The electronic return originator, ERO, is a person or business that originates federal income tax returns electronically for the Internal Revenue Service, IRS. The IRS requires application and approval to be an ERO. Upon approval, the IRS identifies the ERO by an EFIN, or electronic filer identification number. With approval and appropriate software, the ERO can send federal tax information to a transmitter or an intermediate service provider.
Who Is an ERO?
An ERO is a tax professional registered for e-services who meets the IRS approval as an ERO. The e-services and ERO programs are open only to tax professionals. The ERO becomes an authorized e-file provider with the IRS and must use approved software to transmit tax information from the client to the transmitter or intermediate service provider. Acceptance into the e-file program makes the individual or company an authorized IRS e-file provider, not an ERO.
How to Be an ERO
The electronic return originator is one of several approvals available to the e-file provider. When applying for authorized e-file provider approval, the applicant checks all desired provider options, including the ERO. An ERO may apply to be a transmitter, as well. The transmitter must have software and hardware to interface with the IRS and must complete a test before acceptance. The ERO sends tax information directly to the IRS if both a transmitter and an ERO, but must send through a transmitter or an intermediate service provider if not approved for both positions.
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Apply 45 days before you want to use the e-file system for your business. The application requires information about a responsible official who will uphold the IRS rules and the principals of the business. The IRS requires fingerprint cards for these individuals unless they meet other qualifications. Individuals for whom a fingerprint card is not required are attorneys, CPAs, bonding agents, officers of publicly held corporations and bank officials. A suitability check performed by the IRS looks at the credit history, criminal history, tax compliance check and an e-file check. The IRS requires a primary contact and an alternate contact who does not have to meet the suitability check requirements.
The ERO receives an electronic filer identification number when approved. Approval continues if the provider continues to submit e-file returns, but the ERO must re-apply if he does not file e-file returns for a year. The ERO must keep the IRS up-to-date with changes in the business and must comply with applicable rules and regulations. The ERO must adhere to IRS regulations regarding security of taxpayer data and have security systems in place that meet the IRS requirements. The ERO must make a copy of the tax information for the taxpayer and retain records for the IRS. ERO status does not give the originator authority to sign tax information -- the taxpayer must sign electronically with a PIN number.