The Internal Revenue Service’s procedures for approving authorized e-file providers need fixing after it seems to have approved a number of potentially ineligible tax professionals, including several with a criminal history and uncertain citizenship status, according to a new report.
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According to the rules, “responsible officials” associated with an e-file application must: be a United States citizen or alien lawfully admitted for permanent residence; be at least 18 years of age; and meet state and local licensing and/or bonding requirements for preparing and collecting tax returns. Responsible officials who aren’t certified or licensed professionals must be fingerprinted to ensure that no criminal activity exists that would render them ineligible to participate in the e-file program.
Between January 2022 and March 2025, the IRS accepted approximately 116,000 e-file Provider applications. The IRS performs suitability checks on applicants for the e-file program. But TIGTA found that programming errors, procedural updates and unaddressed suitability issues contributed to the approval of potentially ineligible applicants.
For the report, TIGTA reviewed a statistical sample of 138 responsible officials associated with the applications accepted by the IRS and found that 14 had suitability issues that weren’t addressed, including eight who had tax compliance issues of their own, such as not filing a tax return for one or more tax periods, not paying a tax debt, or not establishing an installment agreement to pay a debt.
Five of them had a criminal history that the IRS had not researched and addressed, or their criminal history wasn’t reviewed because there was no fingerprint data on file.
One applicant’s citizenship wasn’t verified. “During this same period, the IRS accepted 138 individuals into the e-file Program, but their citizenship status records indicated they were not eligible,” said the report. “In addition, approximately 6,300 individuals had an unknown citizenship status in IRS records.”
TIGTA selected a sample of the e-file applicants and found the IRS didn’t verify the citizenship status on 47% of the cases sampled. It also identified 67 IRS employees listed as responsible officials on e-file applications, even though IRS employees are prohibited from outside employment activities that involve preparing tax returns for compensation, gift or favor.
“If the IRS does not ensure that e-file providers maintain their integrity and adhere to professional and ethical standards, it could negatively impact trust in the administration of the federal tax system,” said the report.
TIGTA made five recommendations in the report, including reviewing the programming specific to tax compliance to ensure that initial and continuous suitability reviews function as intended. The report suggested the IRS should also ensure that individuals with an incomplete or ineligible citizenship status are verified, and a citizenship status check is included in continuous suitability reviews. TIGTA also recommended that e-file participants who are subject to fingerprinting requirements, and are not under continuous monitoring, submit their fingerprints and are enrolled in the Federal Bureau of Investigation’s continuous monitoring service. Lastly, TIGTA recommended the IRS should establish a systemic method of identifying IRS employees during initial and continuous suitability checks.
The IRS agreed with four of TIGTA’s recommendations and partially agreed with one recommendation.
“The Authorized Electronic Filing (e-file) Provider Program is an essential partnership with tax professionals and other entities to assist taxpayers in meeting their tax obligations,” wrote Kenneth Corbin, chief of the IRS’s Taxpayer Services Division, in response to the report. “We are committed to protecting taxpayers from fraud and abuse. We strive to ensure all applicants undergo rigorous suitability checks prior to being assigned an Electronic Filing Number, recognizing that this is crucial to maintaining the public’s trust.”
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