What is an Electronic Return Originator (ERO)?
An Electronic Return Originator (ERO) is an authorized individual or business that electronically submits tax returns to the IRS (Internal Revenue Service) on behalf of taxpayers. Essentially, EROs act as middlemen, ensuring tax returns are prepared correctly and securely transmitted using IRS e-file.
If you’ve ever used an online tax service or worked with a tax preparer to file your return electronically, you’ve likely interacted with an ERO without realizing it!
Why Are EROs Important?
With millions of tax returns being filed every year, the IRS e-file system has become a necessity for both individuals and businesses. Here’s why EROs play a crucial role:
✅ Accuracy & Security – EROs help minimize errors in tax returns and ensure secure submission to the IRS.
✅ Time Efficiency – Electronic filing is faster than traditional paper-based tax returns.
✅ Faster Refunds – Taxpayers who file electronically get their refunds much quicker.
✅ Compliance Assurance – EROs ensure returns comply with IRS regulations, reducing the risk of audits.
In short, an ERO simplifies the tax-filing process, making it easier and more efficient for both taxpayers and tax professionals.
How Does an ERO Work?
An Electronic Return Originator follows a structured process to submit tax returns electronically. Here’s a step-by-step breakdown:
- Tax Preparation – The taxpayer or a tax professional prepares the return using IRS-approved software.
- Verification & Authorization – The taxpayer reviews and signs Form 8879, which authorizes electronic submission.
- Electronic Submission – The ERO securely transmits the tax return to the IRS via the e-file system.
- IRS Acceptance – The IRS processes the return and confirms acceptance.
- Taxpayer Notification – The taxpayer receives confirmation that their return has been successfully submitted.
Who Can Become an ERO?
Not just anyone can become an Electronic Return Originator—you must meet the IRS requirements. Here’s how to qualify:
Steps to Become an ERO:
🔹 Obtain an EFIN (Electronic Filing Identification Number) – Apply for an EFIN through the IRS e-Services portal.
🔹 Pass a Background Check – The IRS conducts a suitability check, which includes reviewing your credit history and any criminal background.
🔹 Use IRS-Authorized Software – You must file returns using software that meets IRS security and transmission standards.
🔹 Follow IRS e-file Rules – Compliance with all IRS regulations and ethical guidelines is mandatory.
Who Typically Becomes an ERO?
✔️ Tax Preparers
✔️ CPAs (Certified Public Accountants)
✔️ Attorneys
✔️ Enrolled Agents (EAs)
✔️ Large Tax Preparation Firms (e.g., H&R Block, TurboTax)
If you run a tax preparation business, becoming an ERO can expand your services and provide added value to your clients.
ERO Compliance & Responsibilities
An Electronic Return Originator must follow strict IRS guidelines. Here are some key responsibilities:
✅ Protect Taxpayer Data – EROs must use encryption and secure systems to protect sensitive tax information.
✅ Verify Taxpayer Identity – They must ensure accurate taxpayer identification to prevent fraud.
✅ Maintain Records – IRS requires EROs to keep records of filed tax returns for a minimum of three years.
✅ Follow E-File Security Standards – EROs must comply with IRS Publication 1345, which outlines e-file security policies.
Failing to follow these guidelines can result in penalties or disqualification from the IRS e-file program.
Common Misconceptions About EROs
🚫 “An ERO prepares tax returns.”
👉 No, EROs only submit electronic returns. Tax preparation is done by a tax professional, software, or the taxpayer.
🚫 “Any tax preparer is automatically an ERO.”
👉 Not true! Tax preparers must apply for an EFIN and meet IRS requirements to become an Electronic Return Originator.
🚫 “Paper filing is just as fast as electronic filing.”
👉 Not at all! E-filed returns are processed in 21 days or less, while paper returns can take 6-8 weeks.
Conclusion
Becoming an Electronic Return Originator (ERO) is a game-changer for tax professionals. It ensures faster tax return processing, enhances security, and boosts efficiency. Whether you’re a tax preparer looking to expand your services or a taxpayer wondering how your return gets filed electronically, understanding the role of an ERO is essential.
If you’re considering becoming an ERO, make sure to comply with IRS regulations, use approved software, and follow best security practices.
Want to learn more? Visit the IRS e-file website and take the first step toward becoming a certified Electronic Return Originator today!
FAQs (Frequently Asked Questions)
1. Do I need to be a CPA to become an ERO?
No, a Certified Public Accountant (CPA) is not required. However, you must apply for an EFIN and meet IRS suitability checks.
2. Is there a fee to become an ERO?
No, applying for an Electronic Filing Identification Number (EFIN) is free. However, you may need to invest in IRS-approved tax software.
3. How long does it take to get an EFIN?
The IRS approval process can take 45 to 60 days, depending on background checks and compliance reviews.
4. Can I file my own taxes as an ERO?
Yes, but the primary purpose of an ERO is to file returns for others, not just for personal use.
5. What happens if an ERO violates IRS e-file rules?
Violations can lead to penalties, suspension, or permanent removal from the IRS e-file program.
