EroCode is a site dedicated to income tax practitioners known as Electronic Return Originators (ERO's). These are individuals who have passed annual suitability checks by the Internal Revenue Service and subsequently accepted into the ever growing Electronic Filing (Efile) program of the IRS. ERO's are furnished with publicatons which outline the Efile program, and a publication of Error Codes which will cause an electronically filed tax return to be "Rejected" by the IRS. If a return is "Rejected" the ERO will receive an Acknowledgement file from the Agency listing the Reject Code number(s) which caused the return to Reject. These reject codes guide the ERO in correcting the error in order to have the return "Accepted" by the IRS. Once the return is "Accepted" by the IRS, it is considered "Filed". Being Accepted electronically does not mean that the return is any more or any less subject to Audit by the Agency.

This site is a handy and convenient site to access the total list of Error Codes from the IRS Publication 1345a, and in some cases, helpful hints related to correcting the error. It is also a site dedicated to expounding and following the rules of Electronic Filing as put forth by the IRS, and suggestions concerning those ERO's who don't.. Everyone has heard the saying about the inevitability of "Death and Taxes ". We might add that tax season is like winter, "It only comes once a year", and there is a mad rush to prepare and/or Efile returns before the competition can which actually begins before January. The evolution of electronic filing has been a boon to those who saw the "Wave of the Future" coming early, and tax practitioners who were accepted in the early years have been astounded by its growth, and sometimes widespread abuse. In an effort to lock in tax returns before the season has even begun, many finance companies offer loans to individuals who promise to file their returns with the loan company. With December being the prime month for Christmas borrowing, many people take the offer with no thought of the cost or even if the agreement is binding. Other unscrupulous EROs will allow clients to electronically file their returns prior to receiving their W-2 and/or 1099 forms from the issuer, which takes longer. While this issue is plainly addressed by the IRS in it's Publication 1345 and the official IRS website, to the disdain of many, it is still a common occurrence. It is unfair to the EROs who abide by the rules, and lose potential income to those who don't, and to the taxpayer who often has to file an amended return when he finds that the paystub or LES information does not match when the actual document is received. The offer of obtaining access to tax refund money early drives the taxpayers, most of whom don't know or care that the regulations forbid the practice. Many assume that it is legal, since the offer is being made by an accepted ERO. Compliant ERO's would like to see the IRS either enforce this rule or abandon it. EroCode would like to received feedback from other ERO's regarding this matter. Please send your comments and opinions to Efile@erocode.com.

OFFSETS/FLIPS

Another issue which is problematic to ERO's who offer Refund Anticipation Loans, is whether or not the client's refund will be offset after the return has been filed electronically. One of the prime benefits of RAL's for the ERO is that the preparation and filing fees can be withheld from the refund when it is direct deposited to the RAL bank. Unfortunately, if the refund is offset (applied) to delinquent child support, student loans or a myriad of other government related debts, the ERO's fees are left unpaid and the client receives the benefit of "free" preparation and filing. While this information is sent as part of the IRS Acknowledgement, the return has already "Filed" when it is sent. It is difficult if not impossible to collect on such a debt, and being able to accurately anticipate offsets would be a big time and money saver for ERO's. EroCode has obtained information enabling access to this information before the return has been transmitted, which is being made available to other ERO's free of charge! Simply send an email request to Efile@erocode.com and you will be sent this valuable information by return email absolutely free of charge!

Tip for Drake Software Users:

Using the reports function, find the returns from 2003 which were unfunded or under funded.  These clients are likely to be DECLINED by your bank for a ral or other bank product.  Be sure to add any fees owed to you onto this years'.  The banks pay your fees on declines regardless of what happens.