So you’re interested in shifting from time-consuming paper filing to faster, more
efficient electronic tax filing. But how can you be certain a cloud-based business is
taking all the necessary security precautions?
There are several factors to consider when choosing an e-file provider. First and
foremost, make sure you are working with an authorized IRS transmitter. To become
an IRS transmitter, a tax return preparer or tax-reporting business must go through a rigorous three-step process.
1) Create an IRS e-services account
Before a business can submit an e-file application, it must create an IRS account, which allows electronic interaction with the IRS. In addition to providing specific identification details (Social Security number and phone number), the person creating this initial account must make sure every principal and responsible staffer in the business signs up for e-services. This point person also must confirm registration within 28 days of receiving an IRS confirmation code in the mail.
2) Submit an e-file application
A business can begin the application process once all essential people are approved for e-services. Because the application is so comprehensive, it can take up to 45 days for the IRS to approve it.
3) Pass a suitability check
The business has submitted an application and related documents. Now the IRS can conduct a suitability check on the organization and each person listed on the application as either a principal or responsible employer. This may include a credit check, tax compliance check, criminal background check and/or a check for past noncompliance with IRS e-file requirements.
Upon this approval, the business gets an acceptance letter from the IRS and a Transmitter Control Code (TCC) that allows the business to offer e-filing.As stated on the IRS website:
“The application process is not simple, but as a tax professional, you understand these steps are necessary to protect the integrity and security of the electronic filing system. We all have a stake in maintaining the highest standards for e-file providers.”