Diane Posted January 5, 2011 Report Share Posted January 5, 2011 This is the IRS definition of 'filing' a return for the efile mandate: If a client wants to file in paper form, the preparer must document that choice. The IRS posted sample language for the taxpayer’s signed statement on its web site. Under the proposed regulations, a return is considered filed if the preparer submits the return to the IRS on the taxpayer’s behalf, either electronically or on paper. If the preparer mails the client’s paper return, the IRS counts this as having "filed" the return. Maybe I'm missing something here: If I prepare 125 returns, print out on paper, give it to the client, the client mails it -- the way I read it, there is no efile mandate here because I didn't 'file' the return, just prepared it. What am I missing? Diane Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted January 5, 2011 Report Share Posted January 5, 2011 You sign it....you filed it. That is the way it works. Tom Lodi, CA Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted January 5, 2011 Report Share Posted January 5, 2011 It's 2011. Time for all "Professionals" to realize that and make changes accordingly. All the objections I see to e-filing your client's returns are just rants of personal reasons to cover the fact that the person no longer wants to do the things required to be a true Professional. Time to quit ranting and get with the 21st Centruy methods of doing business in our industry. Quote Link to comment Share on other sites More sharing options...
Diane Posted January 5, 2011 Author Report Share Posted January 5, 2011 I do efile the majority of my clients. The only ones I don't are the ones who prefer not to efile. I am just wondering how this language is being interpreted. I would like to know how IRS interprets 'file' as opposed to 'prepare'. File to me means mailing or efiling the return. Any return that I prepare as a paper return I don't consider that I have 'filed' it. The client files it when he mails it. Diane Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted January 5, 2011 Report Share Posted January 5, 2011 I do efile the majority of my clients. The only ones I don't are the ones who prefer not to efile. I am just wondering how this language is being interpreted. I would like to know how IRS interprets 'file' as opposed to 'prepare'. File to me means mailing or efiling the return. Any return that I prepare as a paper return I don't consider that I have 'filed' it. The client files it when he mails it. Diane The way Tom says it is correct. You sign it....you filed it. That is the way it works. Tom Lodi, CA If you file more than 100 returns for tax year 2010, you are required to e-file. If you sign a return and the client chooses to mail it, then form 8948 must be filled out and attached to the return. If the client does not include the signed form 8948, that return will not be in compliance. The enforcement rules are still being drafted, but will be retroactive to Jan 1, 2011. Here is one IRS article. Here is another IRS article Electronic Filing of information is many times more secure than the Postal Service. This is reality and we should be educating our clients to the facts. In my personal practice, I charge extra to prepare a paper return. E-file is included in my base price. The added expense seems to make e-filing more attractive to people. Quote Link to comment Share on other sites More sharing options...
Diane Posted January 5, 2011 Author Report Share Posted January 5, 2011 If IRS considers a tax return 'filed' just because I signed it, then how would you explain non-filing penalties for clients who should have mailed their paper return, but did not. In your scenario the client technically 'filed' his return because it was signed by me. Diane Quote Link to comment Share on other sites More sharing options...
TAXBILLY Posted January 5, 2011 Report Share Posted January 5, 2011 "If you file more than 100 returns for tax year 2010, you are required to e-file. If you sign a return and the client chooses to mail it, then form 8948 must be filled out and attached to the return. If the client does not include the signed form 8948, that return will not be in compliance. The enforcement rules are still being drafted, but will be retroactive to Jan 1, 2011." Form 8948 is not signed by anybody. taxbilly Quote Link to comment Share on other sites More sharing options...
Diane Posted January 5, 2011 Author Report Share Posted January 5, 2011 What I'm referring to is the definition of 'filing' and 'preparing'. What I'm saying is that just because I sign a return, to me that doesn't mean that I'm 'filing' the return. So, what IRS is saying about 'filing 100 returns' is the question. Hypothetical -- If I prepare over 100 paper returns, give them to the client to mail (they are actually filing the return), then how can I be 'filing' these returns. Tom is saying that just because I signed each return that IRS is saying that I've 'filed' the return. And I'm saying that what if the clients never mail the returns? Does IRS still consider them 'filed'? Diane Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted January 5, 2011 Report Share Posted January 5, 2011 It may just be a question of definitions. As I understand it, every return that you prepare (I assume you sign all the returns you prepare - I do) and sign is a return "filed" by you in the eyes of the IRS. They are probably assuming, just as I did, that when you give the return to the client, the client will actually present that return to the IRS. It may be an assumtion that the IRS shouldn't make. So, if you prepared and signed 101 returns, but only 99 were actually presented to the IRS by your clients, would you meet the e-file mandate? I have no idea. But I do have a hunch that if 99 returns signed by you showed up in paper form at the IRS service center, they would probably send you a letter asking for the opt-out forms for the returns. Just a hunch. The way I read the intent of the mandate, preparers of more than 100 returns must e-file. It may not be written that way, and you may be able to argue that the rules don't actually say what the IRS want you to do, and you may actually prevail. But in the end, every preparer is going to be e-filing every return they prepare if the IRS has it their way. When that is accomplished, they will start working on the self-preparers and requiring them to e-file their returns. It is the new world order in our profession. Tom Lodi, CA Quote Link to comment Share on other sites More sharing options...
GeneInAlabama Posted January 5, 2011 Report Share Posted January 5, 2011 I have found that the way I look at something doesn't amount to a hill of beans. It's how the one who made the rule looks at it that counts. 1 Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted January 5, 2011 Report Share Posted January 5, 2011 You sign it....you filed it. That is the way it works. Tom Lodi, CA Not really, Tom. The law clearly does make a distinction between 'preparing' and 'filing' a return. However, it is also clear that if you take the position that you are not covered because you just 'prepare' the returns, and the clients then mail them, you better be prepared to deal with the IRS. Because they are now saying silly things like, if you give the client an envelope with the address preprinted, etc, that constitutes 'filing'. As opposed to just giving them the return and a cover letter that includes the address to mail it in to, which is not 'filing'. I know this is stupid, but that is the sort of thing being said in IRS Liaison meetings, etc. Frankly, I love efiling, and I do NOT think it in any way harms the client, or increases his risk of anything. But I still resent being FORCED to do it, which I personally think has more to do with the IRS increasing CONTROL OVER THE PREPARERS than it does with the wish to increase efiling, which has increased every year, without any coercion needed. Think about it, if all returns must be efiled, then the IRS can put ANYONE out of business in one day, just be turning off their EIN. And current law gives them that right, with NO PROVISION FOR APPEAL OR REVIEW BEFORE IT IS SHUT OFF. Quote Link to comment Share on other sites More sharing options...
Pacun Posted January 6, 2011 Report Share Posted January 6, 2011 I do believe that we are called tax preparers, but the way it is coming down and quickly, we might be called tax filers just by signing the return. I love efiling and last year I only used paper on returns with ITIN requests and with First time home buyer credits. I did anticipate that soon States or the IRS was going to demand more efiling. I would feel really bad if I only efiled a few returns in the past because learning about efiling while under a big pressure to comply is not a good combination. We have talked about this subject before. Remember that someone was joking when it was announced that the IRS was planning to audit returns every 5 years? I said "do not under estimate the power of computers". Efiling will give the IRS, the funds and resources to audit a high percentage of returns every year and auditing everybody every 5 years is NOT beyond reach. The tax preparation profession has changed 5 days ago and it has changed significantly and FOREVER. Soon the IRS will know what kind of returns we prepared, what exams we have passed and it will match our qualifications vs returns prepared. IRS will have a pretty goods estimate on how much our business made from tax preparation. Also the IRS will slowly stop hiring data entry personnel and will hire more revenue agents. As you know revenue agents pretty much billable and data entry personnel are overhead. That's what companies are doing outside anyways and they IRS (as many government agencies) have been slow in adjusting to the www and technologies of the 21 century. As someone said, CPAs will have a lot of opportunities and as long as they stay out of trouble, they will make a lot of money with these new opportunities. Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted January 6, 2011 Report Share Posted January 6, 2011 If IRS considers a tax return 'filed' just because I signed it, then how would you explain non-filing penalties for clients who should have mailed their paper return, but did not. In your scenario the client technically 'filed' his return because it was signed by me. DianeTry arguing this point with the compliance department?? What I'm referring to is the definition of 'filing' and 'preparing'. What I'm saying is that just because I sign a return, to me that doesn't mean that I'm 'filing' the return. So, what IRS is saying about 'filing 100 returns' is the question. Hypothetical -- If I prepare over 100 paper returns, give them to the client to mail (they are actually filing the return), then how can I be 'filing' these returns. Tom is saying that just because I signed each return that IRS is saying that I've 'filed' the return. And I'm saying that what if the clients never mail the returns? Does IRS still consider them 'filed'? Diane Read what the IRS says about this topic here. Then read what ELSE the IRS says about this topic. It is irrelevant what we "think" or how we try to skew the definition of "filed." The IRS is making the rules. Just come up into 2011 and be professional. "Fly straight, Fly right and there will be no need to look over your shoulder." Jack from Ohio 1981 Quote Link to comment Share on other sites More sharing options...
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