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Wisconsin Department of Revenue

 Electronic Filing Requirement
For Tax Return Preparers

  1. How do I know if the Wisconsin Department of Revenue will require me to file my clients' income tax returns electronically?
  2. To whom does Wisconsin Administrative Code section Tax 2.08 apply?
  3. My business has ten employees who prepare individual income tax returns. How will the Department determine whether my business has to file returns electronically?
  4. My business has two locations. Does the 100-return threshold apply to each location separately?
  5. My tax return preparation business is located outside Wisconsin. Does the electronic filing requirement apply to me?
  6. What do I have to do to file returns electronically?
  7. How long does it take to get approval from the IRS? How long does it take to get approval from the State of Wisconsin?
  8. What happens if I am not approved to file returns electronically by the IRS or Wisconsin?
  9. Where can I find a list of approved software developers?
  10. How do I transmit my clients' returns electronically?
  11. How do I know my clients' returns were received electronically by the IRS and the Wisconsin Department of Revenue?
  12. The software I use does not allow certain federal or state forms to be filed electronically. What should I do if I have a client who is required to file one of these forms along with the tax return?
  13. What should I do if a client's tax return is rejected?
  14. What should I do if my client does not want to file electronically?
  15. I do not have a computer with a modem. How do I request a waiver?
  16. I cannot afford to buy electronic filing software. What should I do?
  17. I had to purchase my tax preparation software by June 15. If I have to buy additional software now, it will substantially increase my costs. Can I request a waiver?
  18. I no longer file 100 or more tax returns. Am I still required to file electronically?
  19. Is electronic filing of tax returns secure?
  20. What are the consequences if I don't file my clients' tax returns electronically?
  21. Since Administrative Code section Tax 2.08 applies to returns other than corporations, am I required to file fiduciary and partnership returns electronically?
  22. As a preparer, how do I benefit from filing tax returns electronically?
  23. What are the costs of filing returns electronically?
  24. What is Wisconsin Free-File?
  25. During the tax season, I volunteer to prepare returns at no charge for low-income individuals. Am I required to file these returns electronically?

  1. How do I know if the Wisconsin Department of Revenue will require me to file my clients' income tax returns electronically?

    If you prepared 100 or more 2006 Wisconsin individual income tax returns in 2007, you are required to file 2007 Wisconsin individual income tax returns electronically beginning January 1, 2008. See the complete text of Wisconsin Administrative Code section Tax 2.08, which authorizes the Department to require electronic filing of individual income tax returns.

  2. To whom does Wisconsin Administrative Code section Tax 2.08 apply?

    The administrative rule requiring the electronic filing of individual income tax returns applies to any person or entity engaged in the business of individual income tax return preparation, regardless of its legal form. Thus it applies to sole proprietors, partnerships, limited liability companies, and corporations that prepare 100 or more Wisconsin individual income tax returns.

  3. My business has ten employees who prepare individual income tax returns. How will the Department determine whether my business has to file returns electronically?

    The 100-return threshold is based on the total number of returns prepared by all of your employees. If your business prepared at least 100 individual income tax returns, even the returns prepared by employees who did fewer than 100 returns must be filed electronically.

  4. My business has two locations. Does the 100-return threshold apply to each location separately?

    No. The 100-return threshold is based on the total number of returns prepared at all of your business locations.

  5. My tax return preparation business is located outside Wisconsin. Does the electronic filing requirement apply to me?

    The location of the business is not relevant in determining whether an individual income tax return preparer is required to file electronically. If you prepared 100 or more Wisconsin individual income tax returns in 2007, you must electronically file the Wisconsin returns you prepare in 2008.

  6. What do I have to do to file returns electronically?

    In order to file returns electronically, you must first become an Electronic Return Originator (ERO). The Internal Revenue Service (IRS) must approve all EROs. See the Wisconsin Electronic Filing Program Information for Tax Professionals.

  7. How long does it take to get approval from the IRS and do I need approval from the State of Wisconsin?

    The approval process with the IRS takes about 45 days. For more information about the federal application process, visit the IRS web site for Tax Professionals or call the IRS regional office in Milwaukee at (414) 297-3574. Once you have been approved with the IRS and have an Electronic Filing Identification Number (EFIN), you may file electronically with Wisconsin. See the Wisconsin Electronic Filing Program Information for Tax Professionals on how to become a Wisconsin ERO.

  8. What happens if I am not approved to file returns electronically by the IRS?

    You should take the steps necessary to meet the suitability tests to become an ERO, such as filing any tax returns that are due or paying any delinquent taxes. If you are unable to comply with the ERO requirements, you should continue to file paper income tax returns.

  9. Where can I find a list of approved software developers?

    For information about choosing electronic filing software, you can visit the IRS web site for Tax Professionals. Also see the list of approved Wisconsin software.

  10. How do I transmit my clients' returns electronically?

    In Wisconsin, the federal and state returns must be transmitted together as one electronic message.

    Tax returns are transmitted to the IRS in one of two ways:

    • Direct transmission to the IRS. EROs choosing the "direct" transmission method will have to test the compatibility of their modems with the IRS.

    • Transmission to a third party software company. EROs choosing the "third party" method do not have to go through compatibility testing with the IRS.

    Wisconsin electronic returns are processed at the IRS Service Center in Kansas City, Missouri . There the IRS receives the electronic transmission, matches the social security number to the name on the return, and acknowledges receipt of the federal return.

    Once the IRS receives the transmission, the federal return is either accepted or rejected based on established criteria. The IRS will generate a federal acknowledgment the following business day that indicates receipt of the return as well as its processing status. If the federal return is rejected, the acknowledgment will state why and list the detected errors.

    The Wisconsin Department of Revenue does not receive any state return information associated with a rejected federal return.

  11. How do I know my clients' returns were received electronically by the IRS and the Wisconsin Department of Revenue?

    You will receive an acknowledgment within 24 hours of the original transmission from the IRS and within 72 hours from the State of Wisconsin. See the Information about Acknowledgments.

  12. The software I use does not allow certain federal or state forms to be filed electronically. What should I do if I have a client who is required to file one of these forms along with the tax return?

    If required forms or schedules that accompany a tax return cannot be filed electronically, you should file a paper return for that client.

  13. What should I do if a client's tax return is rejected?

    You should try to correct the problem and resubmit the tax return electronically. If the tax return cannot be filed electronically, file a paper return for that client.

  14. What should I do if my client does not want to file electronically?

    You should explain to your client the benefits of filing electronically. If your client still does not want to e-file, the client must write "no e-file" before his or her signature on the Wisconsin income tax return. You can then file a paper return for that client.

  15. I do not have a computer with a modem. How do I request a waiver?

    We realize that electronic filing may not be possible for everyone. The rule provides an exception to the electronic filing requirement if it causes an undue hardship for you or your business.

    To request a waiver:

    • Send your request in writing to the Secretary's Office, Wisconsin Department of Revenue, Mail Stop 5-77, P.O. Box 8903, Madison WI 53708-8903.

    • Clearly indicate why the requirement causes an undue hardship. List all factors that may make it especially difficult for you to file returns electronically.

  16. I cannot afford to buy electronic filing software. What should I do?

    The rule provides an exception to the electronic filing requirement if it causes an undue hardship for you or your business. You can request a waiver as explained in Question 15.

  17. I had to purchase my tax preparation software by June 15. If I have to buy additional software now, it will substantially increase my costs. Can I request a waiver?

    You can ask for a waiver from the electronic filing requirement if it results in an undue hardship. The potential extra expense that you would incur by changing your contract with the software company now would be considered an undue hardship. You can request and receive a waiver from the e-filing requirement.

  18. I no longer file 100 or more tax returns. Am I still required to file electronically?

    The rule provides that you must file electronically if you filed 100 or more tax returns in 2007. If filing returns electronically for 2008 would create an undue hardship, you can request a waiver from the e-filing requirement.

  19. Is electronic filing of tax returns secure?

    Yes, Internet companies that provide web-based tax preparation use the industry standard Secure Sockets Layer (SSL) protocol to encrypt your personal data.

  20. What are the consequences if I don't file my clients' tax returns electronically?

    At the present time Wisconsin Administrative Code section Tax 2.08 does not impose penalties for noncompliance with the rule. However, the Department will reevaluate the need for penalties based on the level of voluntary compliance.

  21. Since Administrative Code section Tax 2.08 applies to returns other than corporations, am I required to file fiduciary and partnership returns electronically?

    No, you are not required to electronically file fiduciary returns (Form 2) and partnership returns (Form 3).

  22. As a preparer, how do I benefit from filing tax returns electronically?

    Tax practitioners who already file electronically say that electronic filing --

    • eliminates the need for photocopies,
    • reduces the need for filing and maintaining paper documents,
    • reduces mailing costs,
    • saves time in correcting errors,
    • saves time by not having to assemble returns, and
    • assures that the return was received and is ready for processing.

  23. What are the costs of filing returns electronically?

    The costs of electronic filing may include the following:

    • Expenditures to upgrade computers and communications equipment.
    • Charges for electronic filing software (some packages are available for less than $1,000 and include unlimited transmission of both federal and state tax returns).
    • Transmission fees (generally $1 to $5 per return if not included in the price of the software).
    • Telephone long distance charges.
    • Costs of changing procedures for preparing tax returns. For example, additional data entry may be required. If a return is rejected, the return must be corrected immediately rather than after the filing season.

  24. What is Wisconsin Free-File?

    The Department offers taxpayers the option to complete their Wisconsin income tax returns using an electronic fill-in form that can be filed electronically with the state for free. Just as they do with paper forms, taxpayers have access to instructions, worksheets, and tax tables to complete and file their Wisconsin Form WI-Z, 1A, or 1. The application is not available for Form 1 filers who file federal Schedule C, Schedule E, Schedule F, or income from partnerships, limited liability companies, tax-option (S) corporations, estates, or trusts. For more information, see Wisconsin Free-File.

    Note: You cannot use Wisconsin Free-File if you have more than 13 gain/loss entries on Schedule D or gains or losses from flow through entities that require reporting on a Schedule K-1.

  25. During the tax season, I volunteer to prepare returns at no charge for low-income individuals. Am I required to file these returns electronically?

    If you are volunteering through one of the Volunteer Income Tax Assistance/Tax Counseling for the Elderly (VITA/TCE) programs that has electronic filing capabilities, we encourage you to e-file the tax returns. Otherwise, since you are not preparing tax returns for compensation, you are not subject to the e-filing requirement.

FOR MORE INFORMATION PLEASE CONTACT:

WISCONSIN DEPARTMENT OF REVENUE
Electronic Filing Unit
Mail Stop 5-77
P.O. Box 8949
Madison, WI 53708-8949
Phone: (608) 264-6886
Fax: (608) 264-6884
E-Mail Additional Questions

Last updated January 7, 2008