To prepare tax returns for compensation, you must obtain a Preparer’s Tax Identification Number (PTIN). Additionally, to originate electronic returns, obtain the taxpayer’s authorization to e-file their return, or file tax returns electronically, you need an Electronic Filing Identification Number (EFIN).

PREPARER’S TAX IDENTIFICATION NUMBER

A tax preparer’s PTIN is not the same as his Electronic Filing Identification Number (EFIN). Both are needed to start a tax preparation business but are used for different purposes. As a tax preparer, you need a PTIN to start preparing taxes for a fee.

ELECTRONIC FILING IDENTIFICATION NUMBER

An EFIN is a six digit number assigned by the IRS to a business or organization (it can be a sole proprietorship, partnership, corporation, or other entity) that is used to identify an authorized e-File Provider. Not all tax preparers need one; however, all tax preparation businesses do. Therefore, a PTIN is issued to an individual and an EFIN is issued to a business.

Although there is no cost, the EFIN application process will require you to submit your fingerprints and undergo a suitability check (criminal history, tax debt history etc.). Without an EFIN, you cannot e-file tax returns or engage in any e-file activities (See IRS Publication 3112). You can, however, open and operate a tax preparation center: a place where tax returns are only prepared and collected and forwarded to another location for electronic return origination, compliance review by an EFIN holder or other Responsible Party, signature by the taxpayer, and/or electronic submission (transmission) to the IRS

If you do not have an EFIN, Nexlevel Tax Pro Software can assign you an IRS e-file Provider, thus you can have the tax returns originated, properly authorized, and e-filed for you/your clients (after reviewing the tax returns for IRS compliance). However, our E-filing Service (through our contracted IRS Authorized e-file Providers) is available only to (1) those who have not been denied participation in the IRS e-file program or suspended or expelled from participating in the IRS e-file program and (2) and those who agree to adhere to all applicable requirements for participation in the IRS e-file program wherever published (See, at minimum, Revenue Procedure 2007-40. IRS Publication 3112, and the IRS Website).

Contact us today to learn how to complete IRS registration for your tax preparation business or more information on opening a tax office.