IRS eFile: Introducing Electronic Fingerprinting for Tax Professionals

Recently, the IRS notified tax professionals that it will only accept electronic submissions of fingerprints for e-file applications. The change in the IRS eFile system will be effective from September 25, 2022. So far, the federal body had been relying on FD-258 fingerprint cards for conducting background checks on tax practitioners.

Some job types such as insurance advisors, caregivers, healthcare professionals, tax professionals, etc. require a fingerprint-based criminal history background check to make sure that people with criminal history can be filtered out of the licensing or hiring process.

To run fingerprint-based criminal history background checks, applicants are asked to submit fingerprints, which are eventually submitted to a law enforcement agency that maintains criminal history records. For example, the Federal Bureau of Investigation maintains the largest database of criminal history records along with the biometric information of the subjects in the country.

The law enforcement agency then runs the checks with fingerprints received and lookup for any past criminal records. Whatever the result is, the law enforcement body sends the criminal history background check results to the requesting agency. For example, IRS (Internal Revenue Service) requires tax professionals to go through fingerprint-based background checks. The agency collects the tax professionals’ fingerprints and sends them to the FBI for criminal history screening.

The Internal Revenue Service (IRS) is the revenue service of the United States federal government, which is responsible for collecting taxes and administering the Internal Revenue Code, the main body of the federal statutory tax law. IRS’s responsibilities include providing tax assistance to taxpayers; pursuing and resolving instances of erroneous or fraudulent tax filings; and overseeing various benefits programs, including the Affordable Care Act.

Recently IRS notified tax professionals by email that it will be introducing a new electronic fingerprinting process for applicants. The agency suggested that it will not process IRS fingerprint cards postmarked after August 15, 2022, and applicants will need to wait until September 25, 2022, to schedule their electronic fingerprinting appointment.

Beginning September 25, 2022, the new electronic fingerprinting process will be implemented, requiring you to schedule an appointment with the IRS authorized vendor for fingerprinting. There will be no charge for this service. On September 25, 2022, you can schedule your appointment by accessing the scheduling link located on the e-file application summary page.

Yes, IRS accepts e-file to file your return. Originally, April 18, 2022, was the deadline to file your 2021 tax return. If you missed the deadline to prepare and e-File a 2021 Tax Return or you e-Filed an extension by that date, you can still e-File your 2021 Taxes until October 17, 2022 – the change is because the 15th falls on a Saturday.

The agency is set to replace its existing IRS fingerprint card-based process with the electronic one. The cut-off date to mail paper fingerprint cards (Form FD-258) to the IRS is August 15, 2022. The fingerprint cards also need to be postmarked by August by that same date, and the e-file application has to be submitted prior to mailing the fingerprint cards.

IRS e-file is a computerized system for filing tax documents to the US Internal Revenue Service online via the Internet or with a direct connection. E-file is one of the initiatives of IRS e-services to provide online, paper-free access to taxpayers in the country.

The IRS e-file allows taxpayers to submit documents usually without the need to submit any paper documents. Tax preparation software with e-filing capabilities includes stand-alone programs or websites. Tax professionals use tax preparation software from major software vendors for commercial use.

Taxpayers can e-file free using the IRS Free File service, either using an authorized IRS e-file provider’s tax software, if eligible, or by using online Free File Fillable Forms from the Free File Alliance. Prior to 2020, the use of a third party was required for IRS e-file, and it was not possible to e-file directly through the IRS website. In 2020, the IRS made direct e-filing possible through IRS Free File Fillable Forms available to taxpayers of any income level.

Once you click your desired IRS Free File provider, you will leave the IRS website and land on the IRS Free File provider’s website. Then, you must create an account at the IRS Free File provider’s website accessed via IRS.gov to prepare and file your return.

When you e-file, it typically takes 24 to 48 hours for the IRS to accept your return. Once your return is accepted, you are on the IRS’ refund timetable. The IRS typically issues refunds in less than 21 days after your e-filed return is accepted.

Tax return preparers who reasonably expect to file, or whose firm reasonably expects to file, in the aggregate, 11 or more covered returns in a calendar year are specified tax return preparers and are required to submit electronically any return that the preparer files with the IRS. However, some returns may be filed on paper.

Section 6011(e)(3) of the Internal Revenue Code requires specified tax return preparers to electronically file certain federal income tax returns that they prepare and file for individuals, trusts, or estates after December 31, 2010. Final regulations provide further guidance on this requirement.

The requirement applies to any return of income tax imposed by subtitle A of the Internal Revenue Code on individuals, trusts, or estates, such as Forms 1040, 1040A, 1040EZ, and 1041. Forms 1041QFT and 990T (when the exempt organization is a trust subject to tax on unrelated business taxable income under section 511(b)) also meet the definition of a return of income tax, but because these forms cannot be electronically filed at this time they are exempt from the requirement and do not count towards the 11-return threshold. See also FAQ 19 for other returns that cannot be e- filed at this time.

You will need to check your filing status to confirm. To check the status of your federal tax return, go to where is My Refund? at IRS.gov. It will say ‘approved’ if it is approved.

Or go to the e-file status lookup tool to get your current status (pending, accepted, or rejected). After the tax return has been accepted by the IRS (meaning only that they received the return) it will be in the “processing” mode until the tax refund has been approved and then an Issue Date will be available on the IRS website.

• Is filed on paper
• Needs a correction to the Recovery Rebate Credit amount
• Needs a correction to the Child Tax Credit amount
• Is incomplete
• Is affected by identity theft or fraud
• Includes a claim filed for an Earned Income Tax Credit or an Additional Child Tax Credit using 2019 income.
• Includes a Form 8379, Injured Spouse AllocationPDF, which could take up to 14 weeks to process
• Needs further review in general

It’s taking IRS more than 21 days (and up to 120 days) to issue refunds for tax returns with the Recovery Rebate Credit, Earned Income Tax Credit, and Additional Child Tax Credit.

IRS requires all tax preparation businesses to have an EFIN (Electronic Filing Identification Number) since the IRS requires any businesses that file more than 10 tax returns to use their eFile Services.

Even before you could purchase any tax preparation software, an EFIN is a requirement. Effective in the tax year 2011, federal legislation mandates anyone filing more than 10 returns must electronically file. Before you can electronically file tax returns, you must apply to become an Authorized e-File Provider with the IRS and obtain an EFIN.

Federal legislation mandates that anyone filing more than 10 returns must file electronically. Before you can electronically file tax returns, you must apply to become an Authorized e-File Provider with the IRS and obtain an EFIN.

Obtaining an EFIN account is a free 3-step process that involves – 1. Accessing IRS e-file Application, which is located under the e-Services section on the IRS portal. 2. Completing and submitting your application, is the step where you will need to provide submit your fingerprints. 3. Passing a suitability check- this may involve a credit check; a tax compliance check; a criminal background check; and a check for prior non-compliance with IRS e-file requirements.

To get an EFIN account you will need to start the application process on the IRS portal and for that you would need an IRS Service Account. The link to create your IRS service account to get an EFIN account is here.

Once you have completed this step and essential individual(s) are approved for an e-Services account, your firm can begin the application to become an authorized e-file provider. The application is comprehensive, but you can save the information, take a break and continue to fill out the application when convenient. It can take up to 45 days from the date of submission for the IRS to approve your e-file application.

For detailed step-by-step guidance on the e-file application, check out Publication 3112, IRS e-file Application, and Participation. All tax professionals who are not certified or licensed (i.e. attorney, CPA, bank official, or enrolled agent) must submit fingerprints to the IRS.

Please note that the upcoming changes about electronic fingerprinting may be applicable here and the IRS fingerprint cards will not be accepted post August 15, 2022. IRS will not process fingerprint cards postmarked after August 15, 2022. Those needing fingerprints must wait until September 25, 2022, to schedule an electronic fingerprinting appointment.

Once you’re issued an Electronic Filing Identification Number (EFIN), it doesn’t expire. Your EFIN number covers you and anyone working at your tax preparation firm. When changes at your firm occur, you will have to update your e-file application to reflect those changes.

If you’re filing more than 10 tax returns for clients each year, you will need an Electronic Filing Identification Number (EFIN). The EFIN is a 6-digit ID that is issued to tax preparers or tax preparation firms by the IRS.

If you use IRS e-file services to file tax returns on behalf of clients, this ID is required. Below this limit, you do not need an EFIN and will be able to file tax returns without it. Generally, firms and tax service providers need this number as they provide professional services and fill a large number of tax returns.

There is no fee involved in order to obtain an EFIN. However, you must apply and pass a suitability and tax compliance check.

Forms 1041-QFT and 990-T (when the exempt organization is a trust subject to tax on unrelated business taxable income under section 511(b)) meet the definition of a return of income tax, but because these forms cannot be electronically filed at this time they are exempt from the e-file requirement and do not count towards the 11-return threshold.

This also includes amended income tax returns, such as Form 1040-X, fiscal year returns for Form 1040, and fiscal year returns for Form 1041 for certain periods (i.e., fiscal year Form 1041 returns ending during any month after June 30 of the current processing year).In addition, some Forms 1040, 1040-A, 1040-EZ, and 1041 cannot be e-filed if they have attached forms, schedules, or documents that IRS does not accept electronically.

IRS, the federal body for collecting taxes and administering the Internal Revenue Code has been largely dependent on IRS fingerprint cards (FD-258 cards) to collect fingerprints for different applications such as e-file Provider applications, etc.

Except for the fingerprinting process, the federal tax agency has been making the optimum use of information and communication technology and offering a wide range of e-services that can be accessed and completed online, so relying on IRS fingerprint cards was holding back the agency to provide a seamless e-services experience.

Since electronic fingerprinting is also witnessing high adoption rates and businesses as well as government agencies are replacing the FD-258 card-based fingerprint collection with electronic fingerprinting. The IRS has also taken the much-anticipated move and is finally going to replace FD-258 IRS fingerprint cards with electronic fingerprinting. It will not only offer a more seamless experience for the applicants but will also cut short the time taken by snail mail while sending your fingerprints.