IRS Form 8944: Preparer e-File Hardship Waiver Requests

Most taxpayers will never file IRS Form 8944 with the Internal Revenue Service, even when they have a financial or economic hardship preventing them from paying their taxes on time. However, tax return preparers do file this form when they experience financial hardship.

This article will help you better understand:

• What IRS Form 8944 is used for
• What to expect if you hire a tax return preparer who files this form with the IRS
• What a taxpayer should do instead of Form 8944 for hardship waiver requests

Let’s start with discussing what IRS Form 8944 actually is.

What is IRS Form 8944?

IRS Form 8944, Preparer e-File Hardship Waiver Request, is the tax form that a specified tax return preparer files with the IRS to request an undue hardship waiver from electronic tax return filing requirements in a given year.

What is a specified tax return preparer?

According to Section 6011(e)(3) of the Internal Revenue Code, a specified tax return preparer is any tax return preparer who reasonably expects to file 11 or more individual income tax returns in a given calendar year. In other words, the determining factor is the number of returns the tax preparer filed on behalf of taxpayers in a given year.

Normally, the tax code requires specified tax return preparers “to file income tax returns via magnetic media,” unless:

• The IRS has granted the tax preparer a hardship exemption.
• The personal income tax returns qualify for an administrative exemption, and the tax preparer files IRS Form 8948 with each tax return instead. IRS Form 8948 is the Preparer Explanation for Not Filing Electronically
• The taxpayer files their own federal return.

The IRS uses the term, covered return, to determine which tax returns ‘count,’ and which ones do not count.

What is a covered return?

According to the form instructions, covered returns include “any return of tax imposed by subtitle A on
individuals, estates, or trusts.”

A waiver is not needed for any other return that is not accepted electronically by the IRS or the IRS has instructed taxpayers not to file electronically. The instructions go on to state the following:

A return is considered filed by a preparer if the preparer or any member, employee, or agent of the preparer or the preparer’s firm submits the tax return to the IRS on the taxpayer’s behalf, either electronically or in paper format.

IRS Form 8944 Instructions

However, acts of assistance, do not count as filing on the taxpayer’s behalf if the taxpayer personally submits their own income tax return, either electronically or by mailing a paper return. Such acts of assistance may include things like providing:

• Filing or delivery instructions
• An addressed envelope
• Postage estimates or stamps

When is IRS Form 8944 due?

The IRS requires any licensed tax preparer experiencing economic problems to submit their request before tax season starts in earnest. Generally, the tax preparer must submit their Form 8944 request between October 1 of the tax year in question and February 15 of the following year.

If the due date happens to fall on a weekend or federal holiday, then that year’s deadline is the following business day.

How do I complete Form 8944?

Most tax preparers would not complete Form 8944. However, we’ll include snapshots and step by step instructions of this one-page form for educational purposes.

Let’s start with the top portion of the form.

Top section

There are no official sections of this form. But to make things easier to read, the top portion contains the first six lines.

Line 1: Year and type of submission

In this line, the tax preparer will enter the calendar year of the request. Additionally, the preparer will check whether this is an original submission or a reconsideration of a previous submission.

An original submission is the preparer’s first request for a hardship waiver for the calendar year entered in this line.

A reconsideration includes additional information that the tax preparer believes will help the IRS representative overturn the denial of a previous request.

Line 2: Preparer’s name and complete address

Self-explanatory. The tax preparer will include their full name and complete mailing address.

Line 3: Preparer Tax Identification Number

Every tax preparer has a preparer tax ID number, known as a PTIN. The PTIN goes into Line 3.

Line 4: Telephone number

Self-explanatory. Provide your complete phone number, including area code.

Line 5: Reason for waiver

This line asks whether the tax preparer expects to file 11 or more covered returns in the coming tax year as a member of a tax preparation firm. Tax preparers who are not members of a firm should answer ‘No’ to this form and move onto Line 6.

Remember, the specified tax return preparer definition is based upon the number of returns (more than 10). This question asks the preparer to declare whether they believe themselves to be a specified tax return preparer as defined by the Internal Revenue Code.

If so, then enter the firm’s name and employer identification number (EIN) under Line 5.

Please note if you are a member of a tax preparation firm: If you personally expect to file 10 or fewer tax returns, but the firm expects to file 11 or more in the given year, you may still be required to e-file the tax returns you’ve prepared.

According to the form instructions, “All tax return preparers in a firm must e-file the covered returns they prepare and file if the firm’s preparers, in the aggregate, reasonably expect to file 11 or more covered returns in a calendar year.”

Line 6: Number of returns

Check the appropriate boxes next to the types of form(s) for which you are requesting the hardship waiver. This section attempts to separate individual income tax returns (Forms 1040) from estate and tax returns (Form 1041). For each type of form, you’ll enter:

Section (i)

The number of returns filed in the past year.

Section (ii)

The number of tax returns you reasonably expect to file in the coming calendar year.

When determining this estimate, do not count returns that you reasonably expect your clients will choose to have completed in a paper format and will file with the IRS themselves.

Also, do not count returns that you do not expect to e-file for various reasons. For example, do not
count forms that cannot currently be filed electronically (such as Form 1041-QFT). For more information, see Notice 2011-26 as modified by Notice 2020-70.

Section (iii)

Whether you plan to use professional tax preparation software to prepare the tax returns.

Section (iv)

The number of returns your tax preparation firm expects to file in the upcoming year. If you answered ‘No’ to Line 5, you should not answer this question.

When determining this estimate, do not count any return that would be excluded for the reasons provided earlier in the instructions for line 6(ii).

Bottom

The bottom section identifies the reason for the hardship waiver request, as well as the economic impact of obtaining the required resources to meet IRS e-file requirements.

Line 7: Reason for Hardship Waiver Request

Check the appropriate box. However, check only one box, even if multiple reasons apply.

If you checked bankruptcy, and you have bankruptcy documentation, you must attach copies of these documents to your Form 8944.

For waiver requests citing economic reasons, you must complete Lines 8 and 9, below.

If you checked either Presidential Disaster Area (Box c) or Other (Box d), then you need to identify the disaster or conditions in Line 9 below.

Line 8

For tax preparers citing economic reasons for their hardship waiver request, Line 8 is mandatory.

Under net income, enter the annual income or average tax return preparation fees that your tax prep generates.

You’ll also need to enter two current, third-party cost estimates to obtain the additional resources you require to e-file client returns. According to the instructions, these cost estimates must reflect the total amount that each third party vendor will charge for:

• Purchasing a computer, if you do not have one
• Installing software and software upgrades
• Programming current system
• Costs to produce your electronic files

The IRS will not accept cost estimates written in any year except for the calendar year in which the request is filed.

Line 9

If you selected box 7b, 7c, or 7d, you must explain the hardship or identify the disaster behind the waiver request.

For economic waivers, you must explain why the additional expenses would cause an undue hardship.

Waivers for Presidential disaster declaration must include documentation on how the disaster directly impacted your ability to electronically file returns as an IRS e-file provider.

Waivers filed for other hardships must provide complete documentation detailing:

• The hardship described on Line 9, and
• The hardship’s impact on your ability to electronically file tax returns.

If you attach additional sheet(s), include on each sheet the name entered on Line 2 and the PTIN entered on Line 3.

The IRS specifically states that the federal government will not consider a hardship waiver request based on the lack of an Electronic Filing Identification Number (EFIN). It is the tax preparer’s responsibility to take all required steps to comply with the IRS e-filing requirement.

Signature block

In the signature field, the tax preparer will certify, under penalties of perjury, that the presented facts and accompanying statements are true and accurate.

Below are some frequently asked questions about IRS Form 8944.

Frequently asked questions about IRS Form 8944

Who files IRS Form 8944?

A specified tax return preparer experiencing undue hardship due to their financial situation will file Form 8944 with the IRS to request relief from certain electronic filing requirements.

Does a taxpayer experiencing financial hardship file IRS Form 8944?

No. A taxpayer requesting relief from collection activity due to an IRS tax bill, penalties or interest may look to help through:

• Penalty abatement
• An offer in compromise
• Installment agreement

Penalty abatement

Penalty abatement is available for taxpayers seeking relief from certain types of penalties. Taxpayers may be able to seek relief for one of the following reasons:

• First Time Penalty Abatement and Administrative Waiver
• Reasonable Cause
• Statutory Exception

The IRS’ penalty abatement only works on penalties. Taxpayers who owe interest on back taxes may not seek relief for interest. However, interest that has accumulated on unpaid penalties will be abated when the IRS grants penalty relief.

Offer in compromise

An offer in compromise is when the Internal Revenue Service agrees that a taxpayer does not have enough money to pay their tax bill and agrees to accept a reduced sum of money. Usually, the first step towards an offer in compromise is to submit IRS Form 433, Collection Information Statement. Form 433 exists in several forms:

• IRS Form 433-A: Individual taxpayers
• IRS Form 433-B: Business taxpayers

Installment agreement

An installment agreement exists when a taxpayer has a tax problem which prevents them from paying the full amount of tax debt, but the taxpayer can pay that tax debt over a period of installments.

The taxpayer may request an installment agreement online, or by submitting IRS Form 9465, Installment Agreement request. Depending on the debt amount, the IRS may require the taxpayer to submit IRS Form 433-F, Collection Information Statement.

Where can I get a copy of IRS Form 8944?

You may obtain a copy of this form from the IRS website or by selecting the file below.