Who Is Authorized to Sign the ERO Signature?

An Electronic Return Originator (ERO) is an IRS-authorized tax professional or firm that facilitates the electronic submission of tax returns to the Internal Revenue Service (IRS). The “ERO signature” refers to a required attestation within this electronic filing process, serving as a digital confirmation from the ERO. This signature upholds the integrity and authenticity of electronically filed tax returns.

Identifying the Authorized Signer

The authority to apply the ERO signature rests primarily with the principal of the ERO firm or an employee specifically authorized by that principal. An authorized employee must be a direct employee of the ERO, not an independent contractor, ensuring a clear line of responsibility within the firm. This authorization means the employee can sign on behalf of the ERO, though the ERO firm ultimately remains responsible for all returns submitted under its Electronic Filing Identification Number (EFIN).

Individuals not permitted to apply the ERO signature include the taxpayer, any unauthorized third party, or someone not directly employed by the ERO firm. The IRS outlines these requirements in IRS Publication 1345, which serves as a handbook for authorized IRS e-file providers. This publication specifies the criteria for who can originate and transmit electronic returns, emphasizing the need for proper authorization to maintain the security and validity of the e-file system.

The Purpose and Responsibilities of the ERO Signature

The ERO signature represents a declaration that the Electronic Return Originator has fulfilled specific obligations in the e-filing process. It attests that the ERO has verified the taxpayer’s identity and obtained the necessary taxpayer consent, typically documented on IRS Form 8879, before transmitting the return. This verification process often involves identity authentication methods, especially for remote transactions, to ensure the person seeking to e-file is indeed the taxpayer.

The signature further signifies that the ERO has accurately transmitted the tax return data as received from the taxpayer. EROs are held to due diligence responsibilities, which include ensuring the accuracy of data entry and compliance with all IRS e-file requirements. EROs are required to transmit the electronic return to the IRS within three calendar days of receiving the taxpayer’s signed authorization, such as Form 8879.

Consequences of Non-Compliance

Failure to adhere to the ERO signature requirements and related e-file rules can lead to repercussions for the Electronic Return Originator. The IRS can impose various disciplinary actions, ranging from a written reprimand to suspension or expulsion from the IRS e-file program. Such sanctions can severely limit an ERO’s ability to operate and serve clients.

Improper or unauthorized ERO signatures can also result in the rejection of a taxpayer’s return by the IRS, delaying processing and potentially causing issues for the taxpayer. Tax preparers who fail to meet e-filing mandates may face penalties. For instance, failing to meet due diligence requirements for certain credits, like the Earned Income Tax Credit, could incur penalties of $560 per failure per return. Adherence to these regulations ensures efficient tax filing operations for both the ERO and the taxpayer.