Luca IQ receives IRS approval for federal 1040 e-filing

Luca IQ has passed IRS Assurance Testing for Form 1040, making it an authorised IRS e-file provider for federal individual returns. While the company is initially rolling out federal 1040 capabilities, Luca IQ says it has established a waiting list for interested firms.

The tax software company is approved by the IRS as a Software Developer, Transmitter and Intermediate Service Provider, allowing it to prepare, calculate and electronically file federal individual tax returns through its own system.

The approval marks a regulatory milestone as Luca IQ seeks to sell software to CPA and tax firms rather than individual taxpayers. Its product is designed to replace the tax engines used by many accountancy practices, which Luca IQ argues were built as desktop systems and are difficult to connect with other software.

Rather than routing filings through a separate transmitter or relying on older tax engines beneath newer interfaces, Luca IQ says its platform handles document intake, calculation and filing in one system. Source documents such as W-2s, 1099s, K-1s and brokerage statements are uploaded to the platform, which maps the data to the relevant parts of a return.

According to Luca IQ, each figure can be traced back to the original document, and completed returns are calculated using rules-based logic. The company describes that approach as deterministic, meaning the same inputs produce the same result each time.

Tax engine

The IRS testing result is significant because software providers must complete assurance testing before they can transmit live returns electronically. For Luca IQ, it means the company can now file federal individual returns directly through its own engine rather than using long-established desktop software as an underlying layer.

Luca IQ is targeting professional firms rather than the retail tax market. It does not offer a do-it-yourself filing product for consumers and sells only through CPA and tax firms.

That focus reflects the founders' backgrounds. Co-Founder and Chief Executive Officer Angelo Policicchio previously worked in local tax firms and is a Certified Public Accountant (CPA), while Co-Founder and Chief Technology Officer Akash Sadashivapeth was employee number one at Welligence Energy Analytics, where he led the company's engineering and data science efforts.

Policicchio outlined the company's pitch in a statement on the testing result.

"I spent years working in local tax firms and then as a CPA, watching people retype numbers into software older than they are," said Angelo Policicchio, CPA, Co-Founder and Chief Executive Officer of Luca IQ. "The problem was never that the incumbents are bad at tax math; it is that nothing connects. Every firm has stitched together a stack of workarounds because the underlying engine has no way to talk to anything else. We rebuilt the engine so that your tax engine is no longer the bottleneck."

Workflow focus

Luca IQ says its system is built with an API-first structure, allowing a completed return to be delivered as structured data, as a formatted PDF or as a return filed with the IRS. The approach is intended to make the software easier to integrate into wider firm workflows than older stand-alone tax programs.

Professional tax software remains a large but fragmented part of the accountancy technology market, where many firms use combinations of legacy preparation tools, document-gathering software and manual processes. Vendors have tried to modernise parts of that workflow, but Luca IQ argues that many newer products still depend on older calculation engines and use robotic process automation to move data between systems.

By contrast, Luca IQ argues that legacy players have not needed to innovate because CPA firms have had so few options available. The IRS testing milestone gives the company the regulatory ability to process 1040 individual returns. Sadashivapeth described the company's division of labour between document processing and tax calculation in a separate comment.

"We separated the two problems every firm faces," said Akash Sadashivapeth, Co-Founder and Chief Technology Officer of Luca IQ. "Automation handles the tedious document work up front. We built a deterministic engine that connects with every workflow and new technology, unlocking not just significant time savings, but also the ability for firms to grow their practice through advisory or tax planning, all while keeping the same customer base."