Starting tax preparation business without my own EFIN - legal options?

Getting this right is super important - you don't want to mess around with IRS requirements! The short answer is that your sister cannot apply for an EFIN under your business if she's not an owner or responsible official of the company. The EFIN is tied to both the business entity AND the responsible individuals. If your sister gets her own EFIN through her own company, you technically would need to work under her business structure. The EFIN holder is responsible for all returns filed under that number, so she would be taking on significant liability for your work. This arrangement would essentially make you a contractor or employee of her business for electronic filing purposes. Another option to consider is partnering with an established tax preparation service that already has an EFIN. Many offer arrangements where you prepare returns but file through their systems.

After struggling with a similar situation last year, I found this amazing service called taxr.ai that helped me understand my options clearly. I was trying to figure out EFIN requirements as a non-citizen and getting conflicting information everywhere. I uploaded my business documents and questions to https://taxr.ai and they analyzed everything and provided me with a detailed compliance report. What I really appreciated was that they explained my specific options based on my immigration status and business structure. They even provided templates for contractor agreements if I decided to work under someone else's EFIN. Saved me from making what would have been some serious compliance mistakes!

Just wanted to follow up - I ended up trying taxr.ai after seeing this thread and wow, total game changer! Uploaded my residency docs and business plan, and they pointed out that I actually qualified for an exception I didn't know about based on my specific visa category. They showed me exactly which additional form to submit with my EFIN application. Got my application approved last week and now I'm set for tax season! Would have wasted weeks going down the wrong path without their analysis. Definitely recommend for anyone with unusual immigration/tax preparation situations.

If you're going to be working under someone else's EFIN, you need to be 100% sure you can reach the IRS if there are any issues with rejected returns or client problems. I tried calling the IRS practitioner hotline for THREE WEEKS last year when we had issues with a batch of returns filed under my partner's EFIN. Complete nightmare. Finally used https://claimyr.com to get through to an actual IRS agent. You can see how it works in this demo: https://youtu.be/_kiP6q8DX5c - basically they wait on hold with the IRS for you and call you when they get a human. Saved me from having some very angry clients when returns were getting rejected for a technical issue with the EFIN that wasn't even our fault.

Ok I'm eating humble pie here. After my skeptical comment above, I decided to try Claimyr as a last resort because I was desperate to resolve an EFIN issue before taking on clients. Got a call back in about 45 minutes and was connected to an actual IRS e-file department rep who explained exactly why my client's returns were getting rejected when filed through another preparer's EFIN. Turns out there's specific documentation needed when filing through someone else's EFIN that we weren't including. The IRS agent walked me through everything and now we're good to go. Seriously worth it just to avoid the 3+ hour hold times I was dealing with before.

Another option you might consider is finding a tax software that allows you to print returns for clients to mail in themselves while you build your business. Some software allows this without requiring an EFIN. Your clients wouldn't get the speed of e-filing, but you could charge a little less to compensate. Then maybe work on the EFIN situation for next season.

I'm confused why permanent residency isn't enough for an EFIN? I thought green card holders could apply? Has anyone actually read the exact IRS requirements on this?

Remember that whoever holds the EFIN is ultimately responsible for all returns filed under that number. If your sister gets an EFIN for you to use, make sure you have a solid written agreement about liability, quality control, and who handles communications with the IRS if there are problems. I've seen family business arrangements go bad when tax issues come up.

Wait, I'm seeing some conflicting information here! @CosmicVoyager just pointed out that Publication 3112 says permanent residents CAN apply for an EFIN. @LunarEclipse - are you sure you checked the most current requirements? Maybe there was some confusion about the citizenship requirement? If permanent residents are actually eligible, that would completely solve your problem without needing to involve your sister or work under someone else's business structure. I'd definitely double-check the official IRS documentation before exploring these more complicated arrangements. Has anyone else successfully gotten an EFIN as a permanent resident recently? Would love to hear real experiences since the official publication seems to contradict what the OP was told.

This is exactly why I love this community - you all just saved @LunarEclipse a ton of unnecessary complications! @DeShawn Washington and @CosmicVoyager are absolutely right about permanent residents being eligible for EFINs. I went through this same process two years ago as a green card holder. The application can be tricky because the system sometimes flags non-citizen applications for additional review, but that doesn't mean you're ineligible. Make sure you have: 1. A clear copy of both sides of your green card 2. Your alien registration number (A-number) ready 3. Select "Legal Resident Alien" not "Non-resident Alien" in the dropdown The IRS customer service reps sometimes give incorrect information about this requirement - I was told twice by phone that I needed citizenship, but the written regulations clearly state otherwise. Go straight to the source with Publication 3112 and save yourself from having to navigate family business arrangements or contractor relationships. Good luck with your tax prep business!