Reporting Agent for Form 940 & 941

We are looking to begin e-filing our client's payroll returns. Currently we e-file individual and business tax returns.

In order to become a reporting agent and e-file 941's and 940's, what exactly do we have to do? The IRS told me that we need a signed Form 8655 from each client, and to submit this with a list of all the client's that we are going to be a reporting agent for. Then, we need to update our application on e-services to become a reporting agent for 940's and 941's. We update the application after we file the 8655's? Seems kind of backwards to me.

I don't want to screw up anything with our EFIN right before tax season. Is there anything else we need to do? Any suggestions would be helpful.

Check my profile and you'll know I have no idea about this. But a search quickly produced https://www.irs.gov/Tax-Professionals/e ... Fact-Sheet and https://www.irs.gov/pub/irs-pdf/p1474.pdf

Here are some excerpted FAQ answers from one of the efile providers out there (eSmartPayroll).

I will add, CA state payroll tax filing is greatly advanced compared to IRS. It's free, it's online via EDD (no third party vendors), there are no PINs required.

"The IRS 941/940/944 eFile program requires a signature PIN. It is as if the filer is signing the form with a PIN. The Business Taxpayer PIN is a 10-digit number that is different from PINs of other IRS programs (EFTPS PIN, EFIN, ETIN, etc.). This PIN is only good for form 941/940/944 efile."

"Yes, each business (EIN) needs a 10-digit PIN of its own. You can prepare and submit multiple PIN applications from our website. Tax professionals managing multiple business clients can apply for Reporting Agent PIN. However, the application is made directly through the IRS and all clients must sign form 8655 authorizing the tax professional to e-File for them."

"Business Taxpayer PIN is used for one company (EIN) only. It is intended for individual businesses to e-file their own payroll tax returns.

Reporting Agent PINs are for tax professionals managing a large number of clients. A Reporting Agent PIN is tied to all of its client EINs and it is the responsibility of the Reporting agent to maintain the list of clients at the IRS."

"Report Agent is a term defined by the IRS for tax professionals that choose to file for multiple companies using one PIN."

Check my profile and you'll know I have no idea about this. But a search quickly produced https://www.irs.gov/Tax-Professionals/e ... Fact-Sheet and https://www.irs.gov/pub/irs-pdf/p1474.pdf

Old thread, but with the new mandate (maybe not currently finalized) requiring preparers to e-file 94X forms, it's a real issue for us. We did our research and are now scrambling a bit. Our software says that even though we have an ERO and are the reporting agent for our clients, and the 94X series is listed under our ERO, we can't e-file unless we also have ETIN.

However, the IRS says if we use our ETIN to transmit a return we prepared we are committing fraud. ETIN users should ONLY be transmitting returns they haven't prepared. Two different IRS folks have told us that and our software reps act like that's the craziest thing they have ever heard.

So for now QB Desktop clients are being e-filed.
Our other software provider, CFS Tax Software, we'll have to paper-file/mail.

Razorback, that must be complete horlicks. I’ve had an ETIN for almost four years and spoke to the e-file tech support at IRS whilst applying for it. They knew precisely what I was trying to do.

Methinks someone is trying to pull your chain.

Thanks Sum. Been reading pub 3112 tonight and it seems like I had an IRS employee that was oh so confident in something false.

I’ve e-filed through CFS almost all the time I’ve been in business. My reasoning is that there must be a reason they offer electronic filing on software sold to public accountants.

Now that I think about it, there is a toggle switch somewhere on an application and it was my unerring ability to bugger up anything technical that caused me to call tech support in the first place. A very nice lady helped me out and got me to reverse a toggle. I have no doubt that she knew exactly what I wanted to achieve.

Sincerely appreciate the feedback. I was just shocked by how confident the IRS and how it so completely contradicted all the common sense of what companies like CFS do.

Razorback, where have you seen a new mandate regarding requiring e-filing on the 941's? I haven't seen anything on it, and I still paper file a few for clients.

Razorback, where have you seen a new mandate regarding requiring e-filing on the 941's? I haven't seen anything on it, and I still paper file a few for clients.

I originally heard about it in CPE as authorized by the Taxpayer First Act of 2019. It was proposed by the IRS in July 2021.

https://public-inspection.federalregist ... -15615.pdf

Then the tax software we use (CFS) issued a statement saying the same.

https://help.taxtools.com/article/umlkp ... -threshold

However, I haven't found anything after this saying it was finalized.

We mainly wanted to keep moving that direction as the IRS kept losing paper-filed returns (Forms 940 and 941) multiple times, and because we figured it's a matter of time before the proposed deadline becomes finalized.

Thank you Razorback. I need to get set up as well for filing on-line I guess. Maybe after tax season!!

I’ve read through all this stuff in the past 3 or so weeks trying to understand who is who in these relationships on filing Form 940s and 941s.

ERO allows you to efile tax returns. My profile says I can efile 94x series just like 1040s, 1065s, and 1120s.

It’s my understanding a transmitter is the companies/softwares who are actually transmitting the return (whichever software you are using.) To be sure of this, I searched around on all the local firms, everyone is only EROs, not listed as transmitters.

IRS lists all the efile providers out there. https://www.irs.gov/e-file-providers/ta ... -providers

Softwares like Gusto actually sign the returns for the taxpayer and therefore required to be a Reporting Agent and they sign in a different section than what a paid preparer would. Softwares like Tax1099.com allow you to efile as a paid preparer and do the practitioner pin method just like you would using UltraTax (or any other software) with a 8879. You’re signing as a paid preparer and ERO and not a reporting agent. Once signed, you then originate the efile with your ERO, then the software transmits it to the IRS.

I’ve had panic attacks on this in last couple weeks because the language is overly complicated at who’s who but I firmly believe this is the breakdown. And if it’s not, there a lot of people “committing fraud” out there because everyone is recommending using these easy efile websites.

https://www.irsvideos.gov/SmallBusiness ... nd8453-EMP

Directly from the IRS videos site.... "If you choose not to transmit the return yourself using commercial tax prep software, you can authorize an ERO or a paid tax preparer to sign the form and e-file it for you.

Also, a paid preparer signing this form doesn't have to be a reporting agent, which allows you more flexibility in choosing your preparer."

We got our ETIN on Saturday, got our test file approved on Tuesday, and started transmitting today.

My final comfort came from, in addition to this thread, reading Publication 3112 where it said an ERO can transmit.

Page 15 of Pub 3112:
An Electronic Return Originator (ERO) is the Authorized IRS e-file Provider that begins the process of the elec- tronic submission of a return to the IRS. The ERO is usually the first point of contact for most taxpayers filing a return using IRS e-file.
An ERO begins the electronic submission of a return after the taxpayer authorizes the filing of the return via IRS e-file.
An ERO must begin the electronic submission of only returns that the ERO either prepared or collected from a taxpayer or Provider. An ERO begins the electronic submission by any of the following:
■ Electronically sending the return to a Transmitter that will transmit the return to the IRS
■ Directly transmitting the return to the IRS
■ Providing a return to an Intermediate Service Provider for processing prior to transmission to the IRS

So which softwares require you to take the “transmitter” role?

So which softwares require you to take the “transmitter” role?

so far for us the only one is CFS. But that's where we do about 95% of our ATF payroll and about 10% of our live payroll.

See I think everyone including the IRS are jumbling up their usage of the words making this overly complicated.

Do you agree with my viewpoint on the difference of the ERO and transmitter though?
And also, an ERO signing as paid preparer vs reporting agent? An ERO can still efile with 8879 and NOT be a reporting agent. RA is required if you are signing on behalf of the client.

I also have been trying to figure out if TCC is required for some of the 1099 efile websites... For instance Track1099 told me they have the TCC and are the transmitter. So therefore, the user does not need a TCC, whether they are the business or the paid preparer?
https://www.irs.gov/pub/irs-pdf/p1220.pdf
"If you’re using a third-party to prepare and transmit your information returns to the IRS, you don’t need to
obtain a TCC." -- So Track1099 is the 3rd party transmitting the returns and asked them and they said "yes, we use our own TCC to file on behalf of our clients"

I feel like there is a disconnect between the IRS, the software, and the preparers... but the softwares/websites are definitely actively advertising to the preparers. And appears a select few require additional information whereas others do not.

So which softwares require you to take the “transmitter” role?

You are a transmitter when you (as the preparer) are the one taking a file and uploading it directly to the IRS. These days, it's mostly old-school programs installed on your desktop with an all-in-one price. The new group of website software like Track1099/Tax1099 (which charge per-form) all handle the transmitting for you.

As Razorback says, CFS requires you to be the transmitter. My previous firm used 1099-Etc which also required you to be the transmitter.

Thank you Razorback. I need to get set up as well for filing on-line I guess. Maybe after tax season!!

Saw here where it finally became a finalized regulation

https://www.federalregister.gov/documen ... -documents

https://www.accountingtoday.com/news/ir ... 7063746056