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Home > Filing Your Return(s) and Paying Taxes > Electronic Options for Filing Business Returns and Paying Taxes > Sponsor IRS e-file at Your Business

Filing Your Return(s) and Paying Taxes

Sponsor IRS e-file at Your Business

Employers, Businesses and Organizations Can Sponsor IRS e-file

Credit unions, banks, churches, corporations, hospitals, state universities, etc., can become organizations that sponsor IRS e-file and make it available to their employees and customers. This option is unique because it can operate two ways. First, organizations can offer IRS e-file as a free service to their employees directly or sponsor an employee electronic filing Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) site. Second, they can offer IRS e-file for a minimal fee to customers.

Benefits to Your Customers and Employees

  • Accuracy! Their chance of getting an error notice from the IRS is significantly reduced.
  • Security! Their privacy and security are assured.
  • Electronic Signatures! They can create their own Personal Identification Number (PIN) and file a completely paperless return. There is nothing to mail!
  • Proof of Acceptance! An electronic acknowledgement will be sent within 48 hours that the IRS has accepted their return for processing.
  • Fast Refunds! They can get their refund in half the time, even faster and safer with Direct Deposit - in as few as 10 days.
  • FREE/Low-cost Filing! The IRS Web Site at www.irs.gov contains a list of IRS e-file partners who offer free or low-cost filing options to taxpayers who qualify.
  • Electronic Payment Options! Convenient, safe, and secure electronic payment options are available. Taxpayers can e-file and pay in a single step. They can even schedule an electronic funds withdrawal from their bank account (up to and including April 15, 2002) or pay by credit card.
  • Federal/State e-file! They can prepare and file their Federal and state returns together and double the benefits they get from e-file.

Q. What is IRS e-file?
A. It is the most accurate, safest and fastest way to file and pay federal income taxes electronically. IRS e-file is the brand name for totally paperless processing of your tax return information. IRS computers quickly and automatically check for errors or missing information. IRS e-file gets individuals their refund in half the usual time - even faster and safer with Direct Deposit. If they owe tax, they can file and pay using electronic funds withdrawal from their bank account or pay by credit card.

Q. Why is IRS encouraging this option?
A. IRS e-file is the preferred method of filing because it's the most accurate, safe and fast way of filing tax returns. Businesses, corporations, hospitals, colleges, and state universities can sponsor IRS e-file and make it available to their employees and customers.

Q. What are the advantages for an organization that offers IRS e-file?
A. Free electronic filing can be offered as a benefit to your employees or arrangements can be made with an "Authorized IRS e-file Provider" to provide this service at a reduced rate. Hardware and software associated with IRS e-file are tax deductible as ordinary and necessary business expenses. For a list of "Authorized IRS e-file Providers," visit our Web Site at www.irs.gov.

Q. What are the requirements for a business or organization to establish an IRS e-file site?
A. Businesses or organizations must first apply to become an Authorized e-file Provider by completing Form 8633, Application to Participate in the IRS e-file Program, and mailing it to the IRS. If you charge a fee to your customers for this service, your firm may be subject to a suitability check. Non-profit organizations are not subject to suitability checks. Program sponsors and workers may be required to submit fingerprints. Contact your local e-file Contact or your IRS Taxpayer Education Coordinator for more details.

Q. What options does an employer, business or organization have when offering IRS e-file to its employees?
A. Organizations have two options when deciding to offer IRS e-file. The most popular option is to choose a professional electronic filing vendor or a service bureau that will file the tax returns for you. The second option is to purchase the equipment necessary to file the returns electronically (i.e., personal computer, modem, software, etc.) and provide staffing to input the return data before transmitting.


Q. Can a business offer free electronic filing services to its employees?
A. You can offer IRS e-file as a free service to your employees directly or sponsor an employee electronic filing Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) site. You cannot charge a fee for IRS e-file at VITA/TCE sites. Some sites operate on a free-will donation system.

Q. Can an organization or business electronically file Federal and state returns for its employees or customers?
A. Yes. Federal/State e-file is supported by 37 states and the District of Columbia. Visit the IRS Web Site at www.irs.gov or contact your state tax agency for more details.

Q. How much time does it take to file returns electronically?
A. The time it takes to file returns electronically depends on the services you offer and the number of available assistors. Generally, it takes anywhere from 15 minutes to an hour per return depending on its complexity.

Q. Do taxpayers have a greater chance of being audited by using IRS e-file?
A. No. The way a taxpayer files a return has nothing to do with the audit process. Returns filed electronically have no greater chance of being audited than returns filed on paper. And they have fewer math errors so the chance of getting an error notice from the IRS is significantly reduced.

Q. Would my business or organization be liable for penalties or preparation errors?
A. No. In most cases, the business or organization is neither responsible nor liable for preparation errors, audits, or preparer penalties. As with traditional paper returns, the person(s) who signs the return is solely responsible for the accuracy and validity of all information on it.

Q. What equipment and/or software is required to offer IRS e-file?
A. Minimum system requirements are: Windows 95/98, 2000, or NT operating
system, Pentium 75 MHz, 14" monitor, 16 MB of RAM, 60 MB available hard disk space, 14,400 BPS modem (Hayes compatible), Laser or ink jet printer (Windows compatible), CD_ROM drive and accepted commercial tax preparation and electronic filing software. Check out our Web Site at www.irs.gov for additional information.

Q. How much will this employee benefit cost?
A. The cost to implement this option is minimal. To defer costs, most businesses use their existing office equipment. Tax preparation software will need to be purchased unless you are sponsoring a Volunteer Income Tax Assistance (VITA) site that will be provided free software by the IRS. Otherwise, software packages can cost from a minimum of a couple hundred dollars to a maximum of a few thousand dollars depending on the features of the software. Hardware and software for the IRS e-file program are tax deductible as an ordinary business expense. There is usually no cost to the employee.


Q. If I become an Authorized IRS e-file Provider, will I automatically become a part of the Authorized IRS e-file Provider Database?
A. Yes. All tax professionals who are accepted into the IRS e-file program will be automatically included in the Authorized IRS e-file Provider Database. Using zip code information, this database allows taxpayers and tax professionals to search for their nearest Provider on-line.