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Do You Need a PTIN, an EFIN or Both?

A board displaying PTIN & EFIN numbers

Preparer Tax Identification Numbers are issued to individuals. Electronic Filing Identification Numbers are issued to individuals or firms. Most preparers will need both. What are the differences between these two IRS-issued numbers and what will you need?

A Preparer Tax Identification Number (PTIN) is a number issued by the IRS to paid tax return preparers. It is used as the tax return preparer's identification number and, when applicable, must be placed in the Paid Preparer section of a tax return.

A PTIN must be obtained by all enrolled agents, as well as all tax return preparers who are compensated for preparing, or assisting in the preparation of, all or substantially all of any U.S. federal tax return, claim for refund, or other tax form submitted to the IRS.

Who does not need a PTIN? Those who do not receive compensation for preparing federal tax returns, such as non-profit volunteers, and those who help gather information, but not prepare federal tax returns, such as a secretary or intern.

The general rule of thumb is if you prepare or assist in preparing federal tax returns and are paid for preparing those returns, you must have a valid PTIN before preparing returns. Failure to have a current PTIN could result in the imposition of Internal Revenue Code section 6695 penalties, injunction, and/or disciplinary action by the IRS Office of Professional Responsibility.

Most first-time PTIN applicants can obtain a PTIN online in about 15 minutes. View this checklist to get started.

NOTE: As of June 2, 2017, based on a District Court Order, the IRS will not charge for the issuance or renewal of a PTIN.

An Electronic Filing Identification Number (EFIN) is a number issued by the IRS to individuals or firms that have been approved as authorized IRS e-file providers. It is included with all electronic return data transmitted to the IRS.

Nearly 80 percent of all individual federal returns are now e-filed and IRS e-file has safely and securely transmitted more than 1 billion tax returns since 1990. An EFIN is one way the IRS continues to help successfully protect all this important information.

Providers need an EFIN to electronically file tax returns. The IRS assigns an EFIN to identify firms that have completed the IRS e-file Application to become an Authorized IRS e-file Provider. Your application must include a Responsible Official who is an individual with authority over the Provider's IRS e-file operation at the location where the EFIN is assigned. The Responsible Official is the first point of contact with the IRS, has authority to sign revised IRS e-file applications and is responsible for all returns e-filed/originated from that location.

After you submit your application and related documents, the IRS will conduct a suitability check on the firm and each person listed on your application as either a principal or responsible official. This may include a credit check, a tax compliance check, a criminal background check and a check for prior non-compliance with IRS e-file requirements. Once approved, you will receive an acceptance letter from the IRS with your Electronic Filing Identification Number (EFIN).

The application process is not simple, but as a tax professional, you understand these steps are necessary to protect the integrity and security of the electronic filing system in order to maintain the highest standards for e-filers.

There is no fee for an EFIN and your EFIN is not transferable. Even if you transfer your business by sale, gift or other disposition, you may not transfer your EFIN. You must protect your EFIN from unauthorized use at all times.

If you have questions or concerns in regards to your EFIN, visit Information for IRS e-file Providers for additional information.

Early preparation can help you get a jumpstart on the competition. That includes obtaining or renewing your PTIN and verifying your EFIN. Check out the TaxAct® Professional Preseason Checklist to help you get ahead of the upcoming tax season.