The latest expansion of the IRS business tax account makes this online self-service tool available to C corporations, bringing the total number of business entities eligible to use the tool into the millions, the tax agency said on Dec. 12. In addition, designated officials can now access business tax account on behalf of their S corporation or C corporation.
New features also include tax return, tax account, and entity transcripts for the current tax year and some previous tax years, with some transcripts now available in Spanish.
Available in both English and Spanish, business tax account is a key part of the agency’s transformation initiative, providing taxpayers with an improved digital experience and helping them meet their tax obligations.
With the latest expansion, designated officials can view and pay their corporation’s tax balances and make federal tax deposits. In addition, designated officials and sole proprietors can now use business tax account to approve or reject a tax transcript authorization request from a lender through the IRS Income Verification Express Service (IVES).
According to the IRS, a designated official is a person who is legally authorized to bind the corporation and a current employee who received a W-2 form from the corporation for the most recent tax-filing year. By registering as a designated official, this person will have full access to the corporation’s tax information and can act on behalf of the corporation within business tax account. Corporation can have more than one designated official, the IRS said.
Those considered designated officials include:
- President
- Vice president
- CEO
- CFO
- COO
- Secretary
- Treasurer
- Limited liability company (LLC) managing member
IVES helps both borrowers and lenders speed up the lending process. Through IVES, mortgage companies, banks, credit unions, and other lenders can easily access a taxpayer’s tax records to verify the income of those applying for mortgages and other loans. The IRS can only provide a lender access to this information if a taxpayer authorizes it, the agency said. Tax records include transcripts of a taxpayer’s tax returns, as well as 1099s and other forms filed by banks and other payors reporting business income to the IRS. Through business tax account and IVES, business taxpayers can now quickly and easily approve or reject these authorization requests from lenders.
What’s available through business tax account?
Business taxpayers can view:
- Their balance due;
- Their payment history, including payments made through business tax account, the Electronic Federal Tax Payment System online, payroll processor payments, wire transfers, checks or money orders, and if any payments were returned or refused;
- Authorization requests from a lender submitted through IVES;
- Transcripts for various income, payroll, and excise tax returns;
- Digital copies of select IRS notices;
- Their business name and address on file;
- A tax compliance report or a tax certificate for award use; and
- Business entity transcripts with their business name, mailing address, and location address (limited to sole proprietors).
Business taxpayers can also:
- Make an electronic payment on a tax balance or federal tax deposit;
- Set up a future payment or cancel a scheduled payment;
- Approve or reject a tax transcript authorization request from a lender;
- Download transcripts and select IRS notices; and
- Give account access to employees of the business (limited to sole proprietors).
Who qualifies to use business tax account?
Most business taxpayers can now activate and use their business tax account. This includes:
- A sole proprietor who has an employer identification number (EIN) issued by the IRS.
- An individual partner or individual shareholder with both a Social Security number (SSN) or an individual taxpayer identification number (ITIN), and a Schedule K-1 on file (for partners, from 2012-2023; for shareholders, from 2006-2023).
- Individual partners and individual shareholders of LLCs reporting income on Form 1065, U.S. Return of Partnership Income or Form 1120-S, U.S. Income Tax Return for an S Corporation, can access business tax account. They must also have both the SSN/ITIN and K-1.
- The president, vice president, CEO, CFO, COO, secretary, treasurer, or LLC managing member of a corporation.
Single-member LLCs with an EIN that are reporting business income on Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship), can’t currently access business tax account, the IRS said. A tax preparer or representative of a company won’t have access to business tax account and in the future will use Tax Pro to support their business taxpayers. Under the agency’s digital first Initiative, these businesses, as well as other entities, including tax-exempt organizations, government agencies, and partnerships, will be able to access business tax account in the future.
How to register as a designated official
First, gather all required tax records. Some of the same records needed to activate the business tax account are also needed for designated official registration. This includes the corporation’s EIN, federal tax return–either Form 1120 or Form 1120-S—and mailing address from the most recent IRS records.
Next, sign into the corporation’s existing business tax account.
Finally, register as a designated official by requesting a PIN. The PIN is unique to the requesting user and cannot be transferred to another user and is sent to the most recent business mailing address. The designated official will receive the PIN within five to 10 business days.
All designated officials must re-validate annually using business tax account. Though not required, a corporation can help ensure continued business access to business tax account by having multiple designated officials, the IRS said.
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