An overview of how to get set up with the IRS and with Drake
Below are the most important steps you’ll need to take to become a professional tax preparer. The steps we cover are unique to tax preparation, especially meeting IRS requirements.
The information presented here applies to any new tax preparation business, whether you’ll be a solo preparer or will have a much larger staff.
We’re going to cover the five steps below, presented in the order you’ll probably have to do them, or that makes the most sense for doing them.
These days, becoming a tax preparer is usually synonymous with e-filing. In fact, if you file 11 or more returns—or expect to—the IRS wants you to e-file. Becoming an e-filer takes three steps:
This process can take up to two months, and applying to become an ERO (step 2) takes most of that time, 4 to 6 weeks on average. So it’s best to not procrastinate until late in the calendar year, because if the IRS gets a backlog of applications at that time of year, you could face a delay in being able to e-file live returns.
Once approved, your firm will receive an Electronic Filing Identification Number, or EFIN. This number identifies the firm as the sender of any e-filed returns.
If you don’t already have an EFIN when you purchase Drake Tax, you’ll be assigned a temporary EFIN, which you can use to test e-filing. You'll also use the temporary EFIN as your username when signing into the Drake Support website and using other Drake web-based tools. Remember, before you can e-file actual customer returns, you must apply for an EFIN with the IRS.
When you receive your EFIN, provide your E-File Application Summary with a status of "Completed" to Drake Software. Watch this video for important information.
You may send the EFIN document by:
You will receive a confirmation email once your document has been accepted and uploaded on your account. Please allow 4 hours for processing.
Usually, getting an EFIN also enables you to e-file state returns, but you should know that some states have different or additional e-file requirements. For example, some states “encourage” e-filing much more forcefully than other states, and may even go so far to penalize preparers who send a paper return without a good reason.
A handful of states also require preparer registration at the state level: California, Maryland, New York, Oregon, and Virginia. So if you’re a preparer in one of these states, see your state’s tax department website for registration details. (A registration is not required to prepare a return for one of these states if your business is not located in the state.)
Just as each firm that e-files must register with the IRS and get an EFIN, each paid preparer must also register and get a Preparer Tax Identification Number (PTIN). The IRS says that if you are paid to prepare or to help prepare a return — even if you don’t sign it — you must get a PTIN. The key factor is whether you take an action or make a decision that affects the outcome of the return.
PTINs are issued for one calendar year, and must be renewed annually.
For complete instructions on who is required to have a PTIN, see PTIN Requirements for Tax Return Preparers.
If you apply by mail and have not heard from the IRS within 6 weeks, you may call the PTIN help phone number to check on the status of your application:
Primary: (877) 613-PTIN (7846)
TTY: (877) 613-3686
International (Toll): +1 915-342-5655
Hours: Monday – Friday, 8 am – 5 pm (CST)
Since being an e-filer requires submitting returns with a computer, you’ll need tax software for preparing and e-filing returns. When you comparison shop, we’re confident you’ll see these benefits to choosing Drake Tax as your tax software:
Our free Evaluation Package includes a demo copy of Drake Tax, which you’ll be able to use to learn entering data and preparing returns, as well as to explore all of Drake’s built-in client management features.
Other than getting an EFIN and PTIN(s), plus getting Drake Tax, what else do you need?
Tax laws and professional responsibilities are always changing, making it essential to stay educated and informed. Drake Tax provides numerous training opportunities, including many that allow you to earn Continuing Professional Education (CPE) credits.
Note: The IRS intends to require 15 hours of continuing education annually for non-exempt Registered Tax Return Preparers (RTRP), but is currently enjoined from enforcing the RTRP program and associated requirements. Its goal is to ensure that all paid preparers meet minimum competency standards, and it is in the process of appealing the court’s decision. In the meantime, preparers other than CPAs, EAs and attorneys are not required to obtain continuing education.
Check out what we offer:
Drake's e-Training Center (ETC) is a central location from which you can get training for yourself and your entire office staff. You’ll have access to various types of training and, as an ETC administrator, you can monitor your staff’s progress.
A few of the courses and other training opportunities provided:
We have lots of other information that is particularly relevant to new preparers or new preparation businesses. Click the links below to find out more about us and what we offer to the professional tax preparer:
Drake is dedicated to being a partner after the sale, to serving you and helping you grow as a business. Need more information? Our helpful and knowledgeable sales representatives are standing by to help. Just call (800) 890-9500.