real-time efin validation for filings

Summary#

This bill would require the Treasury Department (through the IRS) to verify electronic filing identification numbers (EFINs) before they are used to file federal tax returns or other IRS documents. It calls for a real-time validation system that software must use to confirm an EFIN is active and that the holder is authorized to file. The stated policy goal is to improve the reliability and security of electronic tax filing.

• Main change: An EFIN cannot be used to file electronically unless the Secretary has validated it as active and authorized for the intended filing activity.
• Software requirement: Tax-filing software must call the validation system and block filing if the EFIN is not validated.
• Validation system: The Secretary must build a real-time, high-volume validation system that can report active/suspended/revoked/compromised status.
• Timing: The Secretary must set up the validation program within 24 months and send an implementation plan within 180 days.
• Reporting: Two years after the program starts, the Secretary must report on performance, outages, validation counts, and recommendations.

What it means for you#

• Tax preparers and firms that hold an EFIN:

  • You must have a validated, active EFIN before using it to file returns.
  • Your EFIN may be revalidated periodically or after certain events.
  • If your EFIN is suspended, revoked, or compromised, software should block filings that use it.

• Companies that make tax-filing software (including large vendors):

  • Your software must connect to the new real-time validation system.
  • You must prevent users from filing with unvalidated or ineligible EFINs.
  • You may need to update systems to handle high-volume, secure validation requests.

• Taxpayers (individuals and businesses):

  • This changes how preparers and software verify they are authorized to file for you.
  • You could see fewer filings from compromised or unauthorized preparers, but there could be delays if validation systems are unavailable.

• Treasury / IRS staff:

  • The agency must design, build, and run the validation system, set access rules, and produce required reports.

Expenses#

No publicly available information.

• The bill requires the IRS to build and operate a new real-time IT system. This would likely create administrative, staffing, and technology costs for the Treasury/IRS, but the bill does not provide cost estimates.
• Software vendors and tax preparers may face development and testing costs to integrate with the system.
• The bill does not say whether any fees will be charged or who pays for implementation or ongoing operating costs.
• The bill requires contingency procedures and security safeguards, which could add further costs for both the government and private firms.

Proponents' View#

• The bill appears intended to reduce misuse of EFINs by ensuring only active, authorized holders can file electronically.
• A real-time validation system could improve the security and integrity of electronic filing and help prevent fraud or filing by compromised preparers.
• Requiring software to check EFIN status could standardize verification across the industry and support large-scale, automated checks.

Opponents' View#

• One concern is cost and resource needs: building and running a secure, high-volume real-time system could be expensive for the IRS, and software vendors may bear development costs.
• The bill does not clearly explain contingency steps if the validation system is down; this could disrupt electronic filing or cause last-minute filing problems.
• It is unclear how access and authentication will work in practice (who may request validations and how they are authorized), which could create implementation delays.
• The bill requires safeguards against unauthorized bulk checking of EFINs but gives few technical details; privacy and security questions may remain about how validation data is protected.
• The legislation does not include a fiscal estimate or state whether existing IRS systems can be upgraded, so the scale and timing of the effort are uncertain.