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Tax Preparers Face Updated Regulations on Taxpayer Information Self-Select PIN Method for e-file Q&A: e-file Signature Authorization Questions (Forms 8879 & 8878) Adjusted Gross Income: AGI Issues for Taxpayers
| Tax Preparers Face Updated Regulations on Taxpayer Information
A supplement to the regulations provides specific form and content guidance to tax return preparers for obtaining separate, specific consents to disclose and to use taxpayer data in both the paper and electronic environments. Tax preparers must obtain the signed consent of the taxpayer on paper or electronically before they can disclose taxpayer return information to anyone or use it for any purpose other than in the context of preparing and filing the return. Consents must: * Identify the intended purpose of the disclosure or use; * Identify the recipient(s) and describe the particular authorized information to be disclosed or used; * Include the name of the tax return preparer and the name of the taxpayer; * Include the applicable mandatory language set forth in section 4.04(a)-(c) of Revenue Procedure 2008-35 that informs taxpayers that they are not required to sign the consent and if they sign the consent, they can set a time period for the duration of that consent; * Include the mandatory language set forth in section 4.04(d) of Revenue Procedure 2008-35 that refers taxpayers to the Treasury Inspector General for Tax Administration if they believe that their tax return information has been disclosed or used improperly. * Where applicable, include the appropriate mandatory statement set forth in section 4.04(e) of Revenue Procedure 2008-35 that informs taxpayers that their tax return information may be disclosed to a tax return preparer located outside the U.S.; * Be in 12-point type on 8 1/2 by 11 inch paper. Electronic consents must be in the same type as the web site's standard text; and * Contain the taxpayer's affirmative consent (as opposed to an "opt-out" clause); and * Be signed and dated by the taxpayer. The updated regulations apply to paid preparers, software developers, Electronic Return Originators, others engaged in tax return preparation services or services that are auxiliary to return preparation, and to most volunteer tax preparers, for example Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) volunteers and employees and contractors employed by tax preparation companies in a support role. Violations could result in imprisonment for up to one year, a fine of not more than $1,000, or both, for each violation.
Self-Select PIN Method for e-file
If the taxpayer agrees, it is acceptable for an ERO and/or software program to generate or assign the taxpayer PIN. The taxpayer consents to the ERO's choice by completing and signing an IRS e-file signature authorization containing the intended taxpayer PIN. The taxpayer PIN can be systemically generated or manually assigned into the electronic format and/or the signature authorization form. However, the ERO must receive the signature authorization signed by taxpayer(s) before they transmit the return or release it for transmission to the IRS. The following taxpayers are eligible to use the Self-Select PIN method: * Taxpayers who are eligible to file Form 1040, 1040A, 1040EZ or 1040-SS (PR) for TY 2008. * Taxpayers who did not file for TY 2007, but have filed previously. * Taxpayers who are age 16 or older on or before December 31, 2008, who have never filed a tax return. * Primary Taxpayers under age 16 who have filed previously. * Secondary Taxpayers under age 16 who have filed in the immediate prior year (TY 2007). * Military personnel residing overseas with APO/FPO addresses. * U.S. Citizens and resident aliens residing in the American Possessions of the Virgin Islands, Puerto Rico, American Samoa, Guam and Northern Marianas, or with foreign country addresses. * Taxpayers filing Form 4868 (extension of time to file), or Form 2350 (extension for certain U.S. citizens living abroad). * Those who are filing on behalf of deceased taxpayers. * Taxpayers required to file the following forms, which must be attached to Form 8453, U.S. Individual Income Tax Transmittal for an IRS e-file Return: o Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes (or acceptable documentation/required donor documentation) o Form 2848, Power of Attorney and Declaration of Representative (or POA that states the agent is granted authority to sign the return) o Form 3115, Application for Change in Accounting Method o Form 3468, Computation of Investment Credit (if Historic Structure Certificate is required) - attach a copy of the first page of NPS Form 10-169a, Historic Preservation Certification Application (Part 2 - Description of Rehabilitation), with an indication that it was received by the Department of the Interior or the State Historic Preservation Officer, together with proof that the building is a certified historic structure (or that such status has been requested) o Form 4136, Credit for Federal Tax Paid on Fuels (if certificate and/or reseller statement is required) - attach the Certificate for Biodiesel and, if applicable, Statement of Biodiesel Reseller or a certificate from the provider identifying the product as renewable diesel and, if applicable, a statement from the reseller o Form 5713, International Boycott Report o Form 8283, Non-Cash Charitable Contributions, Section A (if any statement or qualified appraisal is required) or Section B, Donated Property, and any related attachments (including any qualified appraisal or partnership Form 8283) o Form 8332, Release of Claim to Exemption for Child of Divorced or Separated Parents (or certain pages from a post-1984 decree or agreement, see instructions) o Form 8858, Information Return of U.S. Persons with Respect to Foreign Disregarded Entities o Form 8864, Biodiesel and Renewable Diesel Fuels Credit - attach the certificate for Biodiesel and, Statement of Biodiesel Reseller or a certificate from the provider identifying the product as renewable diesel and, if applicable, a statement from the reseller o Form 8885, Health Coverage Tax Credit, and all required attachments o Schedule D-1, Continuation Sheet for Schedule D (Form 1040) (or a statement with the same information), if you elect not to include your transactions on the electronic short-term capital gain (loss) or long-term capital gain (loss) records o Worksheets 1 through 4 from Pub. 517, Social Security and other Information for Members of the Clergy and Religious Workers (or other statement showing the required information and computations)
The following taxpayers are not eligible to use the Self-Select PIN method: * Primary Taxpayers under age 16 who have never filed. * Secondary Taxpayers (spouse) under age 16 who did not file in the immediate prior year.
The date of birth is required with the Self-Select PIN method as part of the authentication process for the taxpayer. It will be matched against Social Security records. The return will not be rejected if the date of birth does not match. However, the Acknowledgement Record will contain the field Date of Birth Validity Code. It will advise you if the dates of birth submitted were valid or mismatched. The following values will be returned: * "0" = Date of Birth Validation Not Required * "1" = All Dates of Birth Valid * "2" = Primary Date of Birth Mismatch * "3" = Spouse Date of Birth Mismatch * "4" = Both Dates of Birth Mismatch
Q&A: e-file Signature Authorization Questions (Forms 8879 & 8878)What should I do if my client is unable to return to my office to input his/her PIN? Your client may authorize you to input his/her PIN by completing Form 8879, IRS e-file Signature Authorization or Form 8878, IRS e-file Signature Authorization for Form 4868 and Form 2350. Provide Form 8879/8878 to the taxpayer along with a copy of the completed tax return/tax document, in person, by U.S. mail, a private delivery service (e.g. FedEx, UPS), e-mail, FAX transmission or an internet website. Instruct your client to review the tax return/tax document for accuracy and complete the Form 8879/8878 by providing the requested information (a five-digit PIN, pen and ink signature, and date). If your client is unable to return the signed Form 8879/8878 to your office, he/she may return it to you by mail or FAX. What is Form 8879, IRS e-file Signature Authorization? Form 8879, IRS e-file Signature Authorization, allows the tax professional to input the taxpayer's PIN. It is provided as a convenience for taxpayers who are unavailable to personally enter their PIN. It is also required for all returns signed using the Practitioner PIN method or when the ERO generated or assigned the taxpayer's PIN. Where can I obtain a copy of Form 8879? Some tax preparation software includes Form 8879, IRS e-file Signature Authorization format. A copy can also be obtained from IRS website, keyword Form 8879. A Spanish version, Form 8879-SP, is also available on the site. Must I use Form 8879 for every e-file return? No. Form 8879 is only required when one or both taxpayers are unavailable to personally enter their PIN or when the ERO has generated or assigned the taxpayer's PIN. Can the taxpayer give me their PIN verbally to enter in their electronic return? Yes. A taxpayer may give you their PIN verbally; however, you must receive a completed Form 8879, IRS e-file Signature Authorization, from the taxpayer before you transmit the return or release it for transmission to the IRS. Is it acceptable for an ERO to enter the taxpayer's PIN in the electronic return format before Form 8879 is generated? Yes, the taxpayer PIN can be entered into the electronic return format prior to generation of the Form 8879. However, the ERO must receive a completed Form 8879 signed by the taxpayer before you transmit the return or release it for transmission to the IRS. Is it acceptable for an ERO and/or software program to generate or assign the five digit PIN the taxpayer will use to sign his/her e-file return? Yes, an ERO may determine the taxpayer's PIN if certain conditions are met. In all instances, the taxpayer shall retain the right to select his or her own PIN. If the taxpayer agrees to allow the ERO to determine the taxpayer PIN, the taxpayer will consent to the ERO's choice by completing and signing a Form 8879 which contains the taxpayer PIN used as the return signature. The taxpayer PIN can be systemically generated or manually assigned by the ERO. Is it acceptable for the ERO to choose the same PIN for multiple clients? Yes, it is acceptable to assign the same PIN for multiple clients. Can a married taxpayer filing a joint return pick the PIN and enter it for his/her spouse? No. The taxpayer who is not present to personally enter their PIN must complete Form 8879 to authorize their tax professional to input the PIN for them. Do both taxpayers filing a joint return have to authorize the tax professional to input their PINs? No, only the taxpayer that is not present to sign the return should authorize the preparer to enter their PIN. If neither spouse is present to sign a joint return, each can authorize the preparer to enter his/her respective PIN. But a spouse who is present should enter his/her own PIN, even if the preparer has authorization to enter the other spouse's PIN. What is my responsibility as a return preparer using Form 8879? As a return preparer, your responsibility is to provide the taxpayer with Form 8879 along with their return for review. You are required to generate or enter the header information, all five tax return line items in Part I, and the ERO firm name in Part II. You may also systemically generate or manually assign the taxpayer's PIN in Part II. What is my responsibility as an ERO using Form 8879 when the taxpayer completed their own return? As an ERO, your responsibility is to complete Form 8879 based on the return information you received from the taxpayer. You are required to generate or enter the header information, the five tax return line items in Part I, and the ERO firm name in Part II. You may also systemically generate or manually assign the taxpayer PIN in Part II.
As an ERO, your responsibility is to identify the paid preparer in the appropriate fields of the electronic return record, regardless of who prepared the return. For example, if a collected return is signed by a paid preparer, the ERO must enter the paid preparer's identifying information in the appropriate portion of the electronic return record. Complete Form 8879 based on the return information you received from the taxpayer. You are required to generate or enter the header information, the five tax return line items in Part I, and the ERO firm name in Part II. You may also systemically generate or manually assign the taxpayer PIN in Part II. Page 1 and 2 of the tax return should be retained until the end of the calendar year. When does the taxpayer complete Form 8879? If you prepared the return, the taxpayer must complete Form 8879 after they have reviewed the prepared return. If the taxpayer provided a completed return for transmission, the Form 8879 and PIN selection can be completed without reviewing the electronic return. You must receive the completed Form 8879 from the taxpayer before you transmit the return or release it for transmission to the IRS. Tax return line items in Part I must be entered on Form 8879 before the taxpayer signs. Can a taxpayer complete Form 8879 and fax it to the ERO? Yes. Form 8879 can be signed and returned to the ERO via fax transmission. However, the ERO must retain Form 8879 in their file for three years from the Return Due Date or IRS Received Date, whichever is later. Form 8879 files can be retained electronically in accordance with Rev. Proc. 97-22, Retention of Books and Records. Do I provide a copy of the completed Form 8879 to the taxpayer for their records? Provide a copy of the completed Form 8879 for those taxpayers requesting one. You may provide a copy to other taxpayers, but you are not required to do so. However, EROs will need to provide taxpayers with a copy of Form 8879 if the current year PIN is assigned or generated by the ERO. The taxpayer may need the PIN when electronically signing their next year return. Can a preparer enter the taxpayer's PIN on an Application for Extension of Time to File? Yes. Form 8878, IRS e-file Signature Authorization for Form 4868and Form 2350, is available for taxpayers to authorize the ERO to input their PIN on Forms 4868 and 2350. Form 8878 is included in some software packages. A copy can be obtained from the IRS website, keyword Form 8878. Spanish version, Form 8878-SP, is also available on the website. Do I have to mail Form 8879 and Form 8878 to the IRS? No. Retain the completed Form 8879 and Form 8878 in your file for three years from the Return Due Date or IRS Received Date, whichever is later. In addition, Form 8879 can not be used as a transmittal to fax documents or submit payments to IRS. Is it acceptable for an Electronic Return Originator (ERO) to electronically image and store Form 8879 and Form 8878 and meet the document retention requirement? Yes. An ERO may electronically image and store Forms 8879 and 8878 if the EROs storage system satisfies the requirements of Rev. Proc. 97-22, Retention of Books and Records. In brief, Rev. Proc. 97-22 requires that the electronic storage system must ensure an accurate and complete transfer of the hard copy or computerized records to an electronic storage media. In addition, all records reproduced by the electronic storage system must exhibit a high degree of legibility and readability (including the taxpayer's signature) when displayed on a video display terminal and when reproduced in hard copy. What should I do if my client is unable to return to my office to input his/her PIN on an Application for an Extension of Time to File? Your client may authorize you to input his/her PIN by completing Form 8878, IRS e-file Signature Authorization for Form 4868 and Form 2350. Provide this form to the taxpayer along with a copy of the extension of time to file application for their review. It is not necessary for both taxpayers e-filing a joint extension application to authorize the ERO to enter their taxpayer PIN. See additional instructions on Form 8878. Why is a Form 8878 needed for Form 4868 filers if there is no signature requirement on Form 4868? A Form 8878 is required by Form 4868 filers when they will make an electronic funds withdrawal and they want to authorize the ERO to enter the taxpayer's PIN. Form 8878 is not required for Form 4868 when there is no electronic funds withdrawal.
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Taxsoftware.com News
The Self-Select PIN method is one option for taxpayers to use when signing their electronic tax return. The PIN is any five numbers (except all zeros) the taxpayer chooses to enter as an electronic signature. A PIN is needed for each taxpayer if filing through an Electronic Return Originator (ERO) or using tax preparation software; the taxpayer date of birth and prior year AGI or prior year PIN from the original return must also be entered for authentication.
