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Understanding e-file mandates

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Understanding e-file mandates

Most agencies have e-file mandates for tax preparers. This article will help you understand the current mandates for each agency to determine if you are required to e-file.

Federal

Individual:

  • Tax return preparers who reasonably expect to file, or whose firm reasonably expects to file, in the aggregate, 11 or more covered returns in a calendar year are specified tax return preparers and are required to submit electronically any return that the preparer files with the IRS. 
  • An opt out Form 8948 will be required for returns not e-filed.

Alabama

Individual:

Requirements for mandatory e-file for paid prepaers using packaged software:

  • Paper returns with 2-D barcodes are no longer considered as electronically filed
  • An “opt out” election form (Form EOO) must be attached to any paper return submitted by a preparer subject to the electronic filing requirements of Rule 810-27-.09
  • 2-D barcode is still required on any such paper return.

If an income tax return preparer prepares 11 or more acceptable, original individual income tax returns using tax preparation software in a calendar year, then for that calendar year and for each subsequent calendar year thereafter, all acceptable individual income tax returns prepared by that income tax preparer must be filed using electronic technology, as defined in the “Electronic Tax Return Filing Act,” as codified in Chapter 30 of Title 40, Code of Alabama 1975.

Arkansas

As of January 2021 Arkansas does not have an e-file mandate available. For the most current information check the Arkansas Department of Finance and Administration's website.

California

Individual:

California law requires tax preparers to e-file if they prepare:

  • more than 100 individual income tax returns
  • 1 or more returns using tax preparation software

A taxpayer may not want to e-file, or a tax preparer cannot e-file due to reasonable cause. In that case, complete the e-file Opt-Out record for individuals FTB 8454 and keep it for your records.

Business:

California law requires business entities that prepare an original or amended return using tax preparation software to be electronically filed.

A business may request a e-file waiver due to:

  • Technology constraints.
  • e-file may result in undue financial burden
  • circumstances that constitute reasonable cause.

See Business entity e-file waiver request for more information.

Colorado

As of January 2021 Colorado does not have an e-file mandate available. For the most current information check the Colorado Department of Revenue website.

Connecticut

Individual:

Conn. Agencies Regs. Section 12-690-1 requires return preparers who prepared 50 or more Connecticut income tax returns to file all Connecticut personal income tax returns electronically using the Federal/State Electronic Filing Program (e-file).

Delaware

As of January 2021 Delaware does not have an e-file mandate available. For the most current information check the Delaware Division of Revenue website.

District of Columbia

As of January 2021 District of Columbia does not have an e-file mandate available. For the most current information check the Office of Tax and Revenue website.

Florida

Business:

  • Businesses that paid $20,000 or more in taxes during the most recent state fiscal year (July through June) are required to e-file.

Georgia

Individual and Business:

  • Georgia Department of Revenue Regulation 560-3-2-.26 requires electronic filing for income tax or withholding tax return(s) in which series 100 tax credits are generated, allocated, claimed, utilized, or included in any manner.  Income tax returns included are individual (500 and 500X), fiduciary (501), corporate (600 and 600S), and partnership (700).

Hawaii

Business:

  • Corporate income tax returns whos annual estimated tax liability is greater than $4,000 must e-file Form N-30.

Idaho

As of January 2021 Idaho does not have an e-file mandate available. For the most current information check the Idaho State Tax Commission website.

Illinois

Individual:

  • Effective January 1, 2012, paid preparers who file more than ten (10) Illinois Individual Income Tax returns must file those returns electronically.

Opt-out Information. If your client refuses to allow you to electronically file their return, you can remain in compliance with the mandate by having your client complete and sign Form IL-8948, Electronic Filing Opt-Out Declaration. Retain all Forms IL-8948 you receive from your clients in your files for three years. The department may request copies at anytime.

Indiana

Individual:

  • In calendar year 2014 and newer the eFile mandate applies to any professional preparer who filed 10 or more Indiana returns for individuals in the previous tax year. The mandate states the current year tax returns must be filed electronically.
  • A penalty of $50 per return up to a maximum of $25,000 per calendar year may be imposed.
  • Indiana state law requires those practitioners who are affected by the mandate to file their returns electronically. Other states’ practitioners have been successful in such situations by telling their clients up front, before conducting any work for them. Form IN-OPT may be signed by the taxpayer in those rare instances where electronic filing is refused. This form must be retained by the practitioner for three years.

Iowa

As of January 2021 Iowa does not have an e-file mandate available. For the most current information check the Iowa Department of Revenue website.

Kansas

Individual:

  • Tax return practitioners who prepared 50 or more Kansas individual income tax returns during any calendar year must file at least 90% of their Kansas individual returns electronically in successive years.

Kentucky

Individual:

  • Tax preparers that file more than ten individual income tax returns are required to file their client’s returns electronically.
  • A preparer who fails or refuses to comply with the mandate shall pay a return processing fee of $10 for each return not filed as required, unless it is shown that failure is due to reasonable cause.
  • The Form 8948-K should be completed to explain why a particular return is being filed by paper. The form must be attached and mailed with the paper return. A common error found in previous years is the omission of the reason. A reason for not filing by efile is required.

Louisiana

Individual

Preparer that prepares 100 or more Individual income tax returns must electronically file 90 % of these returns and any extensions

Business

All extensions and for income tax periods beginning on or after January 1, 2019, if corporation’s total
assets have absolute value of $250,000 or more

New for tax year 2020 Fiduciary returns:

For Income tax periods beginning on or after January 1, 2020, if return includes 1 or more Schedules K-1

Maine

Individual:

A tax return preparer must file by electronic data submission all Maine tax returns for
individual income tax that is eligible for electronic filing if they prepared 11 or more individual income tax returns in the prior year.

Business:

For tax years beginning on or after January 1, 2016, corporations, including tax-exempt
entities, required to file Form 1120ME with total assets of $5 million or more as of the
last day of that tax year must file returns by electronic data submission.

Maryland

Individual

  • Tax return preparers who have prepared, for compensation, more than 100 Maryland individual income tax returns in the prior tax year to file all individual tax returns electronically.
  • The Comptroller of Maryland to impose on a preparer a $50 penalty for each return that is not filed electronically in compliance with this Act, unless the preparer is able to show that the failure to comply is due to reasonable cause and not due to willful neglect.
  • The taxpayer may opt out of having their income tax return filed electronically if the appropriate box is checked on the paper return.

Massachusetts

Individual:

Personal income tax preparers must file all Massachusetts personal income tax returns (i.e., Forms 1 and 1-NR/PY) electronically unless the preparer reasonably expects to file 10 or fewer original Massachusetts  Forms 1 and 1-NR/PY during the calendar year or the taxpayer directs that filing be done on paper.

Most business returns must also be e-filed see the E-filing and payment requirements page for details.

Michigan

Individual:

Tax preparers who complete 11 or more Individual Income Tax returns are required to e-file all eligible
returns

Business:

All eligible MBT returns prepared using tax preparation software or computer-generated forms must be e-filed.

Minnesota

Individual and Business

Preparers must electronically file all Minnesota individual income, corporation franchise, S corporation, partnership, and fiduciary tax returns if they expect to prepare more than 10 Minnesota tax returns for this year. 

Preparers must self-assess a $5 paper filing fee per return filed by paper that could have been e-filed. 

Mississippi

Business:

  • Pass-Through Entities that issue 100 or more K-1s are required to file electronically.
  • Corporations and Pass-Through Entities with assets greater than $5,000,000 are required to file electronically.  
  • Failure to file electronically as required may subject the taxpayer and/or tax preparer to a penalty of twenty-five dollars ($25.00) for the first instance of non-compliance and five hundred dollars ($500) for each additional instance of non-compliance​

Missouri

As of January 2021 Missouri does not have an e-file mandate available. For the most current information check the Missouri Department of Revenue website.

Montana

As of January 2021 Montana does not have an e-file mandate available. For the most current information check the Montana Department of Revenue website.

Nebraska

Individual and Business:

  • The e-file mandate for tax preparers currently applies to individual income tax, corporate income tax, and partnership returns.
  • OptOut: Taxpayers are not required to e-file their individual income tax, corporate income tax, or partnership returns, but are still strongly encouraged to do so. Taxpayers who do not want the paid preparer to e-file their returns must complete a   Nebraska E-File Opt-Out Record for IndividualsNebraska E-File Opt-Out for Corporations and Partnerships. This form is retained by the preparer.
  • Is there a penalty for not e-filing when required? Yes. A tax preparer may be fined $100 for each return that is not e-filed.

New Jersey

Individual:

  • Per N.J.S.A. 54A:8-6.1 and  N.J.A.C. 18:35-6.4 (e), paid tax preparers who prepare 11 or more New Jersey individual Income Tax resident returns including those filed for trusts and estates during the tax year must use electronic methods to file those returns.

Business:

For tax years beginning on or after January 1, 2015, N.J.A.C. 18:7-11.19 requires tax preparers to file Corporation Business Tax (CBT) returns electronically. In addition, if the taxpayer instructs the tax preparer to make CBT payments, the preparer must do so electronically. For tax years beginning on or after January 1, 2016, all taxpayers and tax preparers must file CBT returns and make payments electronically. The mandate includes all CBT returns, estimated payments, extensions, and vouchers.

New Mexico

Individuals:

  • If a preparer filed 25 New Mexico individual income tax returns filed for the previous filing season subsequent returns the following year must be e-filed.
  • An exception to the electronic filing requirement occurs when your return is being prepared for you, and you request otherwise. To waive the tax preparer's electronic-filing requirement, you must complete form RPD-41338, Taxpayer Waiver for Preparers Electronic Filing Requirement and submit it to the tax preparer. The tax preparer must check the box in the "Paid Preparer's Use Only" section on form PIT-1 to indicate that a signed Taxpayer Waiver for Preparers Electronic Filing Requirement is on file.

New York

Individual and Business

If you’re a tax return preparer, you’re subject to the e-file mandate if you:

  • prepared at least one authorized tax document for more than 10 different taxpayers during calendar year 2020, and
  • will use tax software to prepare one or more authorized tax documents in 2021;
    or
  • were previously mandated to e-file (once you're subject to the mandate, it continues to apply to you in all following years, even if you no longer meet the threshold).
    • For example, if you were initially subject to the mandate because you prepared more than five New York State tax documents in 2018 you are still subject to the mandate.

Clients cannot opt-out of e-file and if you fail to e-file one or more tax documents, you are subject to a $50 penalty per document, unless you can document reasonable cause for not e-filing.

North Carolina

As of January 2021 North Carolina does not have an e-file mandate for income tax returns available. For the most current information check the North Carolina Department of Revenue website.

North Dakota

As of January 2021 North Dakota does not have an e-file mandate available. For the most current information check the North Dakota Department of Revenue website.

Ohio

Individual and Business:

A tax return preparer that prepares more than eleven original tax returns during any calendar year shall use electronic technology to file with the tax commissioner all original tax returns prepared by the tax return preparer. This division does not apply to a tax return preparer in any calendar year if, during the previous calendar year, the tax return preparer prepared not more than ten original tax returns.

If a tax return preparer required by this section to submit original tax returns by electronic technology files an original tax return by some means other than by electronic technology, the tax commissioner shall impose a penalty of fifty dollars for each return in excess of eleven in any calendar year that is not filed by electronic technology. Upon good cause shown by the tax return preparer, the tax commissioner may waive all or any portion of the penalty or may refund all or any portion of the penalty the tax return preparer has paid.

Opt out forms can be found on the Ohio Tax Preparer Electronic Filing page.

Oklahoma

Individual and Business:

  • All tax return preparers must file individual income tax returns electronically.

Oregon

Individual:

  • Paid preparers who meet the requirements of the federal e-file mandate must also e-file Oregon personal income tax returns. ​​

Business:

  • If your corporation is required to e-file your federal return, then your corporation is also required to e-file your Oregon return. In addition, if e-filing was required for the original return, then any amended returns for that year must also be e-filed. However, if that year is not open for e-file, you should paper file or file with a 2-D barcode.

Pennsylvania

Individual

  • For all calendar years following a calendar year in which a third party preparer prepares 11 or more Pennsylvania Personal Income Tax Returns annually, the third party preparer is required to electronically file (e-file) in the manner prescribed by departmental instructions all such Pennsylvania Personal Income Tax Returns. Once a third party preparer is subject to this filing mandate, the third party preparer shall continue to be subject to the mandate regardless of how many Pennsylvania Personal Income Tax Returns he or she prepares during a calendar year.
  • An “OPT OUT” box has been added to the PA-40 return. It must be checked to indicate that the taxpayer does not want their return e-filed.

Business:

  • Beginning Jan. 1, 2014, all third-party preparers who prepared more than 10 PA corporate tax reports in the prior calendar year are required to electronically file all PA corporate tax reports in subsequent years. Once a third-party preparer is subject to this filing mandate, the third-party preparer shall continue to be subject to the mandate regardless of how many PA corporate tax reports he prepares during a calendar year.  Corporations completing there own Corporate Tax Report are not subject to this mandate.

Rhode Island

Individual and Business:

  • Any Paid Preparer who filed more than one hundred (100) Rhode Island Tax Returns during the previous calendar year must file all eligible Tax Returns electronically.

South Carolina

Individual and Business:

  • Preparers who file 100 or more returns for a tax period for the same year are required to file electronically.
  • The statute provides for a $50 penalty for each return not filed electronically.
  • For information on obtaining a waiver for the mandate see the Guidelines for Electronic Programs page.

South Dakota

As of January 2021 South Dakota does not have an e-file mandate available. For the most current information check the South Dakota Department of Revenue website.

Tennessee

Business:

  • Business tax returns are mandated to be electronically filed.

Texas

Business:

  •  Texas taxpayers may be required to electronically report (file) and/or pay based on the amount reported and paid in the preceding state fiscal year (September 1 to August 31). A full list of requirements can be found on the Texas Comptroller webpage.

Utah

Individual:

  • If a preparer prepared over 100 returns in a prior calendar year, the preparer(s) must submit all of their Utah individual income tax returns electronically.

Virginia

Individual and Business

  • Fiduciary Income Tax: Beginning with returns due on or after January 1, 2020, tax preparers are required to file fiduciary income tax returns electronically, but there is no requirement to make payments electronically.
  • Individual Income Tax: Paid tax preparers who prepare, or employ people to prepare, 50 or more individual income tax returns a year are required to file electronically. If they prepare 50 or more returns in a taxable year, then for each year after, they must file all individual income tax returns electronically. 
  • Corporate Income Taxes: Any business, or person filing on behalf of a business, must file the forms and payments electronically
  • Pass-Through Entity (PTE) Tax: Any business, or person filing on behalf of a business, must file the forms and payments electronically

To request a waiver see the Electronic Filing Requirements page.

Vermont

As of January 2021 Vermont does not have an e-file mandate available. For the most current information check the Vermont Department of Taxes website.

West Virginia

Individual:

  • Income tax preparers who filed more than 25 personal income tax returns last year – and will be using tax preparation software to complete one or more of these returns – must file those electronically for the current tax year.
  • To request an opt out see the Electronic Filing for Individual page.

Wisconsin

Individual:

  • Practitioners who filed 50 or more Wisconsin individual income tax returns for the prior taxable year are required to e-file returns.

For a complete list of Wisconsin e-file mandates see Electronic Filing and Electronic Funds Transfer page.

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