SEE Part 3 filing process explained

Filing Process is the smallest SEE Part 3 domain, with 14 of the 85 scored questions (about 16%). It covers three things: accuracy (not trusting software blindly), record keeping and data security, and electronic filing — how a practice becomes an authorised IRS e-file provider, what an Electronic Return Originator must do, and what happens when the rules are broken. The main sources are Publication 3112 and Publication 1345.

Accuracy

Software does the arithmetic, but the preparer signs the return. The outline expects you to review results rather than rely on them: check for duplicated entries (a W-2 keyed twice, a 1099 imported and entered by hand), carryovers that did not transfer, and figures that do not make sense against the prior year. Circular 230’s due diligence standard applies to the finished return, not to the software.

Record maintenance

Forms 8879 are kept by the ERO, not sent to the IRS, unless the IRS asks for them.

Data security

Protecting client data is a legal duty: under the FTC Safeguards Rule, tax return preparers must create and follow a written information security plan. The IRS guidance is in Publication 4557, Safeguarding Taxpayer Data, and Publication 5708, Creating a Written Information Security Plan for Your Tax & Accounting Practice. Security applies to electronic systems, networks and paper files alike, and security incidents must be reported. Improper disclosure or use of client information by a preparer is itself penalised under §6713 and §7216.

Becoming an authorised e-file provider

1. Create an IRS e-Services account and complete the IRS e-file application online.
2. Name Principals and Responsible Officials. Each must pass a suitability check, which may include a tax compliance check, a criminal background check and a check for prior non-compliance with e-file rules.
3. Fingerprints or credentials. Principals and Responsible Officials are fingerprinted unless they provide professional status — enrolled agents, attorneys and CPAs supply their credentials instead.
4. Receive an EFIN — the Electronic Filing Identification Number — once accepted. The EFIN identifies the firm; it is not the same as a PTIN (the individual preparer) or a CAF number (a representative).

Suitability is continuous, not one-off: the IRS keeps monitoring providers after acceptance.

The ERO

An Electronic Return Originator is the authorised e-file provider that begins the electronic submission of a return to the IRS, after the taxpayer authorises e-filing. It is usually the taxpayer’s first point of contact. ERO duties include:

• Verifying taxpayer identity and entering data accurately
• Getting the taxpayer’s signature on Form 8879 (IRS e-file Signature Authorization) before transmitting, and signing it as ERO
• Using Form 8453 to send paper documents that cannot be attached electronically
• Giving the taxpayer a complete copy of the return
• Following the advertising standards: “IRS e-file” is a brand name, acceptance does not imply IRS endorsement, and the Circular 230 §10.30 rules on false or misleading advertising apply

Rejected returns

If the IRS rejects a return and the ERO cannot fix the problem, the ERO must take reasonable steps to tell the taxpayer within 24 hours, with the reject reason. A rejected individual return submitted on or before the due date is still timely if it is corrected and resubmitted by the fifth calendar day after the due date. If it cannot be e-filed, a paper return is timely if filed by the later of the due date or 10 calendar days after the rejection notice, with an explanation attached.

Common rejects involve a dependent already claimed, name and SSN mismatches, and a missing or wrong IP PIN — the Identity Protection PIN issued to identity-theft victims and those who opt in.

The e-file requirement

Preparers who reasonably expect to file 11 or more covered individual or trust returns in a calendar year must e-file them. Exceptions:

• Form 8948, Preparer Explanation for Not Filing Electronically, documents an administrative exemption — for example, the taxpayer chose to file on paper.
• Form 8944 requests a hardship waiver from the requirement.

Sanctions for e-file violations

A provider can appeal a denial or sanction through administrative review. For Level Three, the IRS may suspend before the review.

Sample questions