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INTERNAL REVENUE SERVICE MANDATORY CORPORATE E-FILE PROGRAM. AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS November 13, 2006. BACKGROUND.
AMERICAN INSTITUTE OF
CERTIFIED PUBLIC ACCOUNTANTS
November 13, 2006
- Faster tax processing at the IRS;
- Fewer return errors;
- Reduced cycle time;
- Quicker identification of emerging audit trends; and
- The potential for more current resolution of taxpayer
- Corporations may consider electronically filing their extensions
to (1) proactively identify potential e-filing issues and (2) help
preparers get accustomed to the new process.
- If the Service rejects the electronic extension for processing, it
must be paper filed by the later of the due date of the return or 5
calendar days after the date the IRS gives notification the return is
- Example: A corporation that has 245 employees must e-file its Form 1120 or 1120S, assuming the entity also meets the asset threshold test. This corporation will be filing (i) 245 Forms W-2, (ii) each quarterly Forms 941, and (iii) an annual Form 940, for a total of 250 returns.
Entity level at which the mandate criteria thresholds are applied:
** Please see the controlled group example scenarios provided by the IRS on their
Frequently Asked Questions web site.
- 250 return count threshold applied at top consolidation level or controlled group level, whichever applies, and asset threshold is applied on a consolidated basis.
- Subsidiary data is required to be included in the e-return in “stacked” return format.
- The consolidated return can not be e-filed if the parent/top consolidation return is a Form 1120-L or 1120-PC.
- All forms
- Most supporting data unless specified as PDF
by IRS rules.
- If multiple software packages or other formats (Word, Excel, etc.) are used for return preparation, all information must be merged into one IRS transmission file.
- All prescribed due dates for filing paper tax returns apply to electronic returns.
- The electronic portion of the return must be e-postmarked on or before the due date, including extensions, to be considered timely.
- A return transmitted on or shortly before the due date that is rejected must be re-transmitted and accepted within 20 (5 for Form 7004) calendar days after the original transmission date. The clock does not restart if rejected again after the extended due date and during this 20 day period. (Corporations and preparers should be aware that some states may have established a shorter time frame for correcting a return.) The 20 day perfection period is to cure reject errors—not to correct/change numbers on the return. If the return numbers are incorrect, an amended return should be filed.
- Steps taken and reasons why unsuccessful
- Declaration of undue hardships
- Steps to be taken to ensure future ability to e-file.
- Other details outlined in Notice.
4. Determine required format (XML, PDF, paper) for each form, statement, and election based on e-filing rules.
5. Gain an understanding of how your primary tax software is going to support the e-file process.
- e-Services Registration how to instructions can be found at:
- Taxpayer online application how-to instructions can be found at:: http://www.irs.gov/pub/irs-schema/eservices_efile_application_process.pdf