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Tax Preparer E-file Mandate

Updated January 2017


Tax Preparer Information | Software Developer Information
 

This guidance document is advisory in nature but is binding on the Nebraska Department of Revenue (Department) until amended. A guidance document does not include internal procedural documents that only affect the internal operations of the Department and does not impose additional requirements or penalties on regulated parties or include confidential information or rules and regulations made in accordance with the Administrative Procedure Act. If you believe that this guidance document imposes additional requirements or penalties on regulated parties, you may request a review of the document.

This guidance document may change with updated information or added examples. The Department recommends you do not print this document. Instead, sign up for the subscription service at revenue.nebraska.gov to get updates on your topics of interest.

Summary

Any person or business paid to prepare and file 25 or more Nebraska individual income tax returns in the prior calendar year must electronically file (e-file) all individual income tax returns they are paid to prepare in the current calendar year.


Frequently Asked Questions

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Who must e-file tax returns under this law?

Any person or business paid to prepare 25 or more individual income tax returns in the prior calendar year must electronically file (e-file) all original individual income tax returns they are paid to prepare in the current calendar year.

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Why is e-file required?

In 2009, the Nebraska Legislature created the e-file mandate for tax preparers because e-filed returns cost less to process, contain fewer errors, and result in faster refunds to those taxpayers due refunds.

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What types of returns must be e-filed under the law?

The e-file mandate for tax preparers only applies to individual income tax returns.

The e-file mandate may be extended to other tax programs in the future.

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Who is exempt from the e-file mandate?

The mandate does not apply to tax preparers who are not paid, such as the IRS Volunteer Income Tax Assistance Program (VITA), or American Association of Retired Persons (AARP) preparers. However, the Department encourages all tax preparers to e-file returns they prepare even if they are not required to do so.

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What if a taxpayer does not want his or her return filed electronically?

Taxpayers are not required to e-file their individual income tax returns, but are still strongly encouraged to do so. Taxpayers who do not want their returns e-filed must complete a Nebraska E-File Opt-Out Record for Individuals, which is retained by the preparer.

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What if I have multiple offices that each file less than 25 returns?

Regardless of the number of returns prepared at each location, if you or your business locations collectively prepared 25 or more returns in the prior calendar year, ALL returns prepared and filed by you or the business locations in the current calendar year must be e-filed.

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What if the return is a nonresident return?

Nebraska nonresident individual income tax returns count toward the 25 return threshold.

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What if my client wants to e-file tax returns in several states, and my software does not have that capability?

Check with your software provider to see if you can submit the Nebraska return as a “state only” or “unlinked” filing. If so, you may e-file the Nebraska return separately from the federal return.

If your software does not offer a “state only” or “unlinked” filing option, but the taxpayer is a Nebraska resident and the return meets other eligibility requirements, you can submit the return electronically through the Department’s NebFile program.

If neither of these options is available, you must seek a hardship waiver from the Tax Commissioner (see question below for more information).

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Is there a penalty for failing to e-file a tax return when required? If so, how much is the penalty?

Yes. A tax preparer may be fined $100 for each return that is not e-filed.

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Is a waiver available for the penalty?

Yes, but only in limited circumstances. The penalty may be avoided in cases of hardship or due to other reasonable cause (see the next question).

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Are there any circumstances where the e-file mandate may be waived?

Yes, a tax preparer may request a hardship waiver from the Tax Commissioner. The Tax Commissioner will only grant hardship waivers in cases where a tax preparer would be unduly burdened by the e-file mandate. Waivers will be evaluated and approved or denied on a case-by-case basis, and reviewed annually.

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What is required for a tax preparer to e-file a prepared tax return?

A tax preparer must register with the Internal Revenue Service (IRS) as an Electronic Return Originator (ERO) to electronically file tax returns with the IRS and the State of Nebraska. For additional information, visit www.irs.gov.

In addition, an ERO must use software that has been tested and approved by both the IRS and the Nebraska Department of Revenue to file a return electronically. For additional information on approved software, click here.

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What if the software I use does not permit electronic filing?

You are responsible for purchasing software that will allow you to meet the mandate requirements.

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Where can I find software that supports Nebraska electronic filing?

For additional information on approved software, click here.

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What if my client wants to e-file tax returns in several states, and my software does not have that capability?

Check with your software provider to see if you can submit the Nebraska return as a “state only” or “unlinked” filing. If so, you may e-file the Nebraska return separately from the federal return.

If neither of these options are available, you must seek a hardship waiver from the Tax Commissioner (see question below for more information).
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What if my client wants to e-file, but my software does not have that capability?

If your software does not offer an electronic filing option, but the taxpayer is a Nebraska resident and the return meets other eligibility requirements, you can generally submit the return electronically through the Department’s NebFile program.

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If there are required attachments, must those returns still be e-filed? If so, will there be additional procedures regarding the attachments?

Yes, state returns must be e-filed when possible, even if there are required attachments. For various credits and deductions, the Department requires certain forms and other documents to be filed with the return. In some cases, these are low-volume forms that e-file software products do not support. Required supporting documentation may be submitted as an attached PDF document when e-filing your return if your software supports these types of attachments. If the supporting documentation is not received with the return, the Department may request the required documentation during the processing of your return. Income tax refunds may be delayed if all required documentation is not received with the e-filed return.

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What if I am denied participation in the IRS e-file Program?

If the IRS does not allow you to participate in the IRS Federal/State e-file program, you may apply to the Tax Commissioner for a hardship waiver. 

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Who should I contact about the tax preparer e-file mandate?

If you have questions about the e-file mandate, you may contact Nebraska Taxpayer Assistance.

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Where can I read more about the law?

In 2009, the Nebraska Legislature enacted LB 165, which created the e-file mandate for tax preparers. For additional information, see LB 165 or Neb. Rev. Stat. § 77-1784.


Further Questions?
Contact Nebraska Taxpayer Assistance


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