rp-00-31.pdf

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Part III
Administrative, Procedural, and Miscellaneous
26 CFR 601.602: Tax forms and instructions.
(Also Part I, Sections 6012, 6061; 1.6012-5, 1.6061-1.)
Rev. Proc. 2000-31
CONTENTS
SECTION 1PURPOSE
SECTION 2BACKGROUND AND CHANGES
SECTION 3DEFINITIONS
SECTION 4ACCEPTANCE IN THE IRS e-file
PROGRAM
SECTION 5RESPONSIBILITIES OF AN AUTHORIZED IRS e-file
PROVIDER
SECTION 6PENALTIES
SECTION 7 MONITORING AND SANCTIONING OF AN AUTHORIZED IRS e-file
PROVIDER
SECTION 8 ADMINISTRATIVE REVIEW PROCESS
SECTION 9 PILOT PROGRAMS
SECTION 10EFFECT ON OTHER DOCUMENTS
SECTION 11EFFECTIVE DATE
SECTION 12INTERNAL REVENUE SERVICE OFFICE CONTACT

SECTION 1. PURPOSE
This revenue procedure informs those who participate in the IRS e-file
Program of
their obligations to the Internal Revenue Service, taxpayers, and other participants. The
IRS e-file Program allows taxpayers to file their income tax returns through an Electronic
Return Originator, or by using a personal computer, modem, and commercial tax

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preparation software (the Form 1040 IRS On-Line Filing Program). The following returns
can be filed under the IRS e-file
Program: (1) Form 1040 and Form 1040A, U. S.
Individual Income Tax Return; and (2) Form 1040EZ, Income Tax Return for Single and
Joint Filers with no Dependents. This revenue procedure modifies and supersedes Rev.
Proc. 98-50, 1998-2 C.B. 368 (IRS e-file
Program), and Rev. Proc. 98-51, 1998-2 C.B.
380 (Form 1040 IRS On-Line Filing Program).
SECTION 2. BACKGROUND AND CHANGES
.01 Section 1.6011-1(a) of the Income Tax Regulations provides that every person
subject to income tax must make a return or statement as required by the regulations.
The return or statement must include the information required by the applicable
regulations or forms.
.02 Section 301.6061-1(b) of the Regulations on Procedure and Administration
authorizes the Secretary to prescribe in forms, instructions, or other appropriate guidance
the method of signing any return, statement, or other document required to be made
under any provision of the internal revenue laws or regulations.
.03 Section 1.6012-5 of the regulations provides that the Commissioner may
authorize the use, at the option of a person required to make a return, of a composite
return in lieu of any form specified in 26 CFR Part 1 (Income Tax), subject to the
conditions, limitations, and special rules governing the preparation, execution, filing, and
correction thereof as the Commissioner may deem appropriate.

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.04 This revenue procedure combines the rules governing the IRS e-file
Program
with the rules governing the Form 1040 IRS On-Line Filing Program (previously set forth
in Rev. Proc. 98-50 and Rev. Proc. 98-51, respectively).
.05 This revenue procedure incorporates substantive changes made to the IRS
e-file
Program, including changes to the definitions of program participants (see section 3
of this revenue procedure) and changes to the sanctions that may be imposed upon
Authorized IRS e-file
Providers (see section 7 of this revenue procedure).
.06 Many of the rules governing participation in the IRS e-file Program are now set
forth in IRS Publications. See section 5.01 of this revenue procedure.
SECTION 3. DEFINITIONS
.01 A participant in the IRS e-file Program is referred to as an “Authorized IRS
e-file Provider.” The Authorized IRS e-file Provider categories are:
(1) ELECTRONIC RETURN ORIGINATOR. An "Electronic Return
Originator" (ERO) originates the electronic submission of income tax returns.
(2) INTERMEDIATE SERVICE PROVIDER. An “Intermediate Service
Provider” receives tax return information from an ERO (or from a taxpayer who files
electronically using a personal computer, modem, and commercial tax preparation
software), processes the tax return information, and either forwards the information to a
Transmitter, or sends the information back to the ERO (or taxpayer).
(3) SOFTWARE DEVELOPER. A "Software Developer" develops software
for the purposes of (a) formatting electronic tax return information according to Publication

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1346, Electronic Return File Specifications and Record Layouts for Individual Income Tax
Returns; and/or (b) transmitting electronic tax return information directly to the Service.
(4) TRANSMITTER. A "Transmitter" transmits electronic tax return
information directly to the Service.
.02 The Authorized IRS e-file
Provider categories are not mutually exclusive. For
example, an ERO can, at the same time, be a Transmitter, Software Developer, or
Intermediate Service Provider depending on the function(s) performed.
.03 A “Responsible Official” is an individual with authority over the IRS e-file
operation of the office(s) of the Authorized IRS e-file Provider, is the first point of contact
with the Service, and has authority to sign revised IRS e-file
applications. A Responsible
Official is responsible for ensuring that the Authorized IRS e-file
Provider adheres to the
provisions of this revenue procedure and the publications and notices governing the IRS
e-file Program.
SECTION 4. ACCEPTANCE IN THE IRS e-file
PROGRAM
.01 Individuals, businesses, and organizations that wish to participate in the IRS
e-file
Program must apply for participation and must be accepted by the Service.
.02 The procedures governing application to the IRS e-file
Program are included in
Publication 3112, The IRS e-file Application Package.
.03 The circumstances under which the Service may deny participation in the IRS
e-file Program are included in Publication 1345, Handbook for Authorized e-file Providers
of Individual Income Tax Returns. An applicant who is denied participation may seek
administrative review of the denial. See section 8 of this revenue procedure.

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.04 To continue participation in the IRS e-file
Program, Authorized IRS e-file
Providers must adhere to all requirements of this revenue procedure and the publications
and notices governing the IRS e-file Program.
SECTION 5. RESPONSIBILITIES OF AN AUTHORIZED IRS e-file
PROVIDER
.01 To ensure that returns are accurately and efficiently filed, an Authorized IRS
e-file
Provider must comply with the provisions of this revenue procedure and all
publications and notices governing the IRS e-file Program. The Service will from time to
time update such publications and notices to reflect changes to the program. It is the
responsibility of the Authorized IRS e-file Provider to ensure that it complies with the
latest version of all publications and notices. The publications and notices governing the
IRS e-file Program include:
(1) Publication 1345, Handbook for Authorized IRS e-file Providers of
Individual Income Tax Returns;
(2) Publication 1345A, Filing Season Supplement for Authorized IRS e-file
Providers of Individual Income Tax Returns;
(3) Publication 1346, Electronic Return File Specifications and Record
Layouts for Individual Income Tax Returns;
(4) Publication 1436, Test Package for Electronic Filing of Individual Income
Tax Returns;
(5) Publication 3112, The IRS e-file
Application Package; and
(6) Postings to the Electronic Filing System Bulletin Board (EFS Bulletin
Board) and the IRS "Digital Daily" web site at:

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http://www.irs.gov
on the Internet.
.02 The publications and notices listed in section 5.01 supplement this revenue
procedure but do not supersede it. A violation of a provision of these publications and
notices is considered a violation of this revenue procedure and may subject the
participant to the sanctions provided in section 7 of this revenue procedure.
SECTION 6. PENALTIES
.01 Penalties for Disclosure or Use of Information
.
(1) An Authorized IRS e-file Provider, except a Software Developer that
does not have access to taxpayer information, is a tax return preparer under the definition
of § 301.7216-1(b). A tax return preparer is subject to a criminal penalty for unauthorized
disclosure or use of tax return information. See § 7216 of the Internal Revenue Code and
§ 301.7216-1(a). In addition, § 6713 establishes civil penalties for unauthorized
disclosure or use of tax return information.
(2) Under § 301.7216-2(h), disclosure of tax return information among
Authorized IRS e-file
Providers for the purpose of electronically filing a return is
permissible. For example, an ERO may pass on tax return information to an Intermediate
Service Provider and/or a Transmitter for the purpose of having an electronic return
formatted and transmitted to the Service.
.02 Other Preparer Penalties.
(1) Preparer penalties may be asserted against an individual or firm meeting
the definition of an income tax return preparer under § 7701(a)(36) and § 301.7701-15.

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Preparer penalties that may be asserted under appropriate circumstances include, but are
not limited to, those set forth in §§ 6694, 6695, and 6713.
(2) Under § 301.7701-15(d), Authorized IRS e-file
Providers are not income
tax return preparers for the purpose of assessing most preparer penalties as long as their
services are limited to "typing, reproduction, or other mechanical assistance in the
preparation of a return or claim for refund."
(3) If an ERO, Intermediate Service Provider, Transmitter, or the product of a
Software Developer alters the return information in a nonsubstantive way, this alteration
will be considered to come under the "mechanical assistance" exception described in
§ 301.7701-15(d). A nonsubstantive change is a correction or change limited to a
transposition error, misplaced entry, spelling error, or arithmetic correction.
(4) If an ERO, Intermediate Service Provider, Transmitter, or the product of a
Software Developer alters the return information in a way that does not come under the
“mechanical assistance” exception, the Authorized IRS e-file
Provider may be held liable
for income tax return preparer penalties. See § 301.7701-15; Rev. Rul. 85-189, 1985-2
C.B. 341 (which describes a situation where a Software Developer was determined to be
an income tax return preparer and subject to certain preparer penalties).
.03 Other Penalties
. In addition to the above specified provisions, the Service
reserves the right to assert all appropriate preparer, nonpreparer, and disclosure
penalties against an Authorized IRS e-file Provider as warranted under the
circumstances.

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SECTION 7. MONITORING AND SANCTIONING OF AN AUTHORIZED IRS e-file

PROVIDER
.01 The Service will monitor Authorized IRS e-file
Providers for compliance with
the rules governing the IRS e-file Program. The Service may sanction an Authorized IRS
e-file
Provider for violating any provision of this revenue procedure or the publications
and notices governing the IRS e-file
Program.
.02 Sanctions that the Service may impose upon an Authorized IRS e-file Provider
for violations described in section 7.01 of this revenue procedure include a written
reprimand, suspension or expulsion from the program, and other sanctions, depending on
the seriousness of the infraction. Publication 1345 describes the infraction categories
and the rules governing the imposition of sanctions.
SECTION 8. ADMINISTRATIVE REVIEW PROCESS
.01 An applicant that has been denied participation in the IRS e-file
Program (see
section 4.03 of this revenue procedure) has the right to an administrative review. During
the administrative review process, the denial of participation remains in effect.
.02 An Authorized IRS e-file Provider may seek administrative review for any
sanction the Service may impose under section 7 of this revenue procedure.
.03 Publication 1345 describes the procedures regarding administrative review of
a denial of participation in the IRS e-file
Program and any sanction imposed by the
Service.
SECTION 9. PILOT PROGRAMS

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.01 The Service regularly conducts pilot programs to introduce new technology
into the IRS e-file
Program. These pilot programs are usually conducted within a limited
geographic area or within a limited taxpayer or practitioner community. The Service
establishes rules for participating in these pilot programs and embodies these rules in an
implementing document typically referred to as a "Memorandum of Understanding" (MOU)
or "Memorandum of Agreement" (MOA). Pilot participants must agree to the provisions of
the implementing document in order to participate in the pilot program.
.02 An implementing document supplements this revenue procedure, but does not
supersede it. Participants in a pilot program remain subject to the provisions of this
revenue procedure unless the implementing document specifically provides otherwise.
.03 A violation of a provision of an implementing document is considered a
violation of this revenue procedure and may subject the participant to sanctions (see
section 7 of this revenue procedure).
SECTION 10. EFFECT ON OTHER DOCUMENTS
Rev. Proc. 98-50, 1998-2 C.B. 368, and Rev. Proc. 98-51, 1998-2 C.B. 380, are
modified and, as modified, are superseded.
SECTION 11. EFFECTIVE DATE
This revenue procedure is effective July 13, 2000, except for the provisions of
section 7 of this revenue procedure, which are effective for sanctions imposed on or after
January 1, 2001.
SECTION 12. INTERNAL REVENUE SERVICE OFFICE CONTACT

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All questions regarding this revenue procedure should be directed to the Internal
Revenue Service. The telephone number for this purpose is (202) 283-0531 (not a toll-
free number).