The IRS is informing professionals and accounting firms that they need to get EFINs (Electronic Filing Identification Numbers) in order to be compliant for the 2012 e-filing requirements (if they haven’t already received an EFIN).

Beginning in January of 2012, paid preparers who will be preparing and filing more than eleven 1040 or 1041 forms must e-file with the IRS. Individuals and businesses who file their own taxes still have the option of filing their returns on paper.

Tax preparers must create an e-services account in order to be an authorized IRS e-filer. They will have to send an EFIN application and pass the necessary tests. The process takes at least 45 days. Individuals and tax firms only need one EFIN.

Next year’s requirements are the second and final part of a law that was created to help e-filing become the main method of tax filing for individuals, trusts and estates. For 2011, the e-filing requirement was meant for paid preparers and tax firms who filed at least 100 tax returns. In 2011, the rate for returns that were sent via e-filing increased by more than 12%.

80% of tax returns are filed online and the IRS has estimated that almost 1 billion tax returns were filed electronically safely and securely since e-filing began in 1990.

Professional tax preparers can see how the process works on www.irs.gov at “Become an Authorized e-file Provider” or by accessing the FAQ section.

If this new requirement causes hardship for preparers, they may request a waiver for one year by sending an 8894 Form (“Preparer e-file Hardship Waiver Request”). If a client asks for a paper return be sent to the IRS, the preparer must send an 8948 Form “Preparer Explanation for Not Filing Electronically” with the tax return. All forms must be kept with the preparers records.

Daniel Stoica Accounting Professional