(Updated 01/24/2011)

Acceptance Letter - Correspondence issued by the IRS to applicants confirming they may participate in IRS e-file. See also Credentials.

Acknowledgment (ACK) - A report generated by the IRS to a Transmitter that indicates receipt of all transmissions. An ACK Report identifies the returns in each transmission that are accepted or rejected for specific reasons.

Acceptance or Assurance Testing (ATS) - Required testing for Software Developer that participate in IRS e-file to assess their software and transmission capability with the IRS, prior to live processing. PATS, BATS and CATS are acceptance or assurance testing specific to certain form types.

Administrative Review Process - The process by which a denied applicant or sanctioned Authorized IRS e-file Provider may appeal the IRS’ denial or sanction.

Adoption Taxpayer Identification Number (ATIN) - A tax processing number issued by the IRS as a temporary taxpayer identification number for a child in the domestic adoption process who is not yet eligible for a Social Security Number (SSN). An ATIN is not a permanent identification number and is only intended for temporary use. To obtain an ATIN, complete IRS Form W-7A, Application for Taxpayer Identification Number for Pending U.S. Adoptions.

Authorized IRS e-file Provider (Provider) - A firm accepted to participant in IRS e-file.

Automated Clearing House (ACH) - A system that administers electronic funds transfers (EFTs) among participating financial institutions. An example of such a transfer is Direct Deposit of a tax refund from IRS into a taxpayer's account at a financial institution.

Batch - A single transmission consisting of the electronic data from single or multiple tax returns.

Business Rules (BR) - Error codes included on an Acknowledgement (Ack) for returns that the IRS rejected. The IRS publishes explanations prior to the filing season on IRS.gov. Providers can locate these on the Schemas and Business Rules for Forms 1040/4868 Modernized e-File (MeF).

Communications Testing - Required test for all Transmitters using accepted IRS e-file software to assess their transmission capability with the IRS prior to live processing.

Credentials - Documentation issued by the IRS which indicates qualification of an Authorized IRS e-file Providers to participate in the IRS e-file Program. The documentation consists of identification numbers and acceptance letters.

Declaration Control Number (DCN) - A unique 14-digit number assigned by the ERO (or Transmitter, in the case of Online Filing), to each electronically filed tax return.

Denied Applicant - An applicant that the IRS does not accept to participate in IRS e-file. An applicant that the IRS denies from participation in IRS e-file has the right to an administrative review.

Depositor Account Number (DAN) - The financial institution account to which a Direct Deposit refund is to be routed.

Direct Deposit - An electronic transfer of a refund into a taxpayer's financial institution account.

Direct Filer - see "Transmitter".

Drain - The IRS scheduled time for processing electronically filed return data.

Drop or Dropped - An EFIN that is no longer valid due to inactivity or other administrative action.

Due Diligence - Due Diligence, when used in context with the Earned Income Tax Credit (EITC), refers to requirements that income tax return preparers must follow when preparing returns or refund claims that involve EITC.

Earned Income Tax Credit (EITC) - The Earned Income Tax Credit is a refundable individual income tax credit for certain persons who work.

EITC Recertification - A requirement for a taxpayer previously denied EITC to provide additional information on Form 8862, Information to Claim Earned Income Tax Credit After Disallowance, when they file a similar EITC claim on a subsequent return.

Electronic Federal Tax Payment System (EFTPS) – A free service from the U.S. Treasury through which federal taxes may be paid. The taxpayer can pay taxes via the Internet, by phone or through a service provider. After authorization, EFTPS electronically transfers payments from the authorized bank account to the Treasury’s general account.

Electronic Filing Identification Number (EFIN) - An identification number assigned by the IRS to accepted applicants for participation in IRS e-file.

Electronic Funds Transfer (EFT) - The process through which Department of the Treasury transmits Direct Deposit refunds from the government to the taxpayer's account at a financial institution.

Electronic Funds Withdrawal (EFW) - A payment method which allows the taxpayer to authorize the U.S. Treasury to electronically withdraw funds from their checking or savings account.

Electronic Management System (EMS) - front-end processing system for electronic information exchange between the Internal Revenue Service (IRS) and Authorized IRS e-file Providers (Providers), to a designated Submission Processing Campus. EMS receives returns from Transmitters, acknowledges the receipt of the information and prepares the information for mainframe processing.

Electronic Postmark - The Electronic Postmark is the date and time the Transmitter first receives the electronic return on its host computer in the Transmitter's time zone. The taxpayer adjusts the time to their time zone to determine timeliness.

Electronic Return Originator (ERO) - An Authorized IRS e-file Provider that originates the electronic submission of returns to the IRS.

Electronic Signature - Method of signing a return electronically through use of a Personal Identification Number (PIN). See also Self-Select PIN Method and Practitioner PIN Method.

Electronic Tax Administration and Refundable Credits (ETARC) – ETARC is the office within IRS with management oversight of the IRS’ electronic commerce initiatives. The mission of ETARC is to revolutionize how taxpayers transact and communicate with the IRS.

Electronic Tax Administration Advisory Committee (ETAAC) - An advisory group established by the IRS Restructuring and Reform Act of 1998 to provide an organized public forum for discussion of ETARC issues in support of the overriding goal that paperless filing should be the preferred and most convenient method of filing tax and information returns.

Electronic Transmitter Identification Number (ETIN) - An identification number assigned by the IRS to a participant in IRS e-file that performs activity of transmission and/or software development.

Electronically Transmitted Documents (ETD) - A system created to process electronic documents that a Provider does not attach to a tax return and the taxpayer files separately from the tax return.

Error Reject Code (ERC) – Codes included on an Acknowledgment (ACK) Report for returns that the IRS rejected. The IRS publishes explanations prior to the filing season on IRS.gov. Providers can locate these on the e-file for Tax Professionals page titled 2009 Tax Year IRS s-file for Individual Income Tax Returns. In addition, the IRS also provides these in Publication 1346 .

Federal/State e-file - The Federal/State e-file option allows taxpayers to file federal and state income tax returns electronically in a single transmission to the IRS.

Financial Institution - For the purpose of Direct Deposit of tax refunds, the IRS defines a financial institution as a state or national bank, savings and loan association, mutual savings bank or credit union. Only certain financial institutions and certain kinds of accounts are eligible to receive Direct Deposits of tax refunds.

Financial Management Service (FMS) - The agency of the Department of the Treasury through which payments to and from the government, such as Direct Deposits of refunds, are processed.

Form Field Number or Form Sequence (SEQ) Number - The identifier of specific data on an electronic tax return record layout as defined in Publication 1346.

Fraudulent Return - A "fraudulent return" is a return in which the individual is attempting to file using someone’s name or SSN on the return or where the taxpayer is presenting documents or information that have no basis in fact.
Note: Taxpayers should not file fraudulent returns with the IRS.

Indirect Filer - An Authorized IRS e-file Provider who submits returns to IRS via the services of a Transmitter.

Individual Taxpayer Identification Number (ITIN) - A tax processing number that became available on July 1, 1996, for certain nonresident and resident aliens, their spouses and dependents. The ITIN is only available from IRS for those individuals who cannot obtain a Social Security Number (SSN). To obtain an ITIN, complete IRS Form W-7, Application for IRS Individual Identification Number.

Intermediate Service Provider - An Authorized IRS e-file Provider that receives electronic tax return information from an ERO or a taxpayer who files electronically using a personal computer and commercial tax preparation software, that processes the electronic tax return information and either forwards the information to a Transmitter or sends the information back to the ERO or taxpayer.

Internet Protocol (IP) Information - The IP address, date, time and time zone of the origination of a tax return filed through Online Filing via the Internet. IRS requires Transmitters that provide Online Services via the Internet to capture the Internet Protocol Information of Online returns. By capturing this information, it transmits the location of the return’s originator with the individual’s electronic return. See Publication 1346 for additional Information.

IRS e-file - The brand name of the electronic filing method established by the IRS.

IRS e-file Marketing Tool Kit - A specially designed kit containing professionally developed material that EROs may customize for use in advertising campaigns and promotional efforts.

IRS Master File - A centralized IRS database containing taxpayers' personal return information.

Levels of Infractions (LOI) - Categories of infractions of IRS e-file rules based on the seriousness of the infraction with specified sanctions associated with each level. Level One is the least serious, Level Two is moderately serious and Level Three is the most serious.

Memorandum of Agreement (MOA) & Memorandum of Understanding (MOU) - The implementing document containing the set of rules established by the IRS for participating in IRS pilot programs.

Modernized e-File (MeF) - The Modernized e-File (MeF) system is an internet-based electronic filing platform. It is a transaction-based system that allows tax return originators to transmit returns electronically to the IRS in real-time. MeF improves the response time required to issue an acknowledgement file to the transmitter that indicates whether the return was accepted or rejected for downstream processing.

Monitoring - Activities the IRS performs in order to ensure that Authorized IRS e-file Providers are in compliance with the IRS e-file requirements. Monitoring may include, but is not limited to, reviewing IRS e-file submissions, investigating complaints, scrutinizing advertising material, checking signature form submissions and/or recordkeeping, examining records, observing office procedures and conducting periodic suitability checks. IRS personnel perform these activities at IRS offices and at the offices of Providers.

Name Control - The first four significant letters of a taxpayer's last name that the IRS uses in connection with the taxpayer SSN to identify the taxpayer, spouse and dependents.

Non-substantive Change - A correction or change limited to a transposition error, misplaced entry, spelling error or arithmetic correction which does not require new signatures or authorizations to be transmitted or retransmitted.

Originate or Origination - Origination of an electronic tax return submission occurs when an ERO either:

1. directly transmits electronic returns to the IRS,
2. sends electronic returns to a Transmitter or
3. provides tax return data to an Intermediate Service Provider.

Participants Acceptance Testing (PATS) - Required testing for all Software Developers that participate in IRS e-file of individual income tax returns to assess their software and transmission capability with the IRS prior to live processing. See also Acceptance or Assurance Testing.

PATS Communications Test - Required for all Transmitters using accepted IRS e-file software for individual income tax returns to assess their transmission capability with the IRS prior to live processing.

Pilot Programs - An approach that the IRS uses to improve and simplify IRS e-file. The IRS usually conducts pilot programs within a limited geographic area or within a limited taxpayer or practitioner community. The IRS embodies rules for participating in pilot programs 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.

Potentially Abusive Return - A "potentially abusive return" is a return

1. that is not a fraudulent return;
2. that the taxpayer is required to file; or
3. that may contain inaccurate information that may lead to an understatement of a liability or an overstatement of a credit resulting in production of a refund to which the taxpayer may not be entitled.
   Note: The decision not to provide a RAL or other bank product does not necessarily make it an abusive return.

Practitioner PIN Method - An electronic signature option for taxpayers who use an ERO to e-file. This method requires the taxpayer to create a five-digit Personal Identification Number (PIN) to use as the signature on the e-filed return.
            Note: Requires Form 8879 to be completed.

Preparer's Tax Identification Number (PTIN) - An identification number issued by the IRS to paid tax return preparers. The PTIN is the number used to meet the requirement under section 6109(a)(4) of furnishing an identifying number on returns. Apply online for a PTIN or file Form W-12, IRS Paid Preparer Tax Identification Number Application. There is an annual user fee of $64.25 for a PTIN.  

Refund Anticipation Loan (RAL) - A Refund Anticipation Loan is money borrowed by a taxpayer that lender bases on a taxpayer's anticipated income tax refund. The IRS has no involvement in RALs. A RAL is a contract between the taxpayer and the lender. A lender may market a RAL under various commercial or financial product names.

Refund Cycle - The anticipated date that the IRS would issue a refund either by Direct Deposit or by mail to a taxpayer for a return included within a specific "drain". However, neither the IRS nor FMS guarantees the specific date that Department of the Treasury mails a refund or deposits it into a taxpayer's financial institution account.

Request for Agreement (RFA) - A solicitation, normally a written document, used in establishing non-monetary memoranda of agreement. RFAs are not "acquisitions" as defined by the Federal Acquisition Regulations (FAR).

Request for Procurement (RFP) - A solicitation, normally a written document, used in negotiated acquisitions estimated over $100,000 (as opposed to sealed bids) to communicate government requirements to prospective contractors and to solicit proposals to perform contracts.

Responsible Official - An individual with authority over the IRS e-file operation of the office(s) of an Authorized IRS e-file Provider, who is the first point of contact with the IRS 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 the Revenue Procedure and the publications and notices governing IRS e-file.

Revenue Protection - A series of compliance programs designed to ensure that the revenue the government collects and/or disburses in the form of refunds is accurate and timely, and that it issues disbursement of revenue only to entitled taxpayers.

Routing Transit Number (RTN) - A number assigned by the Federal Reserve to each financial institution.

Sanction – An action taken by the IRS to reprimand, suspend or expel from participation in IRS e-file, an Authorized IRS e-file Provider based on the level of infraction. See also Level of Infraction.

Self-Select PIN Method - An electronic signature option for taxpayers who e-file using either a personal computer or an ERO. This method requires the taxpayer to create a five-digit Personal Identification Number (PIN) to use as the signature on the e-file return and to submit authentication information to the IRS with the e-file return.

Software Developer - An Authorized IRS e-file Provider that develops software for the purposes of (a) formatting the electronic portions of returns according to Publication 1346 and/or (b) transmitting the electronic portion of returns directly to the IRS. A Software Developer may also sell its software.

Stockpiling – Stockpiling is waiting more than three calendar days to submit returns to the IRS after the Provider has all necessary information for origination of the electronic return or collecting e-file returns prior to official acceptance for participation in IRS e-file. The IRS does not consider collecting tax returns for IRS e-file prior to the startup of IRS e-file as stockpiling. However, Providers must advise taxpayers that it can not transmit the returns to the IRS prior to the startup date.

Submission Identification Number (SID) - A submission identifier (ID) uniquely identifies a submission. A submission ID is present in all attachment files and many request and response messages.The first six digits (003497) contain the Electronic Filer Identification Number (EFIN), the next four digits (2006) contain the year, the next three digits (073) contain the Julian date, and the last seven digits (1234567) contain a sequence number to uniquely identify messages sent within a day with the given EFIN: EFIN + ccyyddd + xxxxxxx. The total number of characters of the submission ID is twenty.

Suitability - A check conducted on all firms and the Principals and Responsible Officials of firms when an application is initially processed, and on a regular basis thereafter. The suitability check includes a background check conducted by the IRS to ensure the firm and individuals are eligible for participation in IRS e-file.

Suspension - A sanction revoking an Authorized IRS e-file Provider's privilege to participate in IRS e-file.

Transmitter - An Authorized IRS e-file Provider that transmits the electronic portion of a return directly to the IRS. An entity that provides a "bump-up" service is also a Transmitter. A bump-up service provider increases the transmission rate or line speed of formatted or reformatted information that it is sending to the IRS via a public switched telephone network.

Treasury Offset Program (TOP) - Public Law that established the Tax Refund Offset Program which permits the government to offset overpayments against delinquent child support obligations as well as debts owed to participating federal and state agencies. Treasury’s Financial Management Service (FMS) office assumes responsibility and oversight for TOP.

Warning - Written notice given by the IRS to an Authorized IRS e-file Provider requesting specific corrective action be taken to avoid future sanctioning.

Written Reprimand - A sanction for a level one infraction of the IRS e-file rules. It reprimands a Provider for an infraction but does not restrict or revoke participation in IRS e-file.