When an electronically filed Form 1120S rejects it is incumbent upon the tax preparer to ascertain the reason for the reject and then take the appropriate action. In some cases the return can be re-submitted electronically after correcting the return. Otherwise, the return will have to be mailed to the IRS.
Here are some of the most common reject codes that EROs may receive when electronically filing Form 1120S.
Previously Accepted Return
This reject occurs when the IRS has already accepted a return for this entity's Taxpayer Identification Number (TIN). In this case, either the rejected return is a duplicate filing or it has not been marked as amended. Unlike a Form 1040, an amended Form 1120S can be electronically filed.
If the 1120S has been amended, it needs to be marked as an amended return. To mark the return as amended, from the main menu of the Form 1120S select
- Heading Information
- Other Information
- Amended Return. Answer YES.
A sample reject when a previously accepted return has been filed:
R0000-932-01 - If "Amended Return" or (Superseded for 1120/1120S/1120-F/1041) checkbox is not
Return Type Not Recognized
This reject occurs when the IRS does not recognize the entity as having previously made an S Corporation election on Form 2553. It may be that the IRS's records do not accurately reflect the fact that the corporation timely filed Form 2553, or it may be that the corporation has not made an S Corporation election on Form 2553.
Form 2553 is a corporation's official notice to the IRS that it is electing to be treated as an S Corporation for tax purposes. Form 2553 should be filed with the IRS by the 45th day of the tax year in which the election is to be effective. (See the Instructions for Form 2553 for more information on making an S Corporation Election.) This reject code will not occur when electronically filing an initial tax return filed by the entity. However, this reject code may appear in years subsequent to the initial filing.
Possible corrective action is to verify that a timely S Corporation election has been made by the corporation and if a timely filing has occurred the preparer can contact the IRS E-file Help Desk for assistance. If after contacting the E-File Help Desk it is determined that the return cannot be electronically filed, then a paper return must be submitted by mail.
If no S Corporation election has been timely made, see the Instructions for Form 2553 and/or contact Practitioner Assistance at the IRS to determine if relief for a late election may be available to the corporation. Otherwise, the corporation will be treated as a C Corporation and file Form 1120.
A sample reject when the IRS does not recognize the S Corporation Return Type:
R0000-900-01 - The return type indicated in the return header must match the return type established
Schedule B, Line 10 Checkbox
When the preparer electronically filed the return, the answer to the Schedule B, Line 10 question "Receipts and Assets at year end less than 250,000" was marked NO in the return and the preparer failed to include on the tax return a Schedule L (Balance Sheet) and/or Schedule M-1 (Reconciliation of Income). The corrective action for this reject code depends on whether both the corporation's asset and receipts are each less than $250,000 at the end of the tax year.
If both the corporation's assets and receipts are less than $250,000 at the end of the tax year, change the answer to Schedule B, Line 10 to YES. In that case, the preparer does not have to complete Schedule L (Balance Sheet); Schedule M-1 (Reconciliation of Income) in order to successfully electronically file the return. To change the answer to Schedule B, Line 10, from the main menu of the 1120S select:
- Schedule B - Other Information
- Receipts and Assets at year end less than 250,000. Change to YES.
Once the answer to this question is changed to YES, the return can be re-submitted electronically. However, If either the corporation's assets or receipts are greater than $250,000 at the end of the tax year, the preparer has to complete the Schedule L (Balance Sheet) and Schedule M-1 (Reconciliation of Income) sections of the return before the return can be electronically filed.
A sample reject when Schedule B, Line 10 is marked NO and fails to include a Schedule L (Balance Sheet):
F1120S-267-01 - For Form 1120S, if neither "Final return" nor "Amended return" checkboxes
A return can also reject if it fails to include Schedule M-1 (Reconciliation of Income) along with Schedule L. To correct this reject, from the main menu of the Form 1120S select Schedule M-1. This action will create the schedule, however the preparer should examine it to ensure it accurately reflects the underlying transactions that have occurred in the entity and make any other entries as needed.
A sample reject when Schedule B, Line 10 is marked NO and fails to include a Schedule M-1 (Reconciliation of Income):
F1120S-266-01 - If Form 1120S, Schedule B, Line 10 checkbox does not have a choice of "Yes" indicated
EFIN Not in Accepted Status
This reject occurs when there is currently an issue with the Electronic Filing Identification Number (EFIN) in the Internal Revenue Service's (not in TaxSlayer Pro's) records. Anytime this reject occurs the tax preparer should immediately contact the IRS directly in order to get the issue resolved with their EFIN because they will be unable to electronically file returns until the issue is rectified.
A sample of a reject when the EFIN is not in accepted status:
R0000-905-01 - Electronic Filing Identification Number (EFIN) in the Return Header must be listed in
Document/Form Count not matching the return
This reject occurs when the number of forms, schedules, and supporting documents in the return do not match the count in the electronic record that is sent to the IRS. Often, a blank form or schedule was inadvertently created during the preparation of the tax return, or the return is created without a required schedule or supporting statement.
Review the return in the View Results, looking for any extra or blank forms that may have been created during the preparation of the return. These blank items inflate the document count and need to be removed from the return before the return can be re-submitted electronically. Also, many entry items on a balance sheet (other current assets, other assets, other current liabilities and other liabilities) require a supplement statement to support the item, but blank supporting statement can be found on a return because the preparer opened those items but never made any entries.
If any blank forms, schedules, or supporting documents are found on the return they should be removed before re-submitting the return. The number of document included in the return and the count expected based on the return data will be show in the reject code, so the preparer can ascertain if any extra forms, schedules, or supporting documents are attached to the return.
A sample of a reject when the document count does not match because there is a blank form, schedule, or supporting document in the return:
R0000-019 - The number of return documents (forms, schedules, and supporting documents) included
Name Control Mismatch
This reject occurs when the combined Name and TIN on the return do not match the combined Name and TIN in the IRS's records. The preparer should first check to see if both the name and TIN have been keyed in correctly.
If the business has changed its name since it last filed with the IRS, the return needs to indicate that a Name Change has occurred, after which it can be re-submitted electronically. To indicate the name has changed, from the main menu of the 1120S select
- Heading Information
- Other Information
- Name Change.
If the name of the corporation has not changed, the preparer can contact the IRS E-file Help Desk for assistance. If after contacting the E-File Help Desk it is determined that the return cannot be electronically filed, then a paper return must be submitted by mail.
A sample of a reject when the Name does not match the TIN:
F1120S-239-01 - Filer's TIN and Name Control in the Return Header must match data in the e-File