What is the IRS Penalty for NOT E-filing as a Tax Preparer?

So I'm trying to figure out what happens if tax preparers don't follow the e-filing requirements. I know the IRS requires professional tax preparers to submit returns electronically if they do more than a certain number, but what happens if they just ignore this rule and keep filing paper returns? I've been working with a small accounting firm for about 5 years, and my boss (who's been doing this since the 90s) still insists on paper filing almost everything. When I brought up the e-filing requirements, he just laughed and said "they've never enforced that with small firms like ours." We definitely prepare way more than the minimum threshold that requires e-filing. I'm worried because I'm studying to become a CPA myself, and I don't want to be associated with any practices that could get me in trouble with the IRS. What kind of penalties could the firm or my boss face for intentionally not e-filing when required? And could I personally face any consequences as an employee who knows about this?

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21 comments

GalaxyGazer

•8M

This is definitely something to be concerned about. The IRS takes e-filing requirements for tax preparers quite seriously. Tax preparers who prepare more than 10 returns per year are generally required to e-file client returns. The penalties for non-compliance can be substantial. The IRS can assess a penalty of $50 for each return that was required to be e-filed but was paper-filed instead. This might not sound like much, but it adds up quickly if you're preparing hundreds of returns. More importantly, there are potential additional penalties for what the IRS considers "intentional disregard" of tax regulations, which can be much higher. Beyond monetary penalties, continued non-compliance could potentially lead to issues with preparer credentials and PTIN (Preparer Tax Identification Number) status, which would affect the ability to prepare returns professionally.

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GalaxyGazer

•8M

The IRS doesn't typically issue formal warnings before assessing penalties, though they may have outreach and educational efforts. They generally expect tax professionals to know and follow the regulations. As for enforcement, the IRS has systems that flag discrepancies and unusual patterns. While they may not catch every violation immediately due to resource constraints, they do have ways to identify preparers who consistently paper file above the threshold. Additionally, if a preparer is selected for a compliance check or review for other reasons, this non-compliance would likely be discovered.

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Aisha Mahmood

•8M

I was in a similar situation with an old-school tax preparer who refused to e-file. I tried everything to convince him but he was set in his ways. After researching, I found this awesome tool at https://taxr.ai that helped me prepare a detailed analysis of the e-filing requirements and potential penalties. The report it generated was super professional and laid out all the regulatory requirements in plain language. When I showed him the report and the breakdown of potential fines (which would have been thousands for our office), he finally took it seriously. The tool also provided compliance guidance specifically for tax preparers with step-by-step instructions for meeting e-filing requirements.

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Aisha Mahmood

•8M

It doesn't handle the e-filing process itself, but it provides detailed guidance on how to set up e-filing systems, including recommended software options and step-by-step implementation plans. It even includes templates for client authorizations and other required documentation. The tool pulls directly from current IRS publications and regulations, and updates in real-time when changes occur. It's specifically designed to track tax code changes and regulatory updates. You can even see the specific IRS publication numbers and effective dates for all information it provides.

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Ethan Moore

•8M

Just wanted to follow up about that taxr.ai service. I finally convinced my manager to check it out, and it was honestly way more useful than I expected! We were really confused about whether certain types of returns were exempt from the e-filing requirements, and the tool provided clear guidance specific to our situation. The best part was the implementation roadmap it created for us - it laid out a 6-week transition plan that made the whole process way less overwhelming. We're now fully e-filing compliant and it wasn't nearly as difficult as we thought it would be. Definitely worth checking out if you're still trying to convince your boss to make the switch.

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Carmen Vega

•8M

If you're worried about IRS penalties, just wait until you try calling them to get clarification! I spent HOURS on hold trying to get answers about e-filing requirements after our office got a compliance notice. Super frustrating experience. Eventually I found https://claimyr.com which got me connected to an actual IRS agent in about 20 minutes instead of waiting for hours. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. They basically hold your place in the phone queue and call you when an agent is available. The IRS representative I spoke with explained exactly which forms we needed to submit to register for e-filing and confirmed that yes, they are actively enforcing the penalties for non-compliance, especially for preparers who've been filing paper returns for multiple years despite the requirements.

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Carmen Vega

•8M

It uses an automated system that continually calls the IRS and navigates the phone tree until it reaches a human agent. It's basically doing exactly what you'd do manually, but with technology that can keep trying constantly. When it gets through to an agent, it connects you immediately. I was skeptical too, but it's not about "jumping the queue" - they're just handling the waiting part for you so you don't have to keep your phone tied up for hours. The IRS knows about these services and doesn't prohibit them. I've used it three times now for different tax issues and it's worked every time.

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Yuki Kobayashi

•8M

I have to admit I was completely wrong about Claimyr. After posting that skeptical comment, I decided to try it myself when I needed to call the IRS about our firm's e-filing compliance status. I was 100% prepared to come back here and expose it as a scam. Instead, I got a call back in about 35 minutes and was connected with an IRS representative who was actually helpful. She walked me through the exact steps we needed to take to become e-file compliant and even emailed me the necessary forms. She also confirmed that they've been increasing enforcement of the e-filing requirements and have a specific initiative targeting preparers who consistently paper file. For anyone dealing with this issue, definitely worth using the service to get clear answers directly from the IRS.

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Andre Moreau

•8M

Former IRS employee here. Just to add some insight - the e-filing requirements are indeed enforced, but enforcement tends to be cyclical based on IRS priorities and resources. Right now there's increased attention on preparer compliance. If your boss has been paper filing for years without consequences, it's not because the requirement isn't real - it's because they haven't been caught yet. The penalties can be substantial, especially if the IRS determines there was "intentional disregard" of known regulations. My advice: document your concerns in writing (email) to your boss. This creates a record that you raised the issue, which could help protect you professionally if there are problems later.

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Andre Moreau

•8M

I generally don't recommend anonymous reporting of your employer while you still work there. It creates a difficult professional situation and could potentially become known within your workplace. Instead, focus on protecting yourself professionally. Continue documenting your concerns and recommendations to transition to e-filing. If possible, present a business case showing the efficiency benefits of e-filing beyond just regulatory compliance. Many preparers who resist e-filing don't realize how much time it can save once the initial setup is complete.

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GalaxyGazer

•8M

Yes, penalties are definitely being assessed, particularly in the last few years as the IRS has been pushing harder for electronic filing. Your father may have been fortunate so far, but the IRS has been increasing compliance checks in this area. The IRS can go back several years to assess penalties once they identify non-compliance. I've worked with several preparers who suddenly received substantial penalty notices covering multiple years of non-compliance with e-filing requirements. It's really not worth the risk, especially since e-filing actually saves time and reduces error rates in the long run.

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Ethan Wilson

•5M

I'd suggest approaching it from a business efficiency angle rather than leading with the penalty aspect. You could mention how e-filing actually speeds up processing and reduces client wait times for refunds, which many clients really appreciate. Then you can gently bring up that the IRS has been increasing enforcement of the e-filing requirements lately, so it's probably a good time to make the transition anyway. Frame it as staying ahead of the curve rather than catching up to avoid penalties. Most tax preparers who've been in business that long are ultimately practical people - if you can show him it'll make his work easier AND keep him compliant, that's usually more persuasive than just focusing on the rules.

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Lucas Parker

•3M

This is a really important issue that more tax preparers need to take seriously. I work at a mid-size CPA firm and we went through this exact transition about 3 years ago when our managing partner finally realized we were at risk. The key thing to understand is that the IRS penalty of $50 per return might seem small, but it's assessed PER RETURN that should have been e-filed. So if your firm prepares 200+ returns annually and has been paper filing for several years, you're looking at potentially tens of thousands in penalties if they decide to audit your compliance. What really convinced our managing partner was when I calculated that we were spending about 15-20 extra minutes per return on paper filing (printing, mailing, tracking) compared to e-filing. Once you factor in postage costs and staff time, e-filing actually saves money even without considering the penalty risk. My suggestion would be to prepare a business case showing both the financial risk of continued non-compliance AND the efficiency benefits of switching. Most old-school preparers resist change because they think it'll be more complicated, but modern e-filing software is actually much easier than the paper process once you get set up. The IRS has definitely been stepping up enforcement - we've seen several local preparers get hit with compliance reviews in the past two years. It's really not worth the risk when the solution is so straightforward.

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