recently, our firm has had a number of S-Corp returns get rejected due to the file type not matching the IRS database. In these cases, many are long-term clients that have been S-Corp for several years and had their extensions accepted.
has anyone else encountered a similar issue?
I have seen this problem with older S corporations. I have also seen the IRS not allow a Rev. Proc. 2013-30 type fix but that may be the solution. If you have copies of past returns proving they always filed as an S corp you should be able to succeed.
The IRS is aware of this issue. Unfortunately, per the IRS this issue will not fixed until at least January 2017.
For taxpayers who are having their returns rejected, the IRS asks them to call the Business and Specialty line (1-800-829-4933) to verify that S Corp status is present on the account. Once that is verified the return submitter can call the Help Desk (1-866-255-0654) and inform them of the S Corp status. The inquiry will be referred to a level 2 assistor who will update the MeF record to allow the return to be filed electronically. The IRS will allow the return to come in electronically within 2-3 days of receiving the inquiry. It normally takes 4 weeks for the Business and Specialty employees to update the actual account.
Note that the level 2 assistors (per the IRS) are successful the majority of the time. For those returns that the IRS is unable to update, the IRS asks the taxpayer (or the preparer) to send in the paper return and if they are a mandated taxpayer, request a waiver. This is a one-time process. Per the IRS, paper returns are categorized correctly based on the election.
Therefore, my opinion is to save the time of calling and just paper file any such rejected returns. That is what we are doing.
Edward P Caine CPA / CFF / CITP / CGMA
EP Caine & Associates CPA, LLC
Offices located in PA, NJ, NY, and FL
25 Elliott Ave
Bryn Mawr, PA 19010
cell: (610) 212-8978
office: (610) 525-2933
fax: (888) 662-2933
Confidentiality Notice: This e-mail and any attachments may contain information that is privileged and confidential and subject to legal restrictions and penalties regarding its unauthorized disclosure or other use. If you are not the intended recipient, you are hereby notified that any unauthorized review, copying, disclosure, use or distribution is strictly prohibited. If you have received this e-mail in error, please notify the sender immediately by return e-mail and delete this e-mail and all attachments from your system.