state tax e-filing update: corporate, partnership...
TRANSCRIPT
State Tax E-Filing Update: Corporate,
Partnership and S Corporation Returns Mastering Latest Rules and Technologies for Mandatory and Optional Electronic Filing
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TUESDAY, NOVEMBER 27, 2012
Presenting a live 110-minute teleconference with interactive Q&A
Terry Hunt, E-File Manager, Kansas Department of Revenue, Topeka, Kan.
Aaron Lindwall, Support Analyst, Corptax, Los Angeles
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State Tax E-Filing Update: Corporate, Partnership and S Corporation Returns Seminar
Terry Hunt, Kansas Revenue Department
Nov. 27, 2012
Aaron Lindwall, Corptax
Today’s Program
Upcoming E-File Mandates
[Aaron Lindwall]
Update On The Federal/State E-File Program
[Terry Hunt]
General Guidance For Dealing With States On E-Filing
[Aaron Lindwall]
Slide 8 – Slide 22
Slide 23 – Slide 45
Slide 46 – Slide 57
Notice
ANY TAX ADVICE IN THIS COMMUNICATION IS NOT INTENDED OR WRITTEN BY
THE SPEAKERS’ FIRMS TO BE USED, AND CANNOT BE USED, BY A CLIENT OR ANY
OTHER PERSON OR ENTITY FOR THE PURPOSE OF (i) AVOIDING PENALTIES THAT
MAY BE IMPOSED ON ANY TAXPAYER OR (ii) PROMOTING, MARKETING OR
RECOMMENDING TO ANOTHER PARTY ANY MATTERS ADDRESSED HEREIN.
You (and your employees, representatives, or agents) may disclose to any and all persons,
without limitation, the tax treatment or tax structure, or both, of any transaction
described in the associated materials we provide to you, including, but not limited to,
any tax opinions, memoranda, or other tax analyses contained in those materials.
The information contained herein is of a general nature and based on authorities that are
subject to change. Applicability of the information to specific situations should be
determined through consultation with your tax adviser.
7
UPCOMING E-FILE MANDATES
Aaron Lindwall, Corptax
Agenda For This Section
I. States with new mandates for TY12
A. Colorado
B. Illinois adding partnerships
C. Michigan transitioning from MBT (Michigan business tax) to
CIT (corporate income tax) returns
D. Rhode Island
E. Tennessee
F. Virginia
G. West Virginia
9
New Mandates For TY12
• Colorado
― Effective Jan. 1, 2012 (Senate Bill 10-162)
― Businesses claiming EZ (enterprise zone) tax credits are required
to file electronically with the Revenue Department.
― Businesses are required to receive pre-certification each
year prior to earning EZ business tax credits, and then must
receive final certification from their local EZ administrator
after earning the credit. An online system is available to
receive pre-certification and certification of EZ business tax
credits.
― Mandate applies to filers of Form 112 (C corporation) and Form
106 (partnership, S corporation) with EZ tax credits.
10
New Mandates For TY12 (Cont.)
• Illinois adding partnership returns for TY12
― Regulation Sect. 760.100, electronic returns:
― Beginning with returns required to be filed for taxable years ending on
or after December 31, 2011, any taxpayer required to file its federal
income tax return by electronic means is required to file its equivalent
Illinois income tax return for the same taxable year by electronic
means. This subsection (c)(4) does not require electronic filing of
amended returns or of returns of individuals or estates, or to any return
the Department has announced cannot be filed by electronic means.
― TY11
― IL-1120 (single and combined C corporation)
― IL-1120 Insurance (single and combined)
― IL-1120-ST (S corporation)
― TY12
― Adding support for IL-1065 (partnership)
11
New Mandates For TY12 (Cont.)
• Illinois (Cont.)
― Short period returns
― Illinois determines which form year to use based on end date. The TY11
form is, “for tax years ending on or after 12/31/2011 and on or before
12/30/2012”. Most state use the beginning date. For short-year filers,
this has two implications:
― Short period returns with an ending date before 12/31/2011 are
prepared on TY10 forms and do not fall within the mandate. They
can be paper-filed.
― Short-year partnership returns can not be e-filed until they have a
EOY date in 2013, because Illinois did not produce a schema until
TY12.
― Example: A short period of 1/1/2012 - 6/30/2012 return will have
to be prepared and filed in the TY11 e-file schema.
― Depending on how your system handles schema changes from
year to year, this could affect how you import data for Illinois.
12
New Mandates For TY12 (Cont.)
• Michigan
― Effective Jan. 1, 2013, Michigan has an enforced e-file mandate for
MBT and CIT. Software developers producing MBT and CIT tax
preparation software and computer-generated forms must support e-
file for all eligible Michigan forms that are included in their software
package. All eligible MBT and CIT returns prepared using tax
preparation software or computer-generated forms must be e-filed.
― The Treasury Department will be enforcing the e-file mandate for
MBT and CIT. The enforcement includes not processing computer-
generated paper returns that are eligible to be e-filed. A notice
will be mailed to the taxpayer indicating that the taxpayer's
return was not filed in the proper form and content, and it must
be e-filed. Payment received with a paper return will be
processed and credited to the taxpayer’s account, even when the
return is not processed.
13
New Mandates For TY12 (Cont.)
• Michigan (Cont.)
― While e-file is not new for Michigan, the state is
transitioning from the MBT (Michigan business tax) to the
CIT (corporate income tax). All eligible returns prepared
using tax preparation software or computer-generated
forms, must be e-filed.
― Most taxpayers will be filing the CIT for TY12.
― MBT election enables certain MBT taxpayers with
certificated or awarded credits to continue using
those credits once the CIT is in place. Such taxpayers
may elect to continue filing and paying under the MBT
until the expiration of the previously awarded,
certificated credits.
14
New Mandates For TY12 (Cont.)
• Michigan (Cont.)
― Special considerations for fiscal filers
― Taxpayers with a federal fiscal year beginning in 2011 and
ending in 2012 must file two short-period returns.
― One to report its final 2011 MBT liability, for the period
from the beginning of its 2011-12 fiscal year through
Dec. 31, 2011.
― The other to report either its initial CIT liability for the
period from Jan. 1, 2012 to the end of its 2011-12 fiscal
year; or, for taxpayers electing to continue MBT to claim
certain certificated credits, a 2012 MBT return for the
period from Jan. 1, 2012 to the end of its 2011-12 fiscal
year
15
New Mandates For TY12 (Cont.)
• Michigan (Cont.)
― Special considerations for fiscal filers (Cont.)
― Furthermore, the final MBT return must use the same method as the second CIT/MBT
return.
― A taxpayer that is subject to the MBT and the CIT for fractional parts of the same
fiscal tax year must use the same method to compute the MBT as used to compute
the CIT for the other portion of the tax year. MCL 208.1503(2) and MCL 206.683
More specifically, MCL 206.683(1) directs that a taxpayer subject to the CIT may
elect to compute the tax for the portion of the tax year to which the CIT applies by
1 of the following methods:
― 1. Annual: The tax may be computed as if the CIT was effective on the first
day of the taxpayer’s annual accounting period, and the amount computed
shall be multiplied by a fraction, the numerator of which is the number of
months in the taxpayer’s first tax year and the denominator of which is the
number of months in the taxpayer’s annual accounting period.
― 2. Actual: The tax may be computed by determining the corporate income tax
base in the first tax year in accordance with an accounting method
satisfactory to the department that reflects the actual corporate income tax
base attributable to the period. The method of accounting used in prior fiscal
years will be assumed to reflect the actual tax base attributable to the
period.
16
New Mandates For TY12 (Cont.)
• Michigan (Cont.)
― Special considerations for fiscal filers (Cont.)
― MCL 206.683(2) further states that the method chosen
by the taxpayer to compute the CIT shall be the same
method used by that same taxpayer when computing
the MBT for the other portion of that same tax year.
― Software providers will have to make changes to
the TY11 MBT calculations.
― Verify the timing of these changes with your
vendor
17
New Mandates For TY12 (Cont.)
• Michigan (Cont.)
― Special considerations for fiscal filers
― Automatic extension to file (not to pay)
― Fiscal-year taxpayers will be granted an automatic extension for
their 2012 fiscal year annual CIT return or 2012 fiscal year annual
MBT election return. Returns for fiscal years ending in 2012 will be
due on the same date as 2012 calendar-year returns, which is April
30, 2013. An extension request form need not be filed unless
required to transmit payment of any tax due with the annual
return. The annual return tax due must be paid by the original due
date, which is the last day of the fourth month after the end of the
fiscal year.
― A fiscal-year taxpayer may request an additional extension on Form
4, Application for Extension of Time to File Michigan Tax Returns,
if the extension to April 30, 2013 is not sufficient (e.g., a taxpayer
with a fiscal year ending November 2012, with a federal extension
granted through September 2013).
18
New Mandates For TY12 (Cont.)
• Rhode Island
• Regulation ELF 09-01 implements 44-1-31.1 of the Rhode Island General Laws.
• Grants the tax administrator the authority to require paid preparers to file
personal and business tax returns electronically with the Division of Taxation
• Effective Jan. 1, 2009, any paid preparer who filed more than 100 Rhode
Island returns during the previous calendar year must file all eligible returns
electronically.
• While the state had the authority to require electronic filing since Jan. 1, 2009, it
did not exercise that authority until TY12.
― The Taxation Division will begin enforcing that mandate Jan. 1, 2013, with
respect to paid preparers of corporate returns on the Form RI-1120 series and
Form RI-1065. Thus, all returns filed on or after Jan. 1, 2013 on Form RI-
1120C, Form RI-1120S or Form RI-1065 must be e-filed.
• Mandated tax returns for TY12 include RI-1120C, RI-1120S and RI-1065 that are
completed by a paid preparer who filed more than 100 Rhode Island returns in the
previous year (including personal and corporate income tax returns and other types
of Rhode Island tax returns).
19
New Mandates For TY12 (Cont.)
• Tennessee
― Beginning Jan. 1, 2013, certain franchise and excise tax, certain sales
and use tax, and all professional privilege tax returns must be filed
electronically pursuant to Public Chapter 657 (2012). It states: "The
commissioner is authorized to require that any return, report, claim,
statement, application, or other document filed with the department,
including any payment or remittance that accompanies such document,
be submitted electronically in a manner approved by the commissioner
beginning no sooner than ninety days after the commissioner has
certified that a system is in place for the electronic submission of such
document or payment." This notice serves as such certification.
― Forms currently accepted through the IRS Modernized e-File (MeF)
Program include the franchise and excise tax return (FAE170),
application for extension of time to file (FAE173), and quarterly
franchise and excise tax declarations (FAE172).
20
New Mandates For TY12 (Cont.)
• Virginia
― Corporation electronic filing mandate
― The 2012-2014 Appropriations Act (273 of HB 1301 - Acts of Assembly
2012 Special Session I, Chapter 3), effective Jan. 1, 2013, requires all
corporations to file estimated tax payments and their annual income tax
return and final payment using an electronic medium in a format
prescribed by the tax commissioner. Accordingly, for taxable years
beginning on or after Jan. 1, 2012, corporations must file and make
return payments electronically. Estimated tax payments must be made
electronically for taxable years beginning on or after Jan. 1, 2013.
Waivers may be granted only if the tax commissioner finds that this
requirement creates an unreasonable burden on the corporation. All
requests for waiver are to be submitted to the tax commissioner in
writing. FAX waiver requests to: (804) 367-3015
― Form 500 filers (C corporation) must e-file.
― Form 502 files (S corporation and partnership) are not supported by e-file.
21
New Mandates For TY12 (Cont.)
• West Virginia
• West Virginia will begin enforcement of its mandate, which has been in place
since Jan. 1, 2009.
• Reg.
110-10D-1 through 110-10D-9, West Virginia State Tax
Department, effective May 16, 2011
• West Virginia has amended its electronic filing regulations to provide
that for tax years beginning on or after Jan. 1, 2012, electronic filing is
mandated for those taxpayers that had annual remittance for any single
tax type equal to or greater than $10,000 during the immediately
preceding taxable year. Previously, the $10,000 threshold was to take
effect for tax years beginning on or after Jan. 1, 2011, for taxpayers
that had total annual liability for any single tax of $10,000 or more
during the preceding tax year. Other amendments to the regulations
conform to statutory changes.
• Mandate applies to Form 120 (C corporation) and Form 100 (S
corporation and partnership)
22
UPDATE ON THE FEDERAL/STATE E-FILE PROGRAM
Terry Hunt, Kansas Revenue Department
Federal/State E-File Program Update
I. States’ implementation of 1120/1120S/1065 e-file
A. 2007 – 2012 program growth
B. State plans for future implementation
II. Nuts and bolts of fed/state business e-file platforms
A. Schemas, TIGERS and manifests!
B. IRS shared data structures
C. State common components
D. State customizable sections of schemas
24
Federal/State F-File Program Update (Cont.)
III. Errors and rejected submissions
A. XML parse errors
B. State business rule errors
C. Resolve errors and re-submit submissions
IV. State coordination with software providers
A. Software developer guides
B. Business rule listings
C. Testing of software
D. Software approval process and compliance agreements
25
1120/1120s/1065 State E-File Growth
26
Participating States Filing Season 2012
State Total State
Returns Corporate
Linked Partnership
Linked Corporate Unlinked
Partnership Unlinked
Alabama 97,305 23,456 19,399 35,751 18,699 Arkansas 41,440 5,376 4,883 21,381 9,800 Colorado 121,832 31,786 24,699 40,943 24,404 Delaware 10,207 5,744 0 4,463 0 Florida 133,600 39,835 0 93,765 0 Georgia 227,110 57,510 37,607 96,943 35,050 Iowa 48,203 10,992 7,550 20,533 9,128 Idaho 43,830 5,336 4,811 19,080 14,603 Illinois 88,389 31,955 0 56,434 0 Kansas 62,118 12,752 10,285 24,377 14,704 Louisiana 58,424 18,844 0 39,580 0 Maryland 141,858 35,072 24,990 56,819 24,977 Maine 8,303 3,302 2,795 1,545 661 Mississippi 85,558 51,453 13,807 16,857 3,441 Minnesota 128,189 31,204 19,145 54,213 23,627 Missouri 48,412 13,076 0 35,336 0 Massachusetts 17,027 2,946 2,514 7,320 4,247 Montana 32,937 7,583 4,114 13,707 7,533 North Dakota 15,602 5,918 4,659 3,191 1,834 New Jersey 1,256 34 0 1,222 0 New York City 451,472 95,822 50,585 227,996 77,069 New York State 1,302,598 227,107 103,702 568,734 403,055 Oklahoma 3,993 1,329 0 2,664 0 Oregon 52,177 12,414 0 39,763 0 Pennsylvania 300,057 60,215 45,087 130,738 64,017 Rhode Island 17,296 7,107 4,177 4,310 1,702 South Carolina 61,268 19,540 0 41,728 0 Tennessee 13,598 5,364 3,210 3,939 1,085 Utah 65,419 5,457 6,084 37,769 16,109 Virginia 16,977 6,951 0 10,026 0 Wisconsin 157,237 38,004 30,326 55,812 33,095 West Virginia 5,935 2,339 1,513 1,626 457
Total: 3,859,627 875,823 425,942 1,768,565 789,297
27
Connecticut: Launching 1065 E-File
Alaska
Arizona
California (independent)
District of Columbia
Hawaii
North Carolina
Ohio
South Dakota
Texas (independent)
Vermont
Non-Participating States (As Of 11/27/12)
Indiana
Kentucky
Massachusetts (independent)
New Hampshire
New Mexico
Connecticut will be accepting 1065 submissions
(CT-1065/1120SI form) beginning in January 2013,
followed by 1120 later in 2013 (CT-1120 form).
28
Schemas, TIGERS And Manifests
Schema: A plan, diagram or scheme
XML: Extensible mark-up language
TIGERS: Tax Implementation Group for E-Commerce Requirements Standardization
Manifest: Provides basic, minimal specifications for the package contents
(submission), and briefly describes what is contained in that submission
Web Service: A method of communication between two electronic devices over
the World Wide Web
All participating states must submit their schemas
for review and approval by the
TIGERS schema review team.
29
Schemas, TIGERS And Manifests (Cont.)
The IRS and states use XML schemas to document and
publish electronic versions of tax forms and schedules.
These schemas also enforce rules for data formatting,
required entries, tax years and versioning.
XML schemas provide IRS and states with “cleaner” tax
data up front, and therefore reduce errors and
adjustments to tax returns (fewer notices and letters
generated to the taxpayer).
Every submission must contain a manifest. The IRS
opens and processes the data in the manifest for both
IRS and state submissions.
Schemas, TIGERS And Manifests (Cont.)
For state submissions, the IRS verifies
that the state listed in the manifest is
a participating state for the submission
platform (1040, 1120, 1065).
Additional checks are performed on
the ETIN, and the name and EIN are
matched against IRS databases.
IRS checks the status of the IRS submission on “linked” fed/state returns. If
accepted, the IRS allows the state submission to be retrieved by the state.
IRS does not open or process any other data in the state submission package. The
package is just simply placed in the corresponding state’s retrieval queue for pick-up
by the state’s Web service application.
States are restricted to assigned time slots for Web service requests, so that volume
management can be monitored and throttled by the IRS.
31
IRS Shared Data Structures
XML data types (e-file types)
XML naming conventions
Tax form structuring
Schema packaging and versioning
Return header information
Binary attachments
“Common” folders
32
XML Data Types And Naming Conventions
33
XML Data Types And Naming Conventions (Cont.)
34
State Common Components
XML schema structure
ReturnHeader
ReturnDataState
FinancialTransaction
Binary attachments
IRS forms (W-2s, 1099s)
35
State XML Schema Structure
36
States’ Customizable Schema Sections
37
States’ Customizable Schema Sections (Cont.)
38
Errors And Rejected Submissions
Error Category Error Msg Rule Number
Severity DataValue
Unknown Schema Version
XML Schema version unknown or missing. 100 99
Error Category Error Msg Rule Number
Severity DataValue
Duplicate Return Original return already received for this tax year by FEIN.
51 99
Error Category Error Msg Rule Number
Severity DataValue
XML PDF Mismatch
XML attachments and submission attachments do not match.
54 99
39
Errors And Rejected Submissions (Cont.)
Error Category Error Msg Rule Number
Severity DataValue
XML Validation
Error: The 'http://www.irs.gov/efile:Phone' element is invalid - The value '50386102435037910329' is invalid according to its datatype 'http://www.irs.gov/efile:PhoneNumberType' - The Pattern constraint failed. Line: 1 Position: 1693
50 99
Error Category Error Msg Rule Number
Severity DataValue
XML Validation
Error: The 'http://www.irs.gov/efile: AveragePercentToKsSales' element is invalid - The value '-0.059668' is invalid according to its datatype 'http://www.irs.gov/efile:Decimal99Type' - The MinInclusive constraint failed. Line: 1 Position: 2725
50 99
40
State Business Rule Errors ErrorCategory ErrorMessage RuleNumber
XML Validation <Actual XML Error Message> 50
Duplicate Return Original return already received for this tax year by FEIN. 51
Invalid Tax Year Tax Year in the Manifest is invalid and out of the range of the program.
52
Invalid Submission type Submission type in manifest not an accepted value. 53
XML PDF Mismatch XML attachments and submission attachments do not match. 54
Invalid EIN EIN does not match IRS master file. 55
Debit Date Missing Requested Settlement Date must be sent for a direct debit transaction
56
Debit Amount Error Payment Amount for a direct debit must be greater than zero 57
TaxPeriodBeginDate Missing Tax period begin date must be sent 58
TaxPeriodEndDate Missing Tax period end date must be sent 59
ABA Validation ABA Bank routing number format is invalid 60
Unknown Schema Version XML Schema version unknown or missing 100
Invalid ETIN Invalid or unauthorized transmitter 101
Invalid EFIN Invalid or unauthorized filer 102
XML Return Missing XML Return was not found in the transmission 103
41
Error Resolution
XML parse error
Decipher XML parse error message
Review tax return for data elements listed in parse error
message
State business rule error
Check rule number error and message
Refer to state business rule error listings
Contact software provider or State ELF office for assistance
42
State Coordination With Software Providers
Software developer guides and business rules
Made available to software partners to
use in conjunction with schemas for
software development
Guides are uniform in structure across
states, allowing developers to easily
locate needed information.
Guides include state program
requirements, contact personnel,
testing overview, acknowledgements
and reject information
Some states also publish this guide on
the ERO section of the state Web site.
43
ERO handbook
Overview of state e-file
programs and ERO
responsibilities
Business rule reject codes
Available on state Web sites
and/or through software
providers
State Coordination With Software Providers (Cont.)
44
Software Testing And Approval Process
States develop test scenarios based off high-volume forms,
legislative changes and errors seen in prior years.
States publish test scenarios and testing timeframes.
Software developers transmit the state scenario data
electronically, and the state compares that XML data received to
the scenario published.
Software approval is granted when the developer has
successfully sent all required test scenarios.
Some states require additional steps in the approval process:
Letters of intent, participation agreements, compliance
contracts
45
GENERAL GUIDANCE FOR DEALING WITH STATES ON E-FILING
Aaron Lindwall, Corptax
Agenda For This Section
I. Successful e-filing
A. Planning
B. Preparing the e-file return
C. Reviewing your e-file return
D. Filing the return with the jurisdiction
47
Planning
• Planning
• Are you required to e-file?
• Many states have different mandates for paid preparers vs.
self-filers.
• Some state have e-file mandates but have not actually built
the e-file infrastructure.
• Some states have e-file mandates and programs but are not
currently enforcing the mandate.
• For states where you need to e-file, what is the perfection
period?
• Move states without a perfection period earlier in your
preparation process. You must have an accepted return by
the return due date.
48
Planning (Cont.)
Perfection period
None 5 Business Days
7 Calendar Days
10 Business Days
10 Calendar Days
CO MI NJ (P-ship) NY (P-ship) NYC PA (C corp) RI TN TX VA
LA MA MS (P-ship)
NY (C corp) NY (S corp)
AL IL
FL GA OR PA (S corp) SC WI
• Waiting on information for WV
49
Planning (Cont.)
• Planning
• When will e-file functionality be delivered from your software vendor?
• Vendor ability to deliver functionality in a timely manner is affected
by:
• Initial delivery of yearly schema
• Complexity of schema and number of business rules
• Testing requirements to gain software approval
• Attend webinars from your vendor to refresh knowledge on existing
jurisdiction issues, and learn about new jurisdictions
• Define roles within your organization
• Who is responsible for the e-file function?
• How are errors reported back to the preparer’s for correction?
• Who is responsible for determining the filing was successful?
50
Preparing
• Preparing the e-file return
• Inventory items previously included in the paper return to
determine how they will be included for e-file
• Part of the XML file
• As a PDF attachment
• Separately submitted on paper
• Not supported for electronic filing (NY credit forms)
• What does the jurisdiction require for federal attachments?
• As filed federal return in XML
• Do they require single-entity, pro forma attachments?
51
Preparing (Cont.)
• Preparing the e-file return
• Does the jurisdiction allow eliminations in an eliminations entity?
• Are negative amounts allowed?
• What are the signature requirements for the return?
• Signature document retained in records
• Signature document submitted with the return
• Certify the return electronically
• Provide information like last year’s revenue or a state-issued
number
• Don’t wait for the return to be completed to begin the e-file process
• Many of the items above can be determined early in the return
preparation process by validating the return against the schema.
• Other items such as address issues can be identified and corrected
early in the process.
52
Reviewing
• Reviewing the e-file return
• The e-file return is not the printed copy of the return.
• Does your software allow you to view the actual
XML file that is being filed with the jurisdiction?
• Who is responsible for reviewing the e-file return?
• What tools are available to facilitate the e-file
review?
• At a minimum, you should be verifying important
numbers in the return (TI, tax due) and attachments
included with the e-file return.
53
Filing
• Filing the return with the jurisdiction.
• How will you transmit the return?
• Direct to the jurisdiction
• Through a third party
• Direct to the jurisdiction
• Combined fed/state participating states can be
uploaded to irs.gov.
• Use your EFIN/ETIN with the return
• You must download the acknowledgement file to
determine if you were accepted or rejected.
• Is any additional registration needed with the
jurisdiction?
54
Filing (Cont.) • Filing the return with the jurisdiction.
• Through a third party
• Use their EFIN/ETIN (online filer)
• Use your EFIN, their ETIN (ERO)
• Do you have the ability to test the transmission process to determine if
trust certificates are up to date or if any firewall issues exist?
• How is the accepted or rejected status (acknowledgement file) reported
back to you?
• Maximize your perfection period for rejected returns
• The 10 days is actually a “lookback” period and is determined as of the
date the return is accepted. IRS looks back 10 days from the date the
return is accepted to determine if there have been any rejects for the
same EIN and tax period.
• Plan to file early and know that you may need to re-file (and reject
again) on the return due date if your return hasn’t been accepted. This
will secure the longest perfection period.
55
Filing (Cont.)
• If my return passed validations in my software, why would I reject with the
jurisdiction?
• The degree to which the various jurisdictions “partner” with software vendors
affects our ability to provide accurate error reporting that increases the
likelihood of the taxpayer receiving an accepted return on the fist
transmission attempt.
• States may not publish all the validations they perform on returns or may
perform validations we cannot (e.g., is the EIN/state account number a valid
combination?).
• If a state implements a lot of rules (Illinois, for example, had 1,500 business
rules), then there is a risk that not all the rules will work in harmony for each
filing scenario.
• What steps need to be preformed once the return is accepted?
• Are acknowledgement files archived in your software or somewhere else on
your network? What about the XML return?
• Do you have the ability to “lock” a filed return?
56
Filing (Cont.)
• Tips for success
• Clearly define roles within your organization
• Have a point person for distributing errors to the preparers and
collecting needed return attachments. That person should
have a return inventory to compare with the e-file package.
• Have someone responsible for determining when the return has
been accepted. For some jurisdictions, it is not an all or
nothing proposition. You may receive a partially accepted
return.
• Begin the process early
• Many errors can be resolved before the return is completed.
Other issues can be determined early.
• Allow time for rejections; know for how long your perfection
period lasts
57