Below are some of the most common reject codes that occur when electronically filing Form 1120-S. In some situations, the return can be re-filed electronically after making a correction on the return, otherwise the return may have to be mailed to the IRS.
This reject indicates the IRS has already accepted a return for this entity's Employer Identification Number (EIN) and the IRS will not accept a second return electronically with the same number. This generally occurs when the ERO has already transmitted this tax return and the reject is simply a duplicate filing. It also occurs when the preparer is attempting to file an amended return but failed to mark the return as amended.
If the return needs to be marked as an amended return, from the main menu of the S corp return select Heading Information, Other Information, Amended Return and answer YES.
This reject indicates one of several things:
- The IRS does not recognize the entity as having made an S Corporation election on Form 2553, either because the corporation never filed Form 2553, or the corporation did timely file Form 2553 and the IRS's data is inaccurate.
- The state in which this entity is incorporated notified the IRS that the corporation has been administratively dissolved.
- This entity is not an S corporation and should be filing a different return, e.g., it's a partnership (Form 1065), a corporation (Form 1120), or a disregarded entity (filed on the individual shareholder's tax return on Schedule C).
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 have been filed with the IRS by the 45th day of the tax year in which the election was 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 the initial tax return filed by the entity. However, this return may receive this reject in the years subsequent to the initial filing.
Verify whether or not the corporation timely filed the election. If they did, contact the IRS E-file Help Desk at 866.255.0654 for assistance.
Otherwise, if the S Corporation election hasn't 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 will file Form 1120.
When the return was electronically filed, the answer to Schedule B, Line 11 "Receipts and Assets at year end less than 250,000" was marked NO in the return and Schedule L (Balance Sheet) and/or Schedule M-1 (Reconciliation of Income) were not included with the return.
In the Schedule B menu in the return, look for the menu line "Receipts and Assets at year end less than 250,000". Correcting the return depends on the whether this is true or not.
If the corporation's assets and receipts are each less than $250,000 at the end of the tax year, change the answer to the question to YES. In this case, Schedule L (Balance Sheet) and Schedule M-1 (Reconciliation of Income) are not required and the return is ready to e-file.
Otherwise, if either or both of the corporation's assets and receipts are $250,000 or greater at the end of the tax year, Schedule L (Balance Sheet) and Schedule M-1 (Reconciliation of Income) must be completed before the return can be electronically filed. Starting each schedule is as simple as opening the schedule's menu. Once in the menu, the preparer can make the entries needed.
This reject occurs when there is currently an issue with the Electronic Filing Identification Number (EFIN) in the IRS's (not TaxSlayer Pro's) records. Verify that the correct EFIN is entered in the program. There are three places you will need to check in TaxSlayer Pro:
- From the Quick Menu select Configuration, Firm Information and verify the correct EFIN is entered in the menu.
- Exit to back to the Configuration menu and select ERO(s) Menu. Verify that the correct EFIN is entered in the menu.
- Exit back to the Configuration menu and select Electronic Filing/Bank Setup. Verify that the correct EFIN is entered under Transmitters EFIN.
If the Transmitters EFIN needed to be updated, each tax return with this reject must be updated to reflect the change. To update the tax return, from the main menu of the return select Mark Return Electronic, Other Information. Select EFIN to update the EFIN in the return.
If the correct EFIN was used when the return was transmitted, contact the IRS E-File Help Desk at 866.255.0654 to update your EFIN status.
This reject occurs when the number of forms, schedules, and supporting documents in the return do not match counter in the electronic record that is sent to the IRS. This typically occurs when a blank form or schedule is created during the preparation of the tax return, or the return is created without a required schedule or supporting statement.
To correct the reject, review the return in the View Results Menu. Look for any forms that may have been created during the preparation of the return but not filled out. These blank items increase the document count and need to be removed from the return before the return can be re-filed electronically. Also, view the supporting statements from the View Results Menu. All entries must have both a description and a dollar amount. If any entry is missing either the description or the dollar amount, either add the missing information or remove the entry entirely.
The return can be resubmitted after an blank documents are removed. See here for more information about diagnosing this reject.
This reject occurs when the EIN plus the first four letters of the business's name in the return don't match the IRS's records. If the business has changed its name since it last filed with the IRS, the return can be electronically filed after indicating in the return that a Name Change has occurred. From the Main Menu of the tax return (Form 1120) select Heading Information, Other Information, Name Change.
If the name of the business has not changed, contact the IRS E-file Help Desk at 866.255.0654 for assistance. Possibly the return will need to be submitted by mail.