The Internal Revenue Service IRS has recently broadened the eligibility for business tax accounts, now including partners in partnerships and shareholders in S corporations, alongside the previously included sole proprietors. In a significant development for business taxation, the IRS has launched the second phase of its advanced online self-service platform.
This expansion not only enhances the capabilities of existing business tax accounts but also opens the door for more types of businesses to benefit. Now, individual partners in partnership firms and shareholders of S corporations can set up their own business tax accounts, joining the ranks of sole proprietors. This move is a crucial part of the IRS’s service improvement strategy, which is in line with the objectives set forth in the Inflation Reduction Act (IRA) of last year and the strategic operational plan announced this spring.
IRS unveils enhanced business tax account features for improved efficiency and accessibility
IRS Commissioner Danny Werfel highlighted the importance of this initiative, stating, “This expansion is a key milestone in the IRS’s modernization journey, aimed at better serving business taxpayers and others.” He further explained that the updated Business Tax Account will enable businesses to download transcripts and access other functionalities, thereby simplifying interactions, reducing paper-based processes, and lessening the need for direct IRS engagements.
This new phase introduces several features to the business tax account. Users can now download a business tax transcript in PDF format, applicable to various forms used by sole proprietors, S corporations, and partnerships. Sole proprietors also have the added ability to view specific notices pertaining to return statuses and Federal Tax Deposit (FTD) guidelines.
Individual partners and shareholders can access their business tax account information after their business return with Schedule K-1 is processed by the IRS. For access, a Schedule K-1 from at least one year between 2019 and 2022 must be on file. Newly established businesses are granted access following the submission, processing, and filing of their business return with the IRS.
Sole proprietors with an Employer Identification Number (EIN) are also eligible for these business tax accounts. Those who have previously established an individual account using their Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN), linked with an EIN, can use the same login credentials. However, sole proprietors without an EIN are currently unable to create a business tax account. Instead, they can access their tax records through an individual online account with the IRS.
The IRS aims for the business tax account to evolve into a comprehensive digital hub, providing an array of services and products for business taxpayers. This includes functionalities like viewing letters or notices, requesting tax transcripts, authorizing third parties, and managing tax payments using stored bank account details.
For those interested in setting up a new business tax account or seeking further information about the service, visit the IRS website at IRS.gov/businessaccount.