This ethics course mainly contains concepts regarding the recognition of an attorney, certified public accountant, enrolled agents, and other persons representing taxpayers before the IRS. Regulations such as rules relating to the authority to practice before the Internal Revenue Service, the duties and restrictions relating to such practice, prescription of sanctions for violating the regulations, the rules applicable to disciplinary proceedings and the availability of official records. Usually attorneys, CPAs, enrolled agents, and enrolled actuaries can represent taxpayers before the IRS. Under special circumstances, other individuals, including un-enrolled tax return preparers can assist taxpayers on tax matters. Special forms need to be filed to authorize an individual or certain entities to receive and inspect a taxpayer's confidential tax information.

"Do unto others as you would have them do unto you". Seriously? The golden rule? This rule seems to be more like the "It is ok to do anything to others". Then you need to determine who "others" is. Is it others like me? Would others include animals and other creatures? So according to this rule, it would be alright to be slowly roasted over an open frame. Oh, so this only means "Do unto others (humans like me) as you would have them do unto you"?

Please don't use "Do unto others as you would have them do unto you" or "The Golden Rule" as your measurement of how good you are. If you call me and tell me that this is your measurement of how good you are, I will yell at you.

Many times, as is the case with foie gras and veal, ethics is a matter of personal conviction. I don't eat foie gras or veal because I know the torture these animals are put through in the manufacture of such. I also only eat eggs from cage free hens. I don't eat at fast food places because I know the little regard for animal life at the farms that produce the meats for these fast food places. I honestly think that fast food places such as McDonalds should disappear from the face of the earth. They are killing and torturing innocent creatures for profit. Come on! You too can be like Bolivia, Yemen, Iceland, Bermuda, Kazakhstan, Macedonia, Ghana, Zimbabwe, Montenegro and ban McDonalds from your country. Your country starts with you. Therefore, if you ban McDonalds from your life and enough people do the same, McDonald's will disappear.

There are many criminals in the world, but many more unethical people. Likewise, there are many practitioners who break the law and who pay the price by getting arrested and losing their license to practice or both. However, there are many more unethical preparers who never get in trouble for anything they do because they are within the legal constraints.

Write it down

If everything that is unethical was written down as being wrong, then the science of ethics would disappear. There would not be such a thing as ethics. In a sense, anything that is wrong and there is no law that prohibits it, is a matter of ethics. If you break ethics rules, you are unethical and you most probably will not go to jail for that. However, if you break legal rules, you are a criminal and it will most probably land you in jail eventually. Remember President George W. Bush? It was all over the news. Many government employees were committing crimes and instead of charging them for the crimes, he sent them to school to learn ethics. It is understandable, since during his presidency, he was an extremely unethical man himself. What about NBC permitting George W. Bush be interviewed regarding his new found hobby and his paintings of kitties? That was quite unethical of NBC if you ask me!

The practitioner must use reasonable efforts to identify and ascertain the facts, which may relate to future events if a transaction is prospective, and to determine which facts are relevant. The practitioner can never base an opinion on any unreasonable factual assumptions, even assumptions as to future events. Furthermore, the practitioner cannot base an opinion on any unreasonable factual representations, statements or findings of the taxpayers or any other person. It would also not be reasonable for a practitioner to rely on a projection, financial forecast or appraisal if the practitioner knows or should know that it is incorrect or incomplete or was prepared by a person lacking skills or qualifications. 

The Secretary of the Treasury, or delegate, after notice and an opportunity for a proceeding, may censure, suspend, or disbar any practitioner from practice before the Internal Revenue Service if the practitioner is shown to be incompetent or disreputable. Additionally, this would also apply if the practitioner fails to comply with any regulation under the prohibited conduct standards or acts with intent to defraud. The Secretary of the Treasury, or delegate may also censure, suspend, or disbar any practitioner from practice if the practitioner willfully and knowingly misleads or threatens a client or prospective client.

To qualify for continuing tax education credit for an enrolled agent, a course of learning must be a qualifying program designed to enhance professional knowledge in federal taxation or federal taxation related matters. The qualifying tax education program must be a qualifying program consistent with the Internal Revenue Code and effective tax administration. This tax education must be administered by a qualifying sponsor of tax education. Individuals can lose their eligibility to practice before the IRS by not meeting the requirements for renewal of enrollment such as when the individual fails to comply with the continuing tax professional education requirements. The practitioner can also request to be placed in an inactive retirement status. Furthermore, individual can lose their eligibility to practice before the Internal Revenue Service by being suspended or disbarred by state authorities to practice as an attorney or certified public accountant. 

A practitioner may never take acknowledgments, administer oaths, certify papers, or perform official acts as a notary public with respect to any matter administered by the Internal Revenue Service. A practitioner shall not represent a client before the Internal Revenue Service if the representation involves a conflict of interest. A conflict of interest exists if the representation of one client will be directly adverse to another client. If there is no significant risk that the representation of one or more clients will be materially limited by the practitioner's responsibility to another client, a former client or a third person, or by a personal interest of the practitioner then there is no conflict of interest. I don't think any conflict of interest is prohibited by law and as long as each affected client waives the conflict of interest by giving informed consent, the practitioner can represent the client before the Internal Revenue Service.

Tax advisors should provide clients with the highest quality representation concerning federal tax issues by adhering to best practices in providing advice and in preparing or assisting in the preparation of a submission to the Internal Revenue Service. Best practice includes establishing the facts, determining which facts are relevant, evaluating the reasonableness of any assumptions or representations, relating the applicable law to the relevant facts, and arriving at a conclusion supported by the law and the facts. Simply advising a client to take a position on a document, affidavit or other paper submitted to the Internal Revenue service would not be a best practice action. It would also not be a best practice for the practitioner to advise a client to submit a document, affidavit or other paper to the Internal Revenue Service if such impedes the administration of the federal tax laws. Neither would it be proper conduct to advise your clients to do anything necessary to avoid the payment of tax at all cost. A best practice would be to represent your client in a legal and ethical manner and this means following the tax laws and avoiding tax loopholes. After all, tax dollars benefit everyone.

In cases where any part of the understatement of the tax liability is due to a willful attempt by the return preparer to understate the liability, or if the understatement is due to reckless or intentional disregard of the rules or regulations by the tax preparer, the preparer is subject to the greater of $5,000 or 50% of income derived or to be derived from the misconduct. A penalty will not be imposed on any part of an underpayment if there was reasonable cause for your position and you acted in good faith in taking that position. However, if you failed to keep proper books and records or failed to substantiate items properly, you should just pay the preparer penalty because you will not be able to avoid the penalty by disclosure.

Many un-enrolled individuals can represent the specific taxpayers before the IRS, provided this individual presents satisfactory identification. You family member can represent you before the Internal Revenue Service. The officer of the corporation can represent the corporation before the IRS. Additionally, any employee can represent the employer before the Internal Revenue Service. In general, individuals who are not eligible or who have lost the privilege as a result of certain actions cannot practice before the IRS. If an individual loses eligibility to practice, his or her power of attorney will not be recognized by the Internal Revenue Service. Out of courtesy, the Internal Revenue Service will most likely send the individual, his client or both a letter notifying them of such non-recognition.

A practitioner who knows that his or her client has not complied with the revenue laws or has made an error or omission in any return, has the responsibility to advise the client promptly of the noncompliance. Every practitioner also has the responsibility to advise the client of the consequences of any noncompliance. Any unenrolled preparer who knows that the client has not complied with the revenue laws, or that the client has made an error in or omission from any return, document, affidavit, or other paper that the client is required by law to execute, shall advise the client promptly of the fact of the noncompliance, error or omission.

An un-enrolled return preparer is permitted to appear as your representative only before customer service representatives, revenue agents, and examination officers, with respect to an examination regarding the return he or she prepared. An un-enrolled tax return preparer cannot represent a taxpayer before other office of the Internal Revenue Service, such as collection or appeals including the Automated Collection System (ACS) unit. An unenrolled tax preparer cannot execute closing agreements or waivers. Unenrolled tax preparers are quite limited in about every aspect of their work when it comes to Internal Revenue Service matters. For example, unenrolled tax preparers cannot extend the statutory period for tax assessments or collection of tax. And talking about being extremely limited, if the un-enrolled tax return preparer does not meet the requirements for limited representation, he or she will be limited to receiving or inspecting your taxpayer information. By the way, preparing a tax return, furnishing information at the request of the IRS, or appearing as a witness for the taxpayers is not considered practice before the IRS.

After a valid power of attorney is filed, the IRS will recognize your representative. However, if it appears the representative is responsible for unreasonably delaying or hindering the prompt disposition of an IRS matter by failing to furnish, after repeated requests, non-privileged information, the IRS can contact the taxpayer directly. If the representative engages in such conduct, the matter can be referred to the Office of Professional Responsibility for consideration of possible disciplinary action. The Office of Professional Responsibility is the one responsible for administering and enforcing the regulations governing practice before the IRS. 

An examining officer, or other Service officer or employee who has reason to believe that an unenrolled preparer's conduct has been or is such as would render the preparer ineligible to appear as the taxpayer's representative before the Internal Revenue Service shall communicate this information to the District Director of the taxpayer.

The director of the Office of Professional Responsibility must inform the EA enrollment applicant as to the reason for any denial of an applicant for enrollment. The applicant may within 30 days after receipt of the notice of denial of enrollment, file a written appeal of the denial with the Secretary of the Treasury or his or her delegate.

Subject to certain limitations, an individual who is not a practitioner may represent a taxpayer before the Internal Revenue Service, even if the taxpayer is not present, provided the individual presents satisfactory identification and proof of his or her authority to represent the taxpayer. For example, an individual may represent a member of his or her immediate family. Furthermore, a regular full-time employee of an individual employer may represent the employer. Also, a general partner or a regular full-time employee of a partnership may represent the partnership.

A "Declaration of Representative" is a written statement made by a recognized representative that he or she is currently eligible to practice before the Internal Revenue Service and is authorized to represent the particular party on whose behalf he or she acts.

A power of attorney must contain the name, mailing address and the identification number of the taxpayer. The power of attorney must also contain the name and mailing address of the recognized representative and also a description of the matter or matters for which representation is authorized. Also, if applicable, the power of attorney must contain the employee plan number. A properly completed Form 2848 satisfies the requirements for a power of attorney and a declaration of representative. The Internal Revenue Service will not accept a power of attorney which fails to include the name and mailing address of the taxpayer, the description of the matter for which representation is authorized or the identification number of the taxpayer such as the social security number and/or employer identification number. 

Information from both powers of attorney and tax information authorizations is recorded onto the CAF system. Such information enables the Internal Revenue Service personnel who do not have access to the actual power of attorney or tax information authorization to determine whether a recognized representative or a designee is authorized by a taxpayer to receive and/or inspect confidential tax return information. Also, the authorization would be to determine, in the case of a recognized representative, whether that representative is authorized to perform the acts set forth in section 601.504(a.  This also enables the IRS personnel to send copies of computer generated representatives or a designee so authorized by the taxpayer. A Centralized Authorization File (CAF) number generally will be issued to a recognized representative who files a power of attorney and written declaration for representative or a designee authorized under a tax information authorization.

The Tax Court has its own rules of practice and procedure and its own rules respecting admission to practice before it. Accordingly, a power of attorney is not always required to be submitted by an attorney of record in a case which is docketed in the Tax Court. Form 2848 is the Internal Revenue Service power of attorney form which may be used by a taxpayer who wishes to appoint an individual to represent him or her before the Internal Revenue Service.

In general, when a fiduciary is involved in a tax matter, a power of attorney is not required. If no executor, administrator, or trustee name in the will is acting or responsible for disposition of the matter and the estate has been distributed to the residuary legatee (s) the Internal Revenue Service officials may require the submission of a statement from the court certifying that no executor, administrator, or trustee name under the will is acting or responsible for disposition of the matter, naming the residuary legatee (s), and indicating the proper share to which each is entitled. 

The office of each district director, the office of each service center, the office of each compliance center, the office of each regional commissioner, and the National Office constitute separate and distinct offices of the Internal Revenue Service. When there is an issue or disagreement as to the status of tax practitioners, there are many departments involved. An appeal from the initial decision ordering disbarment is made by the Office of Professional Responsibility. 

Additionally, section 8246 of the Act amended several provisions of the Code to extend the scope of the income tax return preparer penalties to preparers of all tax returns, amended returns and claims for refund, including estate and gift tax returns, generation-skipping transfer tax returns, employment tax returns, and excise tax returns. Moreover, the Act amended section 6694(a) to provide that the penalty would apply if the tax return preparer knew (or reasonably should have known) of the position and there was not a reasonable belief that the position would more likely than not be sustained on its merits. Hence, the position was not disclosed as provided in section 6662(d)(2)(B)(ii), or there was no reasonable basis for the position. Although the Act did not alter the standard of conduct under section 6694(b), it increased the amount of the penalty and made the penalty applicable to all tax return preparers.

Under both the prior and current law, disclosure under section 6694(a) is adequate if made on a Form 8275, Disclosure Statement, or Form 8275-R, Regulation Disclosure Statement, attached to the return, amended return, or refund claim, or pursuant to the annual revenue procedure authorized in Treasury Regulation sections 1.6694-2(c)(3) and 1.6662-4(f)(2). In addition, under both the prior and current law, the penalty under section 6694(a) would not be imposed if it is shown that there is reasonable cause for the understatement and the tax return preparer acted in good faith.

This transitional relief will apply to all returns, amended returns, and refund claims due on or before December 31, 2007 (determined with regard to any extension of time for filing); to 2007 estimated tax returns due on or before January 15, 2008; and to 2007 employment and excise tax returns due on or before January 31, 2008. However, no transitional relief is available under section 6694(b) as transitional relief is not appropriate for return preparers who exhibit willful or reckless conduct, regardless of the type of return prepared.

A penalty will not be imposed on any part of an underpayment if there was reasonable cause for your position and you acted in good faith in taking that position. However, you cannot avoid the penalty by disclosure if you failed to keep proper books and records or failed to substantiate items properly. The penalty for reckless or intentional disregard of a regulation may be avoided by disclosure only if the position represents a good faith challenge to the validity of the regulation and has a reasonable basis. Generally, the accurate-related penalty of any position of a tax underpayment attributable to negligence or disregard of the rules or regulations is 20%.

Enrollment as an enrolled agent based on an applicant's former employment with the Internal Revenue Service may be of unlimited scope or limited to permit the presentation of matters only of the particular class for which the applicant's former employment has qualified the applicant. The enrollment may also be limited to permit the presentation of matters only before the particular unit or division of the Internal Revenue Service for which the applicant's former employment has qualified the applicant. 

An applicant for enrollment as an enrolled agent who is requesting such enrollment based on former employment with the Internal Revenue Service must have had a minimum number of years of continuous employment with the Internal Revenue Service during which the applicant must have been regularly engaged in applying and interpreting the provisions of the Internal Revenue Code and the regulations relating to income, estate, gift, employment, or excise taxes. Minimum years of continuous employment must be 5 years.

An individual who prepares and signs a taxpayer's tax return as the preparer, or who prepares a tax return but is not required (by the instructions to the tax return or regulations) to sign the tax return may represent the taxpayer before revenue agents, customer service representatives or similar officers and employees of the Internal Revenue Service during an examination of the taxable year or period covered by that tax return. However, this right does not permit such individual to represent the taxpayer before the appeals officers, revenue officers, counsel or similar officers or employees of the Internal Revenue Service. Any individual who prepares the tax return, may appear as a witness for the taxpayer before the Internal Revenue Service, or furnish information at the request of the Internal Revenue Service or any of its officers or employees.

A penalty may be imposed on a return preparer who endorses or negotiates a refund check issued to any taxpayer other than the return preparer. The amounts can add up since there is a penalty of $500 for each check endorsed. The prohibition on return preparers negotiating a refund check is limited to a refund check for return they prepared. A $500 penalty may be imposed, per I.R.C. §6695(f), on a return preparer who endorses or negotiates a refund check issued to any taxpayer other than the return preparer. Preparer penalties may be asserted against an individual or firm meeting the definition of a tax preparer under I.R.C. §7701(a)(36) and Treas. Reg. §301.7701-15. Preparer penalties that may be asserted under appropriate circumstances include, but are not limited to, those set forth in I.R.C. §§ 6694, 6695, 6701 and 6713.

A preparer bank may also subsequently endorse or negotiate a refund check as part of the check-clearing process through the financial system after initial endorsement. Under Treas. Reg. 1.6695-1(f), a tax preparer, however, may affix the taxpayer's name to a check for the purpose of depositing the check into the account in the name of the taxpayer or in joint names of the taxpayer and one or more persons (excluding the tax return preparer) if authorized by the taxpayer or the taxpayer's recognized representative. The IRS may sanction any income tax return preparer that violates this provision. In addition, the IRS reserves the right to assert all appropriate preparer and non-preparer penalties against a Provider as warranted.

The return preparer penalties under IRC 6695 are assessed against preparers who fail to provide the taxpayer with a copy of the return of $50 per failure, up to a maximum of $25,000 for each calendar year; per IRC 6695(a). Penalties may also be assessed if he or she fails to sign the return of $50 per failure, up to a maximum of $25,000 for each calendar year, per IRC 6695(b). If the tax return preparers fails to provide an identifying number he or she may incur a $50 per failure, up to a maximum of $25,000 for each calendar year; per IRC 6695(c). Furthermore, if the preparer fails to retain a copy of the return or a list of returns prepared may incur a $50 per failure, up to a maximum of $25,000 for each return period, per IRC 6695(d).

Paid preparers must meet four due diligence requirements on returns when considering EITC. The Preparer's toolkit on our EITC Central has information on the law and related regulations. Read more about your responsibilities and learn how to protect yourself from potential penalties in the Due Diligence section of the Tax Preparer Toolkit. It is focused and tiered with a goal of increasing the accuracy of EITC claims filed. Walk your clients through the EITC qualification requirements with this interactive tool and show them if they qualify or not.

The tax return preparer must keep a copy of the Form 8867 and the EIC calculation worksheet. You may feel that this is not you job but you must verify the identity of the person giving you the return information and keep a record of who provided the information and when information was provided. It is your duty to keep copies of any documents your client provided that you relied on to determine eligibility for the amount of the EITC.

If the IRS examines your client's return and deny all or a part of EITC, your client must pay back the amount in error with interest. Furthermore, you client may need to file Form 8862 and may be banned from claiming EITC for the next two years if the IRS finds the error is because of reckless or intentional disregard of the rules. If the error is extreme and due to fraud, your client may be banned from claiming the Earned Income Credit for the next ten years.  

An Electronic Return Originator (ERO) originates the electronic submission of returns it either prepares or collects from taxpayers who want to e-file their returns. An ERO originates the electronic submission of a return after the taxpayer authorizes the filing of the return via IRS e-file. The ERO must have either prepared the return or collected it from a taxpayer. An ERO originates the electronic submission by electronically sending the return to a Transmitter that transmits the return to the IRS, by directly transmitting the return to the IRS or by providing a return to an Intermediate Service Provider for processing prior to transmission to the IRS.

While all Providers must be on the lookout for fraud and abuse in IRS e-file, EROs must be particularly diligent while acting in their capacity as the first contact with taxpayers filing a return. An ERO must be diligent in recognizing fraud and abuse, reporting it to the IRS and preventing it when possible. Providers must cooperate with the IRS' investigations by making available to the IRS upon request, information and documents related to returns with potential fraud or abuse. EROs can find additional information in the article Reporting Fraud and Abuse Within the IRS e-file Program.

The TIN entered in the Form W-2, Wage and Tax Statement, in the electronic return record must be identical to the TIN on the version provided by the taxpayer. The TIN on the Form W‑2 should be identical to the TIN on the electronic return unless otherwise allowed by the IRS. The IRS requires taxpayers filing tax returns using an Individual Taxpayer Identification Number (ITIN) to include the TIN, usually a Social Security Number (SSN), shown on Form W-2 from the employer in the electronic record of the Form W-2. This may create an identification number (ITIN/SSN) mismatch as taxpayers must use their correct ITIN as their identifying number in the individual income tax return. The IRS' e-file system can accept returns with this identification number mismatch. EROs should enter the TIN/SSN in the electronic record of the Form W-2 provided to them by taxpayers. Software must require the manual key entry of the TIN as it appears on Form W-2 reporting wages for taxpayers with ITINs. EROs should ascertain that the software they use does not auto-populate the ITIN in the Form-W-2 and if necessary, replace the ITIN with the SSN on the Form W-2 the taxpayer provided.

The IRS has identified questionable Forms W-2 as a key indicator of potentially abusive and fraudulent returns (see Safeguarding IRS e-file from Fraud and Abuse above). Be on the lookout for suspicious or altered Forms W-2, W-2G, 1099-R and forged or fabricated documents. EROs must always enter the non-standard form code in the electronic record of individual income tax returns for Forms W-2, W-2G or 1099-R that are altered, handwritten or typed. An alteration includes any pen-and-ink change. Providers must never alter the information after the taxpayer has given the forms to them. Providers should report questionable Forms W-2 if they observe or become aware of them. See "Reporting Fraud and Abuse Within the IRS e-file Program".

EROs should advise taxpayers that they can avoid refund delays by having all of their taxes and obligations paid, providing current and correct information to the ERO, ensuring that all bank account information is up-to-date, ensuring that their Social Security Administration records are current and carefully checking their tax return information before signing the return. EROs can do a number of things for clients and customers to avoid rejects and refund delays. First, they can insist on identification and documentation of social security and other identification numbers for all taxpayers and dependents. Second, EROs can exercise care in the entry of tax return data into tax return preparation software and carefully check the tax return information before signing the tax return. Third, don't submit returns claiming dubious items on tax returns or present altered or suspicious documents. Also, ask taxpayers if there were problems with last year's refund; if so, see if the conditions that caused the problems have been corrected or can be avoided this year. Lastly, keep track of client issues that result in refund delays and analyze for common problems; counsel taxpayers on ways to address these problems.

An ERO that is also the paid preparer should exercise due diligence in the preparation of returns involving the Earned Income Tax Credit (EITC), as it is a popular target for fraud and abuse. Section 6695(g) of the Internal Revenue Code requires paid preparers to exercise due diligence in the preparation of returns involving EITC. Paid preparers must complete all required worksheets and meet all record keeping requirements. Only taxpayers who provide a completed tax return to an ERO for electronic filing may sign the IRS e-file Signature Authorization without reviewing the return originated by the ERO. The ERO must enter the line items from the paper return on the applicable Form 8878 or Form 8879 prior to the taxpayers signing and dating the form. The ERO may use these pre-signed authorizations as authority to input the taxpayer's PIN only if the information on the electronic version of the tax return agrees with the entries from the paper return.

Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., the ERO may electronically file the return after the taxpayer completes Form 4852, Substitute for Form W-2, Wage and Tax Statement or 1099-R, Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., in accordance with the use of that form. If Form 4852 is used, the non-standard W-2 indicator must be included in the record, and the ERO must maintain Form 4852 in the same manner required for Forms W-2, W-2G and 1099-R.

The IRS will reject individual income tax returns e-filed without the required IP address. Any return received by the IRS containing a private/non-routable IP address will be flagged in the Acknowledgement File with an“R" in the Reserved IP Address Code field of the ACK key record indicating that a reserved IP address is present for the return. The IRS has implemented a Device ID field for electronic return filers and preparers. The IRS will utilize this unique identifier; in addition to key elements we already collect to improve fraud and ID theft detection. Vendors implementing Device ID in their software should ensure that their privacy notice will cover Device ID.

EROs must retain various documents until the end of the calendar year at the business address from which it originated the return or at a location that allows the ERO to readily access the material as it must be available at the time of IRS request. An ERO may retain the required records at the business address of the Responsible Official or at a location that allows the Responsible Official to readily access the material during any period of time the office is closed, as it must be available at the time of IRS request through the end of the calendar year. You must make available a copy of Form 8453, U.S. Individual Income Tax Transmittal for an IRS e-file Return, and supporting documents that are not included in the electronic records submitted to the IRS. You must also retain copies of Forms W-2, W-2G and 1099-R and a copy of signed IRS e-file consent to disclosure forms. You must also retain a complete copy of the electronic portion of the return that can be readily and accurately converted into an electronic transmission that the IRS can process. In addition, the acknowledgement file for IRS accepted returns must be kept in your office and ready to provide to the IRS when requested. Furthermore, forms 8879 and 8878 must be available to the IRS in the same manner for three years from the due date of the return or the IRS received date, whichever is later.

The IRS electronic system provides a submission ID which must be associated with Form 8879 and 8878. The Submission ID can be added to the Form 8879 and 8878 or the acknowledgment containing the Submission ID can be associated with Forms 8879 and 8878 separately. If the acknowledgement is used to identify the Submission ID, the acknowledgement must be kept in accordance with published retention requirements for Forms 8879 and 8878. The acknowledgement is not required to be physically attached to Form 8879 and 8878; it can be electronically stored. EROs may electronically image and store all paper records they are required to retain for IRS e-file. This includes Forms 8453 and paper copies of Forms W-2, W-2G and 1099-R as well as any supporting documents not included in the electronic record and Forms 8879 and 8878. The storage system must satisfy the requirements of Revenue Procedure 97-22, 1997-1 C.C. 652, Retention of Books and Records. In brief, the electronic storage system must ensure an accurate and complete transfer of the hard copy to the electronic storage media. The ERO must be able to reproduce all records with a high degree of legibility and readability (including the taxpayers’ signatures) when displayed on a video terminal and when reproduced in hard copy.

The acknowledgement record of an accepted individual income tax return contains other information that is useful to the originator. The record confirms if the IRS accepted a PIN, if an elected EFW paid a balance due, and if a private/non-routable IP address is present in the return. The ERO should check acknowledgement records regularly to identify returns requiring follow up action and should take reasonable steps to address issues identified on acknowledgement records. Internet Protocol (IP) information of the computer the ERO uses to prepare the return (or originate the electronic submission of collected returns) must be included in all individual income tax returns. The required Internet Protocol information includes the public/routable IP address, the IP date, the IP time and the IP time zone.

If the State submission is linked to an IRS submission (also referred to as a Fed/State return), the IRS will check to see if there is an accepted IRS submission under that Submission Id. If there is not an accepted federal return for that tax type, the IRS will deny the State submission and an acknowledgement will be sent to the transmitter. The state has no knowledge that the state return was denied (rejected) by the IRS. Subsequent rejection of state electronic return data by a state tax administration agency does not affect federal electronic return data accepted by the IRS. States determine when they accept as filed state electronic return data received from the Federal/State e‑file Program. Contact the state tax administration agency when problems or questions arise.

Taxpayers often ask EROs to help them when refunds take longer than expected. The IRS may delay refunds for a number of reasons, including errors in Direct Deposit information (refunds then sent by check), financial institution refusals of Direct Deposits (refunds then sent by check) or delays in crediting the Direct Deposit to the taxpayer's account, estimated tax payments differ from amount reported on tax return (for example, fourth quarter payments not yet on file when return data is transmitted), bankruptcy, inappropriate claims for the Earned Income Tax Credit, or recertifications to claim the Earned Income Tax Credit.

To review an ERO has many duties and responsibilities. The ERO must have either prepared the return or collected it from a taxpayer. An ERO originates the electronic submission by electronically sending the return to a Transmitter that transmits the return to the IRS or directly transmitting the return to the IRS. The ERO could also be working with a third party transmitter and be providing a return to an Intermediate Service Provider for processing prior to transmission to the IRS. An Electronic Return Originator (ERO) originates the electronic submission of returns it either prepares or collects from taxpayers who want to e-file their returns. Furthermore, the ERO must always identify the paid preparer (if any) in the appropriate field of the electronic record of returns it originates.