Electronic filing is mandatory for any preparer who files 11 or more returns. Even if you're below that threshold, e-filing is faster, more accurate, and preferred by clients. Here's how to get set up.
Prerequisites
Before you can e-file, you need:
- A valid Preparer Tax Identification Number (PTIN)
- A Social Security Number
- A personal tax return filed for the prior year
- A U.S. mailing address
- No felony convictions (IRS conducts a background check)
Step 1: Create an IRS e-Services Account
Go to the IRS e-Services portal and create an account. You'll need to verify your identity through ID.me, which may require uploading a government-issued ID and taking a selfie. Allow 24-48 hours for account activation.
Step 2: Apply for Your EFIN
Once your e-Services account is active, apply for an Electronic Filing Identification Number (EFIN). This is a six-digit number assigned to your firm. Key steps:
- Complete the online EFIN application
- Submit to a fingerprint-based background check via an approved vendor
- Pass the IRS suitability check
- Receive your EFIN (typically 45-60 days from application)
Step 3: Choose E-File Software
Your EFIN alone doesn't let you e-file — you need IRS-approved software. Options include:
- Drake Tax: Popular with solo preparers. Per-return pricing available.
- Lacerte: Intuit's professional product. Handles complex returns well.
- ProConnect Tax Online: Cloud-based option from Intuit. Good for remote work.
- UltraTax CS: Thomson Reuters' offering. Enterprise-grade.
Most software providers need your EFIN during setup to connect to the IRS e-file system.
Step 4: Test Your Setup
Before filing live returns, submit a test return through the IRS Assurance Testing System (ATS). This verifies your software is properly configured and communicating with IRS systems. Most tax software handles this automatically during initial setup.
Step 5: Understand Your Obligations
As an ERO (Electronic Return Originator), you have specific obligations:
- Form 8879: Obtain a signed e-file authorization from every client before transmitting their return
- Record retention: Keep copies of all e-filed returns and Forms 8879 for 3 years
- Acknowledgments: Retain IRS acceptance/rejection acknowledgments for all returns
- Due diligence: Verify client identity and review returns for accuracy
Common E-File Rejections and How to Fix Them
Duplicate SSN
Someone else already filed using the client's SSN. Usually means a dependent was claimed on another return. The client may need to paper-file and the IRS will sort it out.
AGI Mismatch
The prior-year AGI used for identity verification doesn't match IRS records. Solution: use the IP PIN if the client has one, or enter $0 for AGI if they didn't file the prior year.
Name/SSN Mismatch
The name on the return doesn't match SSA records. Common after marriage or legal name change. Client needs to update their name with the Social Security Administration.