Occasionally an e-filed return will have an Alert Code sent with the acknowledgement, and both accepted and rejected returns may also contain an alert.
An Alert informs both the preparer and the taxpayer of one these things:
- there may be a delay processing the tax return due to more information being needed;
- the tax return is lacking information that may result in a reject in a future processing year.
For example, an S corp return that's missing the signing officer's social security number will receive this alert:
Alert Code: R0000-223 | Category: Missing Data | Severity: Alert
'SSN' in 'SigningOfficerGrp' in the Return Header must have a value.
The IRS recommends including the signing officer's SSN in the heading information of an e-filed Form 1120-S. (Since the return accepted, nothing more needs to be done with it, and amending the return solely for the purpose of adding the SSN isn't necessary.)
Similarly, a Mississippi return that includes passthrough income or loss from a K-1 but doesn't have a copy of the K-1 attached to the return will receive this alert:
Alert Code: XMS00-106 | Category: Acceptance Validation | Severity: Warning
Partnership, S Corporation, Estate and/or Trust Income/Loss was claimed but no Mississippi K-1s were transmitted
Mississippi Form 80-108 indicates, "Attach Mississippi K-1s as applicable". Ideally, a PDF copy of the K-1 is attached to the Mississippi tax return. If it's missing the return will receive this alert code. The taxpayer may possibly receive a letter from the state requesting a copy of the K-1.
Delaware has an alert code when the refund is greater than a particular threshold:
Alert Code: 055 | Category: Review Alert | Severity: Alert
ELF RETURN - REFUND > APPROVAL THRESHOLD
The state will probably request additional information from the taxpayer.
Illinois Form IL-1041 has an alert code regarding the beneficiary specified on Schedule D:
Alert Code: ILSCHD-2700-3 | Category: Incorrect Data | Severity: Warning
If the beneficiary is a disregarded entity for federal income tax purposes (ex: grantor trust, single member LLC, etc), then the owner of the disregarded entity's information and designation should be entered as the beneficiary for purposes of the schedule D. Example, if the beneficiary is a grantor trust and is owned by an individual, then the beneficiary should be designated as an I for individual. This will help to insure the proper amount of pass-through withholding will be calculated for nonresident beneficiaries.
Bottom line: an alert is not a reject.