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 rejected return 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 Form 1120-S in TaxSlayer Pro select:
- Heading Information
- Other Information
- Amended Return - Answer YES.
Incorrect return type
This reject indicates one of several things:
- The IRS does not recognize the entity as having made the S Corporation election on Form 2553, either because the corporation failed to file 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 be filed with the IRS by the 45th day of the tax year in which the election is to be effective. (See the Form 2552 instructions here for more information about the S corporation election.)
This reject 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 if the IRS doesn't receive Form 2553.
To resolve this reject, first 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 Form 2553 instructions 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.
Missing balance sheet and/or Schedule M-1
When the return was electronically filed, the answer to Schedule B, Line 11 "Receipts and Assets at year end less than $250,000" was answered No and Schedules L (Balance Sheet) and M-1 (Reconciliation of Income) were not included with the return. Those two schedules are required when either receipts or assets are $250,000 or greater.
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.
- If either the corporation's assets or 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. In the return in TaxSlayer Pro, opening each schedule's menu creates the schedule, and then once in the menu you can make the entries necessary for it to be accurate.
Your transmitter EFIN is unrecognized
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. Resolving this reject involves first verifying that the correct EFIN has been entered in the program configuration and in the return itself. There are three places in the program configuration to check as well as checking the return itself:
- From the Quick Menu select Configuration, then 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 a record with the correct EFIN is in this 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 a tax return, from the Main Menu of the return select:
- Mark Return Electronic
- Other Information
- EFIN - Clicking the EFIN menu line will update it to the current Transmitter's EFIN in Configuration.
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 the document counter in the electronic record that is sent to the IRS. This typically occurs when a blank form or schedule has been included with the return, or the return is missing a required schedule or supporting statement.
To correct the reject, within the return do the following:
- At the Form 1120-S interactive screen, look at the Forms Completed menu on the right hand side. Do you see any form showing that you did not complete or don't recognize? If so, double-click it to go to it and examine if it needs completion or deletion.
- From the View Results menu, print a copy of the return and examine the supporting statements. If any entry is missing either the description or the dollar amount, find the item in the return and either add the missing information or remove the entry entirely.
The return can be resubmitted after any blank documents are removed.
See here for more detailed information about diagnosing and fixing this reject.
Mismatch between the EIN and the business name
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 its name has changed. To indicate this change, from the Main Menu of the tax return (Form 1120-S) select:
- Heading Information
- Other Information
- Name Change - Click to change from No to Yes.
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.