Independent ERO Agreement
This Independent Electronic Return Originator Agreement (“Agreement”) is entered into as of the Effective Date by and between:
Exchange ProTax Software (“Company” or “Licensor”), and
[ERO Name] (“ERO” or “Licensee”) powered by TAXSLAYER Professional Software.
1. RECITALS
WHEREAS ERO desires to originate federal and state tax returns electronically as an IRS-authorized Electronic Return Originator (ERO); and WHEREAS, Company provides professional tax software services and agrees to license such software to ERO; NOW, THEREFORE, the parties agree as follows:
2. Description of Services
Company grants ERO one (1) software license for professional tax preparation and client file management.
3. Compensation
ERO retains 100% of client tax-preparation fees but shall remit to Company a Service Bureau (SB) Fee per return based on verified prior-year filing volume (see Schedule A).
4. Term and Termination
Term: This Agreement expires October 31, 2026.
Early Termination:
- ERO termination before this date constitutes breach.
- Company termination is allowed only if ERO is non-productive or violates this Agreement, with penalties up to $5,000.
5. PTIN and EFIN Requirements
PTIN: Required under IRC §6109(a)(4) and IRS Notice 2010-66; ERO must maintain an active Preparer Tax Identification Number (PTIN).
EFIN:
- Defined in IRS Publication 3112 and Publication 1345 (Handbook for Authorized IRS e-file Providers).
- An Electronic Filing Identification Number (EFIN) is assigned to approved IRS e-file providers and is required to transmit returns.
- EFINs are not transferable (Rev. Proc. 2007-40, §6.03).
- ERO must maintain, monitor, and safeguard their EFIN in compliance with IRS guidance.
6. Code of Conduct & Compliance
- ERO must comply with Circular 230 (31 C.F.R. Part 10).
- ERO must adhere to IRC §§6694 & 6695, governing return preparer penalties for understatement, negligence, or failure to comply with due diligence.
- Due Diligence Requirements: ERO must comply with Treas. Reg. §1.6695-2 regarding refundable credits (EITC, CTC/ACTC, AOTC, HOH).
- Penalties for non-compliance rest solely with the ERO.
7. Liability & Errors/Omissions
- ERO accepts full liability for their own actions and those of any downline preparers.
- ERO is encouraged to maintain Errors & Omissions Insurance.
- Liability cannot be transferred to Company.
8. Background Checks
Company reserves the right to require background screening and/or fingerprinting.
9. Work Product & Intellectual Property
Any training content, inventions, or work product created in connection with Company’s services is Company’s sole property. Governed by 17 U.S.C. §101 et seq. (Copyright Act).
10. Clients
Clients acquired by ERO are the property of ERO. Company will not manage client support, refunds, or disputes.
11. Social Media & Communications
All public use of Company name/logo requires approval. Social media accounts created on behalf of Company remain Company property. Defamation of Company will result in legal action; damages, attorney’s fees, and costs shall be reimbursed by ERO.
12. Training & Education
Company provides initial training. ERO must independently satisfy IRS Annual Filing Season Program (AFSP) and any continuing education obligations.
13. Recordkeeping
ERO must maintain client records in accordance with IRC §6107(b) (retention of returns) and IRS due diligence requirements.
Company is not responsible for creating/maintaining client records.
14. Equipment & Business Expenses
ERO shall supply their own office, equipment, and expenses.
15. Indemnification
ERO indemnifies and holds Company harmless against all claims, costs, or damages arising from ERO’s acts or omissions.
16. Confidentiality
ERO shall not disclose proprietary Company data or client tax information in violation of IRC §7216 (disclosure/use of taxpayer information). Confidentiality obligations survive termination.
17. Non-Compete
ERO agrees to execute a separate Non-Compete Agreement upon entering this partnership.
18. Fees for Bank Products
ERO electing not to use bank products will be invoiced $75 per return, February–May.
19. Data Security & Safeguarding
- ERO must comply with IRS Publication 4557 (Safeguarding Taxpayer Data) and the FTC Safeguards Rule under the Gramm-Leach-Bliley Act (15 U.S.C. §§6801–6809).
- ERO shall implement administrative, technical, and physical safeguards (e.g., encryption, secure transmission, access controls, breach response plans).
- ERO assumes full liability for any data breach, unauthorized disclosure, or failure to safeguard taxpayer data.
20. Dispute Resolution & Arbitration
- The parties agree first to attempt good-faith negotiation and mediation before pursuing other remedies.
- Any unresolved dispute shall be resolved by binding arbitration under the rules of the American Arbitration Association (AAA).
- Venue for arbitration shall be North Little Rock, Arkansas unless otherwise agreed.
- Judgment on arbitration may be entered in any court of competent jurisdiction.
- Each party shall bear its own costs, except attorney’s fees awarded to the prevailing party.
21. Governing Law
This Agreement is governed by the laws of Arkansas and the ERO’s resident state.
22. Entire Agreement & Severability
This Agreement constitutes the entire agreement. If any clause is unenforceable, the remainder shall remain effective.
Schedule A: Service Bureau Fees
- 0-99 funded returns: $97.00
- 101–499 funded returns: $87.00
- 500–1000+ funded returns: $77.00
*Based on proof of previous year funding rate from refund bank, will be required to log into account for verification.
23. Incentives & Add-Ons
ERO Incentive Eligibility:
- Company may, from time to time, offer additional incentive payments and/or add-on fees related to bank products (e.g., technology fees, transmission fees, check print fees, or similar).
- These amounts are considered contingent compensation and are not guaranteed unless conditions below are fully satisfied.
Threshold Requirement:
- ERO must successfully complete at least 200 funded tax return transactions involving bank products by May 31st of the applicable tax year.
- “Funded transactions” shall mean tax returns processed through approved banking products where disbursement of taxpayer refund has been completed by the bank provider.
Payment Conditions:
- Incentives and add-ons will only be calculated and paid after the 200th funded transaction has been completed and confirmed by Company.
- Any incentives or add-ons associated with fewer than 200 funded transactions are automatically forfeited with no carry-forward or partial credit.
- All qualifying transactions must be funded by May 31st of the same filing season to count toward incentive eligibility.
Forfeiture Clause:
- If the 200-transaction threshold is not achieved, or if the returns are not funded by April 15, all rights to incentives and add-ons are permanently forfeited.
- Company has sole discretion to validate funded return counts via reporting from banking partners.
Acknowledgment of Agreement
- By signing below, the undersigned ERO hereby acknowledges:
- I have read, understood, and agree to the terms of this Independent ERO Agreement, including all incorporated provisions, IRS compliance requirements, and addendum schedules.
- I acknowledge that incentives and add-ons are contingent upon completing 200 funded bank product returns by May 31st of the applicable tax year.
- I understand this Agreement is legally binding under the laws of the State of Arkansas and my resident state.
- NO REFUNDS FOR SOFTWARE PACKAGES.