Why Is My EFIN Inactive? And How to Fix It

An Electronic Filer Identification Number (EFIN) is a unique six-digit number assigned by the Internal Revenue Service (IRS) to tax professionals. This number is essential for firms that have completed the IRS e-file application to become authorized e-file providers. Without an active EFIN, tax professionals cannot electronically file tax returns on behalf of their clients, which is the standard and often preferred method of submission to the IRS. The EFIN plays a central role in ensuring the security and integrity of the electronic tax filing system by identifying the origin of each e-filed return. It allows the IRS to track who is filing returns electronically, helping to prevent fraudulent submissions and ensuring compliance with tax laws.

Common Reasons for EFIN Inactivity

One frequent reason an EFIN becomes inactive is a lack of electronic filing activity. The IRS requires authorized e-file providers to meet a minimum e-filing threshold to maintain active status. While specific numbers can vary, a general guideline often cited is at least five returns within a 12-month period. Failing to meet this volume requirement can lead to the EFIN’s deactivation.

Another common cause of EFIN inactivity stems from a failure to update or renew application information. The IRS mandates that EFIN holders keep their application details current, requiring updates within 30 days of any changes. This includes changes to the business name, address, telephone number, or the addition or removal of individuals listed on the application, such as principals or responsible officials. Outdated information can prevent the IRS from communicating important updates, potentially leading to EFIN deactivation.

Security concerns or compliance issues can also result in an EFIN becoming inactive. If the IRS suspects a security breach, unauthorized use of the EFIN, or non-compliance with e-file program rules, it may inactivate the EFIN to protect taxpayer data. This includes failures to adequately safeguard taxpayer information or misuse of the EFIN.

Changes in business status, such as a business closure, sale, or significant restructuring, also necessitate proper communication with the IRS. EFINs are not transferable, meaning that if a business is sold, the new principals must obtain their own EFIN. Failure to notify the IRS of such changes, including business dissolution or changes in ownership structure, can lead to the EFIN’s inactivation.

Reactivating an Inactive EFIN

When an EFIN becomes inactive, the first step towards reactivation involves accessing your IRS e-Services account. This online portal allows authorized users to check the precise status of their EFIN and review any specific messages or requirements from the IRS regarding its inactivity. Understanding the exact reason for inactivation, as outlined in the e-Services account, will inform the necessary steps for reinstatement.

For instance, if deactivation occurred due to insufficient e-filing activity, a simple online request to reactivate might be sufficient. However, if the inactivity is linked to more serious compliance issues or security breaches, a more detailed and involved process will be required, potentially including a review of security protocols or an explanation for the lapse.

Gathering necessary information and documentation is an important step before submitting a reinstatement request. This may involve providing updated business information, such as current addresses or contact details, or documentation related to security measures implemented if a breach was a factor. Ensuring all information is accurate and complete will help streamline the review process.

Once all preparatory steps are complete, the formal reinstatement request can be submitted through the IRS e-Services platform. This involves navigating specific menus within the e-Services account to locate the EFIN application, updating any required fields, and then submitting the request. After submission, processing times can vary, but the IRS communicates its decision or requests further information through the e-Services account or via official correspondence.

Maintaining EFIN Status

To prevent future EFIN inactivity, consistent adherence to IRS requirements is important. Meeting the minimum e-filing threshold annually is important to demonstrate ongoing activity as an authorized e-file provider. The IRS monitors the volume of returns filed under each EFIN, and a low volume can trigger deactivation.

Promptly updating all EFIN application information through the IRS e-Services account is also important. This includes any changes to business structure, contact information, or key personnel like principals and responsible officials, which must be reported within 30 days. Keeping this information current ensures the IRS can maintain accurate records and communicate effectively.

Adhering to IRS security requirements and protecting taxpayer data is an ongoing responsibility. EFIN holders should implement security measures, such as using strong, unique passwords, securing devices with up-to-date software, and encrypting sensitive files. Regularly monitoring EFIN activity through the e-Services account for discrepancies between filed returns and internal records can help detect unauthorized use promptly. Consistent monitoring and proactive security practices are important to preventing issues that could lead to inactivation.