1 Electronic Options for Payroll Reporting November 5, 2009 John Myett National Account Manager Shelley Dockstader Sr. Tax Analyst

2 Why Should I e-file?  Eliminates Paper  Prevents Errors  Provides Proof of Filing  Allows Payment With Return  Meets the Requirements of Revenue Procedure

3 Getting Started with e-file  E-file Application  Complete and submit online application  Apply for all of the e-file roles you will require  Reporting Agent  Transmitter?  Software Developer?  Pass a suitability check  Receive e-file credentials  Electronic Filer Identifier Number (EFIN)  Personal Identification Number (PIN)  Electronic Transmitter Identification Number (ETIN)

4 Build It or Buy It  e-file Software  Build your own –  Specifications available in Pub.3823  XML Schemas posted to IRS.gov  Purchase Third Party Software –  Approved software providers listed on IRS.gov  Consider cost and user support

5 Testing  Transmitters –  All transmitters must complete e-file communications testing  Demonstrate ability to transmit returns and retrieve acknowledgement files  Software Developers –  All software developers must complete software testing  Approved software will receive a unique software ID

6 Electronic Submissions  Reporting Agent –  Sign all returns with single PIN  Submit returns for processing (to transmitter)  Retrieve acknowledgements  Correct rejected returns and resubmit  Transmitter –  Batch returns for submission to IRS  Receive transmission Acknowledgement  Retrieve Acknowledgements  Resubmit corrected rejects

7 Acknowledgements & Rejects  Receive an Acceptance or Reject for Each Return  Accepted Returns will be forwarded for posting to client account  Rejected returns must be corrected and resubmitted  Rejected Returns  Error Codes provide feedback on what problems to correct  Common error conditions –  Name/EIN mismatch  Schedule B out of balance

8 What About Making Deposits  EFTPS is the Preferred Deposit Option  More accurate than paper coupons  Better and more automated documentation for use in issue resolution  Clients can easily monitor their deposit activity by accessing eftps.gov

9 EFTPS  Batch Provider –  Free software available  Allows up to 5,000 deposits per transmission  Preferred Option for most Reporting Agents  Bulk Provider –  Best option for very large providers  No software provided  Up to 100,000 deposits per file  Rev Proc 97-33, General EFTPS guidelines  Rev Proc 98-32, Bulk and Batch Processor guidelines  Pub. 4169,Tax Professionals Guide to EFTPS

10 Information Reporting – W-2’s  Working Electronically with the SSA  Business Services Online (BSO)  Register for a User ID  File W-2’s  Upload Wage File  W-2 Online  W-2C Online  Verify Employee Names and SSN’s for wage Reporting Purposes (Not Tax Preparation)  More information at SSA.gov/BSO

11 Information Reporting – 1099, etc…  Filing Information Returns Electronically (FIRE)  Submit 1042-S, 1098, 1099, 5498, 8027, or W-2G electronically  Need software to format data  More information and specifications available in Publication 1220  Why Use FIRE –  Paperless  More Accurate  Confirmed Filing  Extended Due Date

12 In Summary  Evaluate e-file Software  Complete e-file Application  Test Software and/or Communications  File All Eligible Returns Electronically  Use EFTPS for All Deposits  Use Electronic Filing for W-2’s and Other Information Returns  Become Compliant With Revenue Procedure

13 Questions?  John Myett, National Account Manger – Electronic Tax Administration  Shelley Dockstader, Sr. Tax Analyst SBSE – CLD Payroll & Practitioner Stakeholder Liaison