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| Tax School Homepage |
| IRS can also penalize an employer or employing firm if an employee fails to comply with the EITC due diligence requirements. However, there are only specific circumstances when an employer is subject to the due diligence penalty. |
| You should be careful. Tax preparation is your profession and you should always follow the due diligence rules. If you receive a return-related penalty, you can also face suspension or expulsion. Your firm can also face expulsion from the IRS e-file program. There are so many penalties involved, such as many disciplinary actions by the IRS Office of Professional Responsibility. If you deteriorate your service to such an extent, you can also face injunctions barring you from preparing tax returns or imposing conditions on the tax returns you may prepare. |
| Obtaining, Handling and Processing Return Information from Taxpayers |
| 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. |
| A Provider, including an ERO, may choose to originate returns that it has not prepared. The ERO may also disclose tax return information to other Providers in connection with e-filing a tax return. Additionally, the ERO may pass on return information to an Intermediate Service Provider or a Transmitter for the purpose of having an electronic return formatted or transmitted to the IRS. An ERO that chooses to originate returns that it has not prepared, but only collected and that as a result of entering the data, it discovers errors that require substantive changes and then makes the changes, becomes an income tax return preparer of the returns. A non-substantive change is a correction limited to a transposition error, misplaced entry, spelling error or arithmetic correction. The IRS considers all other changes substantive, and the ERO becomes a tax return preparer. As such, the ERO may be required to sign the tax return as the tax return preparer. |
| The EROs job in on the line if he or she does not exercise proper operation. EROs can do a number of things for clients and customers to avoid rejects and refund delays. The ERO should always insist on identification and documentation of social security and other identification numbers for all taxpayers and dependents. The ERO should never submit returns claiming dubious items on tax returns or present altered or suspicious documents. Remember to always ask those extra questions! An ERO should ask taxpayers if there were problems with last year’s refund. If the taxpayer does acknowledge that there were problems, then the ERO should see if the conditions that caused the problems have been corrected or can be avoided this year. |
| Copyright © 2014 [Hera's Income Tax School]. All Annual Filing Season Program rights reserved. |
| Revised: 12/14/14 |
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