IRS Launches Enhanced Business Tax Account Access
By Jefferson Chen, Director, Tax & Business Services
In a move to modernize tax management for businesses across the nation, the Internal Revenue Service (IRS) recently rolled out the second phase of its digital transformation. This upgrade to the IRS’s online self-service tools marks a significant expansion in the functionality of Business Tax Accounts, now opening doors for a broader spectrum of business entities to engage with the tax authority digitally.
Under the new system, individual partners within partnerships and individual shareholders of S corporations are now granted the capability to create Business Tax Accounts. Additionally, sole proprietorships with an Employer Identification Number (EIN) qualify for a Business Tax Account. Business Tax Accounts allow these individuals to immediately access and retrieve their income tax and payroll tax return transcripts via the IRS’s web services platform. Historically, limited partners in partnerships and minority shareholders in S corporations faced considerable challenges in obtaining copies of income tax returns. The IRS’s recent initiative to improve efficiency has effectively addressed many issues by streamlining this process. This development is aligned with the implementation of the IRS’s multi-year Strategic Operating Plan released this spring.
Eligibility to access the Business Tax Account information is based on the filing and processing of a business return that includes a Schedule K-1 or a sole proprietorship with its own EIN. Individuals of partnerships or S corporations are required to have a Schedule K-1 on file for at least one tax year between 2019 and 2022 to gain access to a Business Tax Account. Accessible information will be limited to the specific tax year(s) for which a Schedule K-1 is filed and issued. It should be noted that new business entities will obtain access only after the submission, processing, and recording of a business return by the IRS.
The Business Tax Accounts are anticipated to evolve into a comprehensive portal, offering business owners an integrated suite of digital products and services with the IRS. These services will include viewing IRS letters or notices, requesting tax return transcripts, delegating third-party authorizations for power of attorney or tax information authorization, and securely storing banking information for tax payment management. This platform is intended to make it easier to manage tax responsibilities, thus alleviating the administrative burden on taxpayers who would conventionally resort to contacting the IRS via phone or mail.
For additional details, visit the IRS portal