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Lane
Lane, CFP, MBA, CRPS
Category: Tax
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Experience:  Providing Financial & Tax advice since 1986
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Legal Question regarding use of EFIN in tax business I own

Resolved Question:

Legal Question regarding use of EFIN in tax business

I own a tax business. In order to submit tax returns electronically to the IRS, I must have an EFIN (electronic filing identification number). I don't have my own so I obtained a silent partner that maintains one in their name which my company uses.

The business arrangement between us is she maintains an EFIN in her name and I run the business. For her part, she receives a percentage of all proceeds from the business but she takes NO part in how the business is run. Of course she has the right to end the relationship any time if she doesn't like how I run the business or if she isn't making enough money.

Question: Is it illegal or a violation of IRS regulations to use my silent partner's EFIN with her consent? Am I violating some law or regulation by running a tax business using an EFIN of someone who doesn't take a part in the business itself?

Please provide case law and/or IRS regulations to support your answer.

Thank You
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

NPVAdvisor :

Publication 3112 provides the standard for imposing the sanction of suspension. The standard is so low, in other words nowhere near the civil "by a preponderance" or criminal "beyond a reasonable doubt" evidentiary standard, that you should become familiar. ... http://www.irs.gov/Tax-Professionals/e-File-Providers-&-Partners/Determine-Eligibility

NPVAdvisor :

The short answer to your questions is that you must meet the three criteria for eligibility, and then shw will be OK as a principal

NPVAdvisor :

THey are the following:

NPVAdvisor :

  • Be 18 years old as of the date of application; and

  • Be a US citizen or an alien lawfully admitted for permanent residence as described in 8 U.S.C. §1101(a)(20) (1994);

  • Meet applicable state and local licensing and/or bonding requirements for the preparation and collection of tax returns.

NPVAdvisor :

If you are clean, and sheunderstands that she is assuming all risk, you are find

NPVAdvisor :

sorry for the typo

NPVAdvisor :

"fine"

NPVAdvisor :

If I were you I would read this:

Customer:

Perfect, thank you.

Customer:

I reviewed those forms a few times

NPVAdvisor :

If you fee that you as a preparer, as agent for her, (meaning she will held responsible for your actions). then you should be ok ... further this would be a good checklist to keep inmond

NPVAdvisor :

in mond

NPVAdvisor :

mind

Customer:

I was just making sure there was no additional information out there that I could be missing as the IRS came in auditing our files and when they found we did everything beyond what the IRS requires, they began going after my partner's EFIN. We are just trying to ensure we are ok

Customer:

got you. thank you.

NPVAdvisor :

You're welcome

NPVAdvisor :

If this HAS helped, I would appreciate a feedback rating of 3 (OK) or better … That's the only way they will pay us here.


HOWEVER, if you need more on this, PLEASE COME BACK here, so you won't be charged for another question.

Customer:

thank you. you get an excellent from me

Lane, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 3638
Experience: Providing Financial & Tax advice since 1986
Lane and other Tax Specialists are ready to help you
Expert:  Lane replied 1 year ago.

Thanks Josiah!

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If you'd like to work with ME again just say "For Lane only," at the beginning of your next question.

Thanks again,

Lane

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