tax season is quickly approaching, so before the deadline comes any closer, the guide above should help bolster tax preparers for a smooth-sailing business next year.
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