Introduction to EFIN Application
The efin application process is a definitive first step for any tax professional or firm looking to become an IRS e-file provider. This essential application allows you to master the art of electronic tax filing, providing a convenient and secure service to your clients. The Electronic Filing Identification Number, or EFIN, is a six-digit number issued by the IRS to firms that are approved to submit returns electronically. Therefore, if you want to file returns for clients, understanding the efin application process is a perfect place to start.
What is an EFIN, and Why is the EFIN Application Necessary?
An EFIN, or Electronic Filing Identification Number, is a unique six-digit number issued by the IRS to firms that have been approved to participate in the IRS e-file program. The e-file program allows tax preparers and businesses to electronically submit tax returns to the IRS, offering a much faster and more efficient alternative to paper filing. The EFIN is a critical part of this system, as it uniquely identifies the firm transmitting the tax returns. For this reason, the efin application is not optional but a mandatory process for any professional who wants to offer electronic tax preparation services to their clients. Consequently, having an EFIN is the key to providing a modern, streamlined service.
The IRS maintains a rigorous application process to ensure the integrity and security of the electronic filing system. As a result, every individual and firm seeking to become an authorized e-file provider must go through a comprehensive suitability check. This check includes a review of the applicant’s tax compliance, criminal history, and any prior non-compliance with IRS e-file requirements. The efin application process, therefore, acts as a crucial gatekeeper, ensuring that only qualified and trustworthy professionals are granted the ability to file tax returns on behalf of others.
The Step-by-Step EFIN Application Process
Navigating the efin application process can seem daunting, but it becomes much simpler when you break it down into manageable steps. This definitive guide will walk you through each phase, ensuring you know to complete your application successfully.
Step 1: Obtain a Preparer Tax Identification Number (PTIN)
Before you can even begin the efin application, every individual in your firm who prepares or assists with preparing federal tax returns for compensation must have a current Preparer Tax Identification Number (PTIN). This number is your professional identifier as a tax preparer. It is a prerequisite for the e-file application and serves as a fundamental credential. You can apply for a PTIN online through the IRS website, and the process is relatively quick.
Step 2: Create an IRS e-Services Account
Once you have your PTIN, the next step is to create an IRS e-Services account. This is a secure online platform where you will submit your efin application and manage your account information. The registration process requires identity verification, which can take time. Therefore, it is important to start this step well in advance of your application. The e-Services account is also where you will be able to check the status of your application and update your information in the future.
Step 3: Submit the EFIN Application Online
With your PTIN and e-Services account in place, you are ready to complete the online efin application. The IRS no longer accepts the paper Form 8633 for new applications. The online application is comprehensive and requires you to provide detailed information about your firm, including its legal name, business address, and other identifying information. You must also enter information about each Principal and Responsible Official in your organization. If you are an attorney, CPA, or enrolled agent, you will enter your professional status information during this step. If not, you may be required to get fingerprinted by an authorized vendor. The online system is designed to allow you to save your progress, so you can work on the application at your own pace.
Step 4: Pass a Suitability Check
After you submit your efin application, the IRS will begin its suitability check. This is a critical and non-negotiable part of the process. The IRS will conduct a background check, which includes a tax compliance check to ensure you have filed and paid your taxes and a criminal background check. They will also verify your credentials and check for any past non-compliance with e-file rules. This check is why the application can take a significant amount of time to process.
Step 5: Receive Your EFIN
If your application and suitability check are successful, the IRS will send you an acceptance letter with your new Electronic Filing Identification Number (EFIN). This is your official authorization to begin electronically filing tax returns. You will use this EFIN to transmit returns through approved tax software. It is a best practice to keep this number secure and only use it for its intended purpose.
Tips for a Smooth EFIN Application Process
A smooth application process is the key to getting your EFIN quickly and efficiently. By following these expert tips, you can avoid common pitfalls and delays.
- Start Early: The IRS states that the process can take up to 45 days. However, in some cases, it can take longer, especially during peak tax season. Therefore, it is a master tip to start your application well in advance of when you plan to begin filing.
- Ensure All Information is Accurate: Double-check all information you provide on the application. Any discrepancies, such as a mismatch between your business name on the application and IRS records, can cause significant delays. The system will not validate your identity against a mobile phone number that cannot be linked to you.
- Be Prepared for Fingerprinting: If you are not a Circular 230 practitioner (e.g., CPA, attorney, enrolled agent), be prepared to undergo electronic fingerprinting. This is a requirement for all new applicants who fall into this category. The process is straightforward, but it adds a step to the timeline.
- Check Your Status Regularly: You can check the status of your efin application at any time through your IRS e-Services account. This is the best way to monitor your progress and see if any additional information is needed. The system is updated regularly, so you will always have the most current information.
Common EFIN Application Challenges
While the process is generally straightforward, you may encounter a few common challenges. Recognizing them in advance can help you address them quickly.
- Denied Application: An application can be denied for various reasons, including past non-compliance with tax laws, criminal history, or a failure to provide accurate information. If your application is rejected, the IRS will give a reason. You may have the option to appeal the decision.
- Delays in Suitability Check: The suitability check is a manual process and can take time. Delays can occur due to backlogs at the IRS or issues with your background information. There is little you can do to speed this up other than ensuring all your initial information is correct.
- Mismatched Information: As mentioned earlier, mismatched information between your application and IRS records is a frequent cause of delay. It is a perfect idea to have all your documents, including your PTIN and business registration details, readily available and up-to-date before you begin the application.
Conclusion: Mastering Your EFIN Application
The efin application is a mandatory and comprehensive process for any tax professional or firm seeking to file tax returns electronically. It is a critical step in becoming an authorized e-file provider and in providing a modern, efficient service to your clients. By understanding the step-by-step process, from obtaining a PTIN to passing the suitability check, you can confidently navigate this journey. This definitive guide has equipped you with the expert knowledge and practical tips needed to master the efin application, ensuring a smooth transition into the world of electronic tax filing.
Frequently Asked Questions
Q1: How long does the EFIN application process take?
The EFIN application process typically takes about 45 days. However, delays can occur, so it is best practice to apply well in advance of tax season.
Q2: Is there a fee to apply for an EFIN?
No, there is currently no fee to apply for and obtain an EFIN from the IRS. However, you may have to pay for fingerprinting if it is required for your application.
Q3: What is the difference between an EFIN and a PTIN?
A PTIN (Preparer Tax Identification Number) is for an individual tax preparer, while an EFIN (Electronic Filing Identification Number) is for a firm or a single-person business that wants to file tax returns electronically. You need a PTIN to get an EFIN.
Q4: Can I check the status of my EFIN application?
Yes, you can check the status of your EFIN application by logging into your IRS e-Services account. The status is updated regularly as the application moves through the process.
Q5: Do I need an EFIN to file my taxes electronically?
No, you do not need an EFIN to file your own personal tax returns electronically. The EFIN is for tax professionals and firms that file returns on behalf of clients.
Q6: Can I have more than one EFIN?
Generally, a firm will have only one EFIN, even if it has multiple offices. Each office location will not have its own unique EFIN.
Q7: What if my application is rejected?
If your EFIN application is rejected, the IRS will send you a letter explaining the reasons. You may be able to correct the issues and re-apply or appeal the decision.
Q8: Can a new tax preparer apply for an EFIN?
Yes, a new tax preparer can apply for an EFIN, provided they meet all the IRS requirements, including having a valid PTIN and passing the suitability check.
Q9: Do I need to reapply for my EFIN every year?
No, once you have an EFIN, it does not expire. However, you must update your e-file application information with the IRS if there are any changes to your firm’s name, address, or responsible officials. You must also maintain a current PTIN.
Q10: What are the different types of e-file provider options?
The main types of e-file providers are Electronic Return Originators (EROs), Software Developers, and Transmitters. Most tax preparers will apply to be an ERO.
