Electronic Filing. User Guide

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Electronic Filing

User Guide

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Electronic Filing Guide

Suite 200 Kennesaw, GA 30144

No part of this manuscript may be copied, photocopied, reproduced, modified or distributed in any form or by any means without permission in writing from CCH Small Firm Services. Information in this manuscript is subject to change without notice. Any software described in this manuscript is furnished under a license agreement and may be used or

copied only in accordance with the terms of the agreement.

CCH Small Firm Services is not engaged in rendering legal, technical, or other professional services. Use of this manuscript or the information in this publication does not relieve the user of complete responsibility for the operation and functionality of its computers and/or network, for the maintenance and backup of all user data, or for the preparation, content,

accuracy, and review of all forms.

THERE ARE NO WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, MADE WITH RESPECT TO THESE MATERIALS OR ANY OTHER INFORMATION PROVIDED TO THE STUDENT.

All trademarks are the property of their respective owners.

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Chapter

1

Electronic Filing Overview

In this chapter, you'll learn the background information required to fulfill basic e-filing requirements, including:

l Modernized E-file l Resources for E-filing

l E-file System Requirements l Internet Connection

l Requirements for Becoming an ERO

l Federal E-filing Requirements and Eligibility l State or Local E-filing Requirements

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Chapter 1: Electronic Filing Overview

Modernized E-file

The IRS’s Modernized e-File System (MeF) was originally designed and released for certain tax-exempt organizations and large to mid-sized companies. Partnership returns were added in 2006 and beginning in tax year 2009, the IRS expanded the MeF system to a limited number of 1040 returns. Today, your tax software supports 1040 MeF system. The software automatically selects the system allowed for the return you are e-filing.

MeF employs a standard XML format, which enables you to attach various required statements and other supporting documentation to the return. This ability is fully supported by your tax software, and

instructions on doing so appear later in this guide.

To determine whether you must e-file your business returns or for more information about MeF, visit the IRS Web site by clickinghereor entering www.irs.gov into your Internet browser.

Resources for E-filing

Your ATX product makes electronic filing fast and easy. Most users are ready to e-file after receiving IRS approval. However, there may be other rules, regulations, exceptions, and technical information, which are beyond the scope of this guide.

IRS Resources

The IRS issues various form instructions, notices, and publications that contain requirements for filing individual and business tax returns electronically. We recommend that you review the following resources before you begin e-filing:

l IRS and state instructions for 1040 forms l IRS and state instructions for 1065 forms

l IRS and state instructions for 1120, 1120-F and 1120S forms l Information for IRS e-file providers: clickhereor enter

www.irs.gov/taxpros/providers/index.html in you r Internet browser.

l Publication 1345, Handbook for Authorized IRS e-file Providers of Individual Income Tax Returns l Publication 4163, Modernized e-File (MeF) Information for Authorized IRS e-file Providers for

Business Returns

l Publication 4206, Modernized e-File Information for Authorized IRS e-file Providers for Exempt Organization Filings

Government Forms and Instructions

To download IRS form instructions, notices, and publications, clickhereor enter

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CCH Small Firm Services Resources

Additional resources are available on the MyATX Solution Center Web site:

1. To access the site, clickhere, or enter https://support.atxinc.com into your Internet browser. 2. Click the E-file Availability link.

The E-file Center tab of the My ATX Support Center Web site appears.

Revenue Procedure/Technical E-file Publications

To download the revenue procedure and e-file specific publications, clickhereor enter

http://www.irs.gov/Tax-Professionals/e-File-Providers-&-Partners/IRS-e-file-Technical-Publications into your Internet browser.

E-file System Requirements

E-file software is a standard feature of our tax preparation programs and does not require a separate installation step. Consequently, the only special hardware requirement for e-filing is an Internet connection.

Minimum Operating Requirements

l 1.0 gigahertz (GHz) processor or higher l 1 gigabyte (GB) or more of RAM

l Microsoft® Windows XP (SP3) or higher

l Super VGA 1024 x 768, High Color/16 Bit display or better l Microsoft® Internet Explorer 8.0

Recommended Requirements

For optimal e-filing performance, the following is recommended:

l 2.0 gigahertz (GHz) processor or higher l 2 gigabytes (GB) or more of RAM

l Microsoft Windows XP (SP3 or higher, 32-bit or 64-bit*) or Windows 7 (with exception of Windows 7 Starter 86 and Starter N versions)

l Super VGA 1024 x 768, High Color/16 Bit display or better l Microsoft® Internet Explorer 8.0

l A high-speed Internet connection (DSL, cable modem, or T1/T3) l An e-mail account that supports file attachments

l A file backup system (backup tape, removable hard drive, CD-R, DVD-R, or similar) l A laser printer

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Internet Connection

The most important e-filing prerequisite is the ability to transmit your data. There are two considerations to keep in mind: 1) the speed of your Internet connection; and 2) the type of connection.

Connection Speed

Although e-files themselves are not particularly large files by today's standards, over the course of the tax season you will need to frequently update your program files and the various forms you will be filing. Often, these files are large and many users find that a dial-up connection is simply too slow to be practical. We recommend using a broadband connection, such as DSL or cable.

Connection Type

You can have either a direct connection or a portal connection to the Internet. A direct Internet connection is one in which your computer uses the standard TCP/IP Protocol to communicate with other computers and access Internet services, such as mail, Telnet, or FTP. While connected via TCP/IP, you can check your e-mail, for example, with any e-mail program you choose. Your Internet service provider (ISP) does not require you to use its program to access e-mail or other Internet services.

If your Internet service provider is an Internet portal service (like AOL®, for example), you may not have access to all Internet services, or you may be required to use your provider's software for specific

services. In some cases, this software—or limitations imposed by the provider—may prevent you from transmitting your e-files. If you connect to the Internet through such a service, you may need to contact your provider to ensure that their service supports ATX e-file software.

Firewalls

A firewall prevents unauthorized access to and from a network or a stand-alone computer by monitoring and controlling communication at specific entry points, or ports. A firewall can be a physical device (hardware), a program (software), or both.

To use ATX software to e-file your returns, you must ensure that your firewall is configured to allow communication between your computer and ATX. For many software-based firewalls, this configuration step is simply a matter of adding your software to the firewall's list of trusted programs (or a similar designation). If your firewall requires specific information about authorized contacts, enter the following values where appropriate:

DNS: ws.atxmax.com Port: 443

If you upgrade your firewall software, you may need to re-enter this information. Clickhereor enter

http://www.microsoft.com/security/default.aspx into your Internet browser for more

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Requirements for Becoming an ERO

You must obtain IRS approval before you can become an ERO (Electronic Return Originator) and file returns electronically.

The authorization process to become an ERO can take up to 45 business days.

The 3 basic steps to becoming an ERO are outlined on theBecoming an Authorized e-file Provider

page of the IRS website:

1. Create an IRS e-Services Account 2. Submit an online application 3. Pass a suitability check

Follow the instructions on this page to become an ERO.

Federal E-filing Requirements and Eligibility

Apply to File Returns Electronically

To become an authorized e-file provider:

l Follow directions on theBecoming an Authorized e-file Providerpage of the IRS Web site.

When completing the application, you will be required to identify your firm's principals and at least one

responsible official. If your application is accepted, you may continue to participate in the program as

long as you and your business meet and adhere to IRS e-file requirements.

Receive Your EFIN

If you are approved, you'll receive an acceptance letter containing your credentials and your unique

Electronic Filing Identification Number (EFIN), which must appear on all your e-filed returns.

You only complete the application once. After you have been authorized to participate, you will receive an acceptance letter before the start of every subsequent tax season, as long as all of the following are true:

l Your address is up-to-date on IRS e-file Application records;

l You transmitted at least one e-file that was acknowledged as accepted for the previous or the

current year;

l You are not denied, suspended, or expelled from participation in IRS e-file.

If you are a preparer in New York, you must register each year with the New York State Department of Taxation and Finance to receive a New York Tax Preparer Registration Number (NY TPRIN). Refer toState or Local E-filing Requirements.

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State or Local E-filing Requirements

There is considerable state-to-state variance in e-filing rules and requirements. For example, Alabama, California, and Connecticut require tax professionals who prepare large numbers of tax returns to transmit those returns electronically. Some states allow you to e-file your returns directly to them, while others only accept files after they have first been validated and forwarded by the IRS. Some states do not accept e-filed business returns. The methods by which e-files can be transmitted to state agencies also vary, but the procedures for those methods are consistent for all states that support them. You may e-file state returns using one of three methods, as determined by the state:

l Linked or Fed/St - The federal and state returns are linked together. The IRS will verify that the

indicated federal return has been accepted before forwarding the state return to the state. If the Federal return has not been received, or has been rejected, the state return will be rejected with Error Code STATE-092: "The IRS Submission ID referenced in the State Submission Manifest must be in accepted status."

l State Only e-file (Unlinked)– State Only e-file is a joint IRS/state program. The IRS receives

state e-file returns, validates that they are in the proper format (but doesn't validate the data or content), and then forwards them to the states.

l Direct e-file – A direct e-file state accepts transmissions independently and without regard to the

status of the federal e-file. However, because many of these states base their returns on federal return data, we do not recommend transmitting an e-file directly to a state until the IRS has

acknowledged receipt of an error-free federal return. Otherwise, you may need to file one or more amended state returns, and these amended returns must be paper-filed.

To learn about a particular state's e-filing requirements, or about the transmission method you need to use:

1. Go to the MyATX Support Center website by clickinghereor entering

https://support.atxinc.com/ in your Internet browser.

The MyATX Solution Center page appears.

2. In the upper right corner of the page, click the Login link. The Client Login page appears:

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3. Enter your Client ID, User Name, and Password. 4. Click Log In.

The MyATX™ Support Center Web site appears. 5. Click the E-File Center tab at the top of the page.

The E-file Center tab appears:

6. Click the State DORs link on the left side of the page.

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7. On the map, click on the state for which you want information. A dialog pops up with options for the selected state:

8. Click the desired link.

States Requiring EFIN Registration or Activation

With the exception of New York, all states automatically accept all EROs without additional state registration. Contact your State e-file Coordinator for more details. To obtain your State e-file

Coordinator's phone number, clickhereor entering

http://www.irs.gov/uac/Federal-State-e-file-For-Tax-Professionals into your Internet browser. New York Tax Preparers

New York does require that certain tax preparers register for a New York Tax Preparer Registration Number (NY TPRIN). For more details, see the New York State Department of Taxation and Finance web site by clickinghereor entering http://www.tax.ny.gov/ in your Internet browser.

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Chapter

2

Preparing Returns for E-filing

In this chapter, you'll learn how to prepare a return for e-filing. While you may have your own pattern for preparing your clients' returns, we recommend that you use the following three-stage process for your initial e-files. Every e-file contains information that does not appear on a standard paper return. By following this process, you can be sure that your e-files include all necessary information.

Pre-Preparation: An important difference between a standard return and an e-filed return is the inclusion of preparer and/or ERO information. In the "pre-preparation" stage, you enter this information in the Preparer/ERO Manager; then, it can be applied to any return.

l Entering an ERO EFIN/Designating Preparer as ERO l Electronic Preparer Signatures

l E-file ID

Return Preparation: When your preparer information is complete and your e-file IDs are unique, you can begin preparing a client's return. In this phase, in addition to your regular return preparation, you associate a preparer and/or ERO with the return and also add any supporting forms or documents to the return.

l Inserting Preparer/ERO Information on Returns

l Attaching PDF Forms and Other Documents to Returns

Post-Preparation Considerations: When you've completed the return, review the information and the amounts calculated by the program. First, make sure you have the most recent copy of the program and forms. Then, use the Check Return feature to check for errors or missing data. Finally, sign the electronic copy of the return by selecting the appropriate signature method.

l Checking Returns for Errors l E-File Signatures

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Chapter 2: Preparing Returns for E-filing

Entering an ERO EFIN/Designating Preparer as ERO

If a preparer has an EFIN (Electronic Filer Identification Number), it should be entered in the

Preparer/ERO Manager.

If you do not have Admin or Office Manager security privileges, you will be restricted from entering an EFIN.

For Standard Licenses, you can enter information for up to three paid preparers. For more than three preparers, you must have an Unlimited License.

To enter an EFIN for a Preparer/ERO:

1. From the Return Manager, do one of the following:

l Click the Tools menu; then, select Preparer/ERO Manager. l Click the Preparer/ERO button.

The Preparer Manager dialog appears. 2. Click the E-file tab.

The E-file tab of the Preparer/ERO Manager dialog appears:

3. Highlight the preparer/ERO, and enter their EFIN in the appropriate field. 4. Check the ERO checkbox.

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Electronic Preparer Signatures

IRS Notice 2004-54 permits preparers to use tax software to print their names as signatures on income tax and amended tax returns. Many states have followed the IRS’s lead and have adopted the same rule.

To have the system automatically print your name in the signature block of tax returns:

1. From the Tools menu, select Preparer/ERO Manager. The Preparer/ERO Manager dialog appears.

2. Check the Print Signature checkbox, then click Close.

E-file ID

The program automatically assigns an E-file ID when a return is e-filed. It appears under the E-file ID column in the E-file Manager:

Submission ID

A Submission ID is a 20-digit number assigned to an e-file when it is first created. It has become the most widely accept E-filing identifier since the inception of Modernized E-file (MeF).

The following table identifies the component parts of a sample Submission ID:

Preparer’s

EFIN (6 digits)

Processing Year

(4 digits)

Julian Day (3 digits)

Unique

Number

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The Submission ID for the federal and state returns will differ, which is by design and complies with IRS rules regarding uniqueness. The federal and state e-files will be assigned unique Submission IDs.

Some federal and state products use neither an E-file ID nor a Submission ID. Examples include 5500, W-2, 1099, and 94X.

DCN (Declaration Control Number)

Only Massachusetts uses the DCN as an E-file number.

The DCN is a 14-digit number assigned by during the initial e-filing process. It was the predecessor of the Submission ID, and is only used in Massachusetts.

Every DCN is unique, but they all share the same structure:

Fixed Value

Preparer’s EFIN

(6 digits)

Batch/Serial Counter (5

digits)

Processing

Year (1 digit)

00 011182 02050 X (for Processing Year 201X)

E-file ID Errors

The calculations used to create Submission IDs and DCNs are designed to prevent duplication. However, if a duplicate Submission ID or DCN is generated, simply re-creating the e-file will generate a new

Submission ID or DCN.

Setting DCN Range when Using Multiple Workstations

Only Massachusetts uses the DCN as an E-file number. IRS and all other state agencies use E-file ID. See theE-file IDtopic for more information.

A common event that causes e-file rejections is when an office does not properly set up DCNs on a series of non-networked workstations. To avoid these rejections, assign a range of DCNs to each non-networked computer.

To set the DCN range when using multiple non-networked computers:

1. Do one of the following:

l From the Preparer/ERO Manager, click the E-file tab.

l From the E-file Manager, click the E-file menu; then, select Modify DCN Series.

2. Make note of the number in the DCN Counter column; this is the beginning DCN for this workstation.

3. In the DCN Max column, enter the maximum number of e-file returns you expect to file from this workstation.

4. On the second workstation, set the number in the DCN Counter column to one more than the maximum number of returns you entered on the first computer.

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Example: If the DCN Max on the first workstation is 100, enter 101 in the DCN Counter column on the second workstation.

5. Repeat this process for additional workstations.

Modifying the DCN Series

Only Massachusetts uses the DCN as an E-file number. IRS and all other state agencies use E-file ID. See theE-file IDtopic for more information.

The IRS will reject e-files if it detects duplicate Declaration Control Numbers, or DCNs. Duplicate DCNs may occur if you have multiple, non-networked computers and have not specified separate and distinct "batches" of DCN numbers for each of your workstations.

To prevent a DCN error, you must initially assign a unique range of DCNs to each computer, ensuring that each computer's DCN range does not overlap with one of another.

To properly assign the DCNs in a multiple computer environment:

1. Open the Preparer/ERO Manager. The Preparer/ERO Manager appears. 2. Click the E-File tab.

The E-File tab for the Preparer/ERO Manager appears:

3. In the DCN Counter column, enter the beginning DCN for this computer.

4. In the DCN Max column, enter the maximum number of e-file returns you expect to file from this computer.

You should record the DCN Counter (beginning) and DCN Max (maximum) numbers for each computer. This will help to ensure that you do not set up your computers to have overlapping DCN numbers.

5. Click Close.

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Receiving a DCN Max Error Message

If you try to create an e-file from a workstation that has reached the maximum number of returns, you'll receive the following error message:

To fix the DCN Max Error:

1. Click the Manage Preparer link.

The E-file tab of the Preparer/ERO Manager appears. 2. In the DCN Max column, increase the number.

The new DCN Max setting must not overlap numbers on the other workstations. 3. Click Close.

You will be returned to the Create E-file dialog.

Inserting Preparer/ERO Information on Returns

This topic provides instruction on manually inserting a preparer or ERO into a single return. To

automatically insert a default preparer or ERO on all your returns, use Preparer Manager preferences.

To insert preparer/ERO information into a return:

1. Open the return.

l Click the Preparer/ERO button on the toolbar.

l Click the Tools menu; then, expand the Preparer/ERO fly-out menu and select Insert

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The Insert Preparer/ERO on Return dialog appears:

3. To check for existing preparer or ERO data, click the down arrow on either of the drop-down lists. 4. Select from the following:

l No Change (keep any existing preparer/ERO info) l None (remove any existing preparer/ERO info) l One of the preparers/EROs in the list (if applicable).

5. Click the OK button to confirm your change.

Manage Preparers Link

The Manage Preparers link automatically brings up the Preparer/ERO Manager. Once the preparer is added to the Preparer/ERO Manager, he/she can be inserted as the preparer for a particular return.

Adjust Preparer/ERO Settings Link

This link automatically brings up the Preparer Manager tab on the Preferences dialog. Here, you can choose a specific preparer and/or ERO to enter automatically on all new returns.

Automatically Including E-file Info Form(s) in Your Returns

The Electronic Filing Information Worksheet (also known as EF Info Worksheet) is a required form for e-filed returns. There are separate EF Info Worksheets for each type of e-file (such as Federal 1120 or 1040). Worksheets can also be specific to the taxing agency to which you will be transmitting the e-file.

The following preferences allow you to add the EF Info Worksheet to returns.

To automatically add EF Info Worksheets to returns that require them:

l From any of the main managers, click the Preferences button on the toolbar.

l From any of the main managers, click the Options menu; then, select Preferences. l From an open return, click the Tools menu; then, select Preferences.

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2. Click the E-file Manager tab of the Preferences dialog. The E-file Manager tab appears:

3. Select the appropriate checkbox for your package.

4. Click OK to apply your changes and close the dialog, or Apply to apply the changes and make another preferences selection.

EF Info worksheets are similar to multi-page tax forms. Be sure to review each page carefully and complete all sections that apply.

Attaching PDF Forms and Other Documents to Returns

As part of the IRS Modernized e-File program, some electronically filed returns can be transmitted with certain PDF attachments. Where the IRS or state allows, either specific PDF attachments are allowed or required. Some agencies also allow other PDF attachments to be made to the return. The program will offer the ability to attach PDFs where the agencies have allowed it.

Conditions that Must Exist to Add an Attachment:

1. The return must have an EF Info Worksheet.

2. If the PDF you want to add is a form, you must first add the form to the return. See "Adding Forms to a Return" in the ATX User Guide.

3. Remove password protection from any PDF you intend to attach in order to successfully e-file the return.

Use Adobe Acrobat or another program to create the required PDF attachment. For instructions on removing password protection to from your PDF files, refer to help for that program.

If you try to add an attachment after you've created an e-file (but have yet to transmit it), the system will prompt you to re-create the e-file.

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Decide What Type of PDFs to Attach

Some forms that are required as PDF attachments may already be in your return as part of the normal tax return preparation process. SeeCreating and Attaching PDFs of Completed Forms.

Other required attachments might come from third parties (such as brokerage statements, property tax bills, etc.). SeeCreating and Attaching PDFs from Other Sources.

Creating and Attaching PDFs of Completed Forms

Creating PDFs of completed forms in the return:

Once you've completed the form within the return, you can save it as a PDF from within the return. 1. From the open return, click the Print button.

The Print Return dialog appears.

2. Under the Select the copies you wish to print section, click the down arrow and select PDF as your printer.

3. Under the What do you want to print section, de-select all the forms except the form you want to make a PDF.

4. Click the Print button at the bottom of the dialog. The Save As dialog appears.

5. In the File name field, enter the name for the PDF form.

By default, the system will save the file under the return name. You can keep this name, or modify it to include the form number.

6. Click the Save button on the Save As dialog.

The Print Results dialog will appear and close if printing is successful. If printing is not successful, you'll receive a message.

To attach PDFs of completed forms:

1. From the open return, click the E-file menu; then, select Attach PDF.

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The Attach PDFs dialog appears:

You can expand the Attach PDFs dialog by dragging the right border of the dialog to the right. This allows you to view long form descriptions.

2. If the item you want to add is listed in the Attach PDFs dialog, double-click the attachment (or, click the paper clip, outlined in red).

3. Browse to the file you want to add; then, highlight the PDF file, and click Open.

Most state and IRS programs require certain attachments to be given particular file names. The program will automatically enforce this naming policy if one of the pre-defined attachment

options is selected.

The paperclip is replaced by the View and Delete icons which indicate that the item is attached.

4. Click Close at the bottom of the Attach PDFs dialog.

Creating and Attaching PDFs from Other Sources

To create a PDF version of a paper document that you've received from a third party or via e-mail, scan the document to a PDF file. Refer to your scanner or copier Help file for instructions.

To reduce PDF file size, scan documents no higher than 150 dpi and use black and white printing.

To attach PDFs of other documents:

Other documents are any documents not specifically listed in the Attach PDFs dialog. 1. From the open return, click the E-file menu; then, select Attach PDF.

The Attach PDFs dialog appears.

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The Select PDF for Other Attachment dialog appears (a Windows browse dialog). 3. Browse to the location where you've stored the PDF file.

4. Select the file and click the Open button. The Add Other Attachment dialog appears.

5. Enter the name for the other attachment and click OK. The other file appears in the Attach PDFs dialog:

6. Click Close.

Viewing and Deleting Attachments

To view the attached PDF document:

From the Attach PDFs dialog, click the View icon next to the document you want to view.

To delete any attached PDF document:

1. From the Attach PDFs dialog, click the Delete icon next to the document you want to delete. The Remove Attachment message appears:

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Checking Returns for Errors

For a quick demonstration, please click to view theChecking for Errors Quick Tutor.

The Check Return feature checks a return for common errors and missing data. The process of checking a return for errors is also called diagnostics.

Even if you're paper filing, running Check Return helps you avoid IRS rejections and/or issues with your client's return.

The Check Return feature

l Recalculates the return before scanning it for errors, critical omissions, and warnings.

l Adds missing or associated forms that should be included in the return. (NOTE: If you opened and then discarded a form before running Check Return, the program won't re-open it.)

l Lists of errors that must be corrected in order to file the return.

l Lists informational diagnostics you may want to review but don't require action on your part. l Reports any fields whose amounts you overrode or marked as estimated.

l Lists errors specific to e-filing as well as basic errors relating to either form of filing. l Lists errors specific to paper filing as well as basic errors relating to either form of filing.

Although the Check Return feature identifies missing and/or inconsistent information, it cannot verify the accuracy of the information provided in the return.

To check your return for problems:

1. From the open return, do one of the following:

l Click the Check Return button on the toolbar. l Click the Tools menu; then, select Check Return. l Press Ctrl+E.

The Diagnostics pane lists errors and warnings.

2. In the Diagnostics pane, click an error or warning.

The selection is highlighted in blue. In the open form area above the diagnostics pane, the system jumps to the corresponding field in the form:

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3. Examine the data for which an error was reported and correct it, if necessary. 4. Click the Re-Check button on the Diagnostics pane to clear the error.

The Diagnostics pane also appears when you create an e-file, and the button name changes from Re-Check to Re-Create E-file(s). SeeCreating E-files.

5. Repeat the steps above until you've cleared the Diagnostics pane of errors.

You cannot electronically file returns that contain errors or estimates. However, you can electronically file returns that contain informational or warning messages.

To hide specific errors temporarily, select the boxes next to the errors and click the Hide Marked checkbox. Click the Show All button to display any errors that were previously hidden.

E-File Signatures

Like any conventional return, an e-file is not considered valid until both you and your client(s) have signed it. The IRS will accept any of the three digital signing methods described in the table below. Only the Self-Select PIN method results in a truly paperless e-file.

Signature

Methods

Taxpayer

ERO (Preparer)

Paper Forms

Required

Practitioner PIN

1. Complete and sign Form 8879 (Part II). 2. Enter PIN on EF Info Worksheet (if ERO is not authorized to do so).

1. Enter taxpayer's PIN on EF Info Worksheet (if authorized by taxpayer on Form 8879).

2. Enter 5-digit ERO PIN on EF Info worksheet.

Form 8879. DO NOT FILE.

Retain for three years from the Return Due Date or IRS Received Date, whichever is later. See Form Instructions.

Self-Select PIN 1. Enter PIN on EF Info Worksheet or complete Form 8879, authorizing ERO to do so. 2. Enter taxpayer’s prior year AGI on EF Info worksheet.

1. Enter 5-digit ERO PIN on EF Info worksheet. 2. Enter taxpayer’s PIN on EF Info worksheet (if authorized by taxpayer on Form 8879).

3. Enter taxpayer’s prior year PIN or AGI on EF Info worksheet

None, if taxpayers enter their PINs on the EF Info Worksheet. Otherwise, complete Form 8879, but do not file it.

Instead, retain the form for three years from the Return Due Date or IRS Received Date,

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Signature

Methods

Taxpayer

ERO (Preparer)

Paper Forms

Required

E-File PIN

Enter E-File PIN on EF Info worksheets “Prior Year PIN” field.

1. Enter 5-digit ERO PIN on EF Info worksheet. 2. Enter taxpayer’s PIN on EF Info Worksheet (if authorized by taxpayer on Form 8879).

None, if taxpayers enter their PINs on the EF Info Worksheet. Otherwise, complete Form 8879, but do not file it.

Instead, retain the form for three years from the Return Due Date or IRS Received Date,

whichever is later.

One of the most common e-file rejections involves disagreement between the prior year AGI amounts on file with the IRS and the amounts entered by taxpayers using the Self-Select PIN method. Although Practitioner PIN requires you to complete Form 8879, this form is not filed. Consequently, we

recommend the Practitioner PIN method as the more reliable method.

To request an E-file PIN, clickhereor enter

http://www.irs.gov/Individuals/Electronic-Filing-PIN-Request in your Internet browser.

Determining Prior Year AGI (Self-Select PIN method)

When taxpayers sign their electronic tax returns using the Self-Select PIN method, you need to include their prior year adjusted gross income (AGI) amounts, so the IRS can validate the taxpayers' identities. For this purpose, the prior year AGI is considered the AGI on the taxpayer’s originally filed prior-year return as the IRS accepted it.

l Do not factor in math error corrections by the IRS or adjustments reflected in amended returns. l Negative amounts are valid when the prior-year AGI (as defined above) is a negative number. l If the prior-year return was filed as Married filing jointly (MFJ) with the same spouse, enter the

same prior-year total AGI for each taxpayer. Do not divide the amount between the taxpayers.

l If the prior-year return was filed as MFJ with a different spouse, enter the prior year total AGI from

the joint return filed with the ex-spouse.

l A zero amount is valid when the taxpayer’s prior-year AGI is zero, when the taxpayer did not file a

prior-year return, and when the prior-year return was filed after December 9. If you e-file a return using the Self-Select PIN method and the prior-year AGI does not match the IRS Master file, the IRS will reject the return, citing the FD0679 or FD0680 error code. If taxpayers are unsure of their original prior-year AGI amounts, have them contact the IRS Customer Service department at (800) 829-1040. To avoid possible errors due to mismatched AGI, use the Practitioner PIN signature method instead.

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Chapter

3

Creating and Transmitting E-files

The E-file Manager organizes and tracks the status of returns for which you have created an e-file. Returns that appear in the E-file Manager can be sorted and filtered by creation or transmission status, or by completion status. You can filter the list of e-file returns.

In this chapter, you will learn about: l Creating E-files

l Creating State E-files l Holding Marked E-files l Releasing Marked E-files l Transmitting E-files

l Displaying E-file Rejection Errors

l Common E-file Rejection Reasons from IRS l E-file Statuses

l E-filing Extensions, Estimated Payments and Payments l Deleting E-files

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Chapter 3: Creating and Transmitting E-files

Creating E-files

After completing the return,we recommend running the Check Return function and correcting create the e-file.

If a required form is missing from the return, the application automatically adds it when you create the e-file.

To create e-files:

Before creating an e-file, make sure that the EFIN used on the EF Info form has been entered in the Preparer/ERO Manager. For instructions, seeEntering an ERO EFIN/Designating Preparer as ERO.

1. Open the return you want to e-file. 2. Do one of the following:

l Click the E-file button on the toolbar.

l Click the E-file menu; then, select Create E-file.

The Create E-file dialog appears:

The Create E-file dialog displays messages relating to the e-file jurisdictions available to create. See theCreate E-file Dialogtopic for an explanation of the messages.

3. Follow the message directions in the dialog to add required forms.

Once you've corrected the message(s), the checkbox for that return type will become enabled. 4. Select the checkboxes for the return type you want to e-file.

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The E-file Creation Results dialog appears:

TheE-file Creation Results Dialogshows you whether or not your e-file(s) were successfully created, and whether or not you need to correct errors or review warnings before officially transmitting the e-file.

6. Click OK.

The Diagnostics pane appears below the forms. To successfully create an e-file, you must fix any errors. Errors appear in red, warnings in orange, and informational messages in blue.

7. In the Diagnostics pane, click an error or warning. The selection is highlighted in blue. In the open form area above the diagnostics pane, the system jumps to the corresponding field in the form:

8. When your errors are corrected, click the Re-Create E-file(s) button.

9. If you receive more errors, repeat the correction process until your e-file is successfully created. If you make changes to a return that has not been transmitted, you must re-create the e-file to incorporate the changes into the transmit file. If the return is accepted, an amended return must be filed.

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If E-filing is Not Available

If e-filing is not available on the forms in the return, the following message will be received:

Create E-file Dialog

The Create E-file dialog allows you to select the returns (state and/or federal) that you want to e-file. It has built-in IRS business knowledge that gives you an error, warning, or informational message when missing data or forms in the return may prevent you from e-filing.

The Create button only becomes enabled when you resolve these e-file related errors.

Create E-file

Messages

Message Description

There are required forms missing from your return

Click the left arrow to reveal the name of the missing form. Click the Add

required forms link to add the required forms to the return. The required

form tabs will appear at the top of the page.

Some forms in your return have not been approved for e-filing

Displays if forms associated with the return are not yet approved for e-filing. Click the arrow to the left of the message to show the form. (You cannot correct this until the form becomes available.

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Create E-file

Messages

Message Description

Form X is required but has some errors or warnings of its own

Displays if a state e-file you're trying to produce requires you to select the Federal also, but you can’t select the associated federal e-file because it has its own problem(s). To correct the error, you must first resolve the problems listed under the Federal option.

At least one of the following e-file types is required to select this e-file...

Displays if a State e-file requires you to select the Federal also, but you don’t have the appropriate Federal forms in your return. A list of appropriate e-file types would be displayed.To correct the error, add one of the forms to your return. Form X is required to e-file Form Y and will be selected automatically

Indicates that certain forms are prerequisites for other forms. The system will automatically select prerequisite forms if they are available.

E-file Creation Results Dialog

The E-file Creation Results dialog appears as part of the Create E-file process. For complete steps, see

Creating E-files.

Errors and/or warnings appear in the diagnostics pane below the return. Fix any errors before re-creating the e-file. For details on fixing errors, seeChecking Returns for Errors.

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Holding/Releasing State E-files

The E-file Creation Results dialog lets you hold state e-files until the federal e-file is accepted.

To adjust the state e-file settings:

1. Click the Adjust state e-file settings link.

The E-file Manager tab of the Preferences dialog appears.

2. Select or de-select the Automatically hold and release state e-files for states that prefer

prior federal e-file acceptance checkbox depending on your preference.

3. Click OK to apply your changes and close the dialog.

To release a held e-file from the E-file Creation Results dialog:

Held e-files have a red transmission icon before the form name.

1. In the E-file Creation Results dialog, use your cursor to hover over the red transmission icon next to the form type. The red color of the icon and the popup text box indicate that the state e-file is on hold until the federal is accepted:

2. To release the state e-file, click the red icon. (The icon turns green.)

When you hover over the icon, the popup indicates that you can toggle back to a "hold" status:

3. Click OK to close the dialog. Review errors in the Check Return pane at the bottom of the return. To view the created e-file, open E-file Manager.

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Creating State E-files

Many states employ a procedure in which the state e-file piggybacks on the federal e-file. If this option is available for your state, you will transmit both the federal and state returns to the IRS. After the IRS has accepted and processed the federal e-file, the state e-file is forwarded to the appropriate state-taxing agency.

To create linked, unlinked, or direct state e-files:

1. Open the return.

2. Click the E-file button on the toolbar. The Create E-file dialog appears:

3. Select the Federal checkbox and the checkbox for the state with which you want to file the return. If you have errors, you will need to resolve them before you can create the e-file. Refer to the

Create E-file Dialogtopic for specifics on e-file errors. 4. Resolve any errors that stand in the way of filing a state return. 5. Select the state jurisdiction for which you want to create an e-file.

6. If you selected a state that offers multiple types of state e-files, select the type of state e-file you want to create.

7. Click Create.

The E-file Creation Results dialog appears. 8. Click OK.

9. If unsuccessful, make the necessary corrections; then, repeat the e-file creation process.

Holding Marked E-files

The program has a preference to hold all state e-files until the corresponding federal e-file has been accepted.

However, if you prefer to make this choice on a case-by-case basis, use the Hold Marked E-files menu item, rather than setting the preference.

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To hold marked e-files:

1. Click E-file Manager.

2. Mark each return you want to hold.

3. Click the E-file menu; then, select Hold Marked E-files.

When you create a state e-file, you can also click on a green transmission icon in the E-file Creation

Results dialog to hold the state e-file until the federal is accepted:

Releasing Marked E-files

If you have held a state e-file instead of transmitting it to the EFC along with its corresponding federal return, you can use Release Marked E-files function when the federal return is accepted.

To release a previously held state e-file:

2. Click the Held filter to display only Held e-files. 3. Mark the state e-file(s) you want to release.

4. Click the E-file menu; then, select Release Marked E-files.

When you create a state e-file, you can also click on a red transmission icon in the E-file Creation

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Transmitting E-files

Once you've created an e-file, you can transmit the e-file via the Internet to the Electronic Filing Center (EFC). However, the following conditions must exist to transmit e-files:

l You must be connected to the Internet to transmit e-files to the EFC l The return(s) that you're trying to e-file cannot be open

To transmit e-files:

1. Click the E-file Manager tab. The E-file Manager appears:

2. Select the Created checkbox filter (outlined in red) to limit the list of e-files to those with a

Created status only.

3. Mark the e-file(s) you want to transmit. 4. Do one of the following:

l Click the Transmit button on the toolbar.

l Click the E-file menu; then, select Transmit Marked E-files. l Press Ctrl+T.

The Transmit Marked E-files dialog appears:

Open returns cannot be transmitted. Only those returns that are marked in this dialog will be transmitted.

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If you're transmitting a 1041 Fiduciary return with a NY State Fiduciary return, both returns are selected automatically in the Transmit Marked E-files dialog and will be transmitted simultaneously to the IRS. The state return is then forwarded to the New York agency. 5. Click the Transmit Marked E-files button.

The Transmission Results dialog appears:

6. Click Close.

Rules Regarding Transmission

l Once transmitted, an e-file cannot be recalled or resubmitted, unless it is rejected. l If you're unsure about a return, you can place it on Hold until you're ready to file it. l Once transmitted, an e-file cannot be deleted from the E-file Manager.

l If you need to make changes to returns with a Transmitted status, wait until the return is either

Accepted or Rejected. If the return is Accepted, file an amended return. If the return is Rejected, make the changes directly to the return, recreate the e-file and re-transmit.

Displaying E-file Rejection Errors

If an e-file is rejected by a taxing agency, the system displays e-file rejection errors in a unique diagnostic pane at the bottom of the return. You can access this function from the open return or from the E-file Manager.

To display and print e-file rejection errors from an open return:

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The E-file Rejection Errors pane appears:

2. To print the rejection errors, click the Print button in the E-file Rejection Errors pane.

A list of EFC Rejection codes can be found by clicking thislinkor by entering the following into your Web browser: http://cchsfs-atx.custhelp.com/app/home.

Rejection Error Pane Descriptions

E-file Rejection Errors

The form name and IRS rejection error number appear (if errors are present).

Explanation Pane (to right of errors)

This is a brief description of the IRS rejection error,and a sub-section called In other words... which further describes the rejection error.

Fields commonly associated with this error

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To view fields in the return that are associated with rejection errors:

1. Under the E-file Rejection Errors portion of the Rejection Error pane, highlight the error. 2. Click the arrow next to Fields commonly associated with this error.

A list of boxes appears.

3. Click the red box. The cursor moves to the associated field (highlighted in yellow).

4. To move to the next field associated with that error, click the Next button at the bottom right of the Rejection Error pane.

5. To return to the previous field associated with the error, click Previous.

To display e-file rejection errors from the E-file Manager:

1. Select the rejected e-file. 2. Do one of the following:

l Click the E-file menu; then, select Display Selected E-file Rejection Errors. l Press Ctrl+R.

The Rejection Error Pane appears.

Common E-file Rejection Reasons from IRS

The following are some common reasons for that the IRS rejects e-files created by preparers who use professional tax software:

Error Code

Error Title

Error Description

F1099R-002

Form W-2/ W- 2G/ 1099-R – Missing or Invalid Data

If Form 1099-R has a US Address in the Payers Address, then State must have a value.

F1099R-003

If Form 1099-R has a US Address in the Payers Address, then Zip Code must have a value.

F1099R-004

If Form 1099-R has a US Address in the Payers Address, then the first five digits of the Payers Zip Code must be with in the valid ranges of Zip codes listed for the corresponding State Abbreviation. SeePublication 4164on the IRS web site.

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Error Code

Error Title

Error Description

IND026

Self-Select PIN Taxpayer's Prior Year AGI Mismatch

If PIN Type Code in the Return Header has the value "Self-Select Practitioner", and Primary Date Of Birth has a value, then Primary Prior Year AGI or Primary Prior Year PIN or Primary Electronic Filing PIN must have a value.

IND-028

Self-Select PIN Taxpayer's Prior Year AGI Mismatch

If PIN Type Code in the Return Header has the value "Self-Select Practitioner", and Spouse Date Of Birth has a value, then Spouse Prior Year AGI or Spouse Prior Year PIN or Spouse Electronic Filing PIN must have a value.

FD0372

Form 1040/1040A – Required

Information is Missing

If Form 1040, Line 51 Child Tax Credit or Line 65 Additional Child Tax Credit has a non-zero value, then the sum of Line 51 and Line 65 cannot exceed an amount equal to $1000 times the number of qualifying children.

E-file Statuses

This table defines the terms that can appear in the Status column of the E-file Manager.

Status

Description

Created

The e-file has been created and the return is ready to be transmitted to the e-file server, or EFC.

If you make any changes to the return after this point, you must re-create the e-file.

Held Indicates you have marked this return Held to prevent it from being transmitted

until later.

Transmitted to EFC

The return has been successfully transmitted to our Electronic Filing Center (EFC). Its status on our server does not allow it to be retransmitted.

Transmitted

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Status

Description

Rejected

Changes were made to the return after creating the e-file but before transmitting it to the EFC. You may have added or removed forms, printed cycling forms (estimated vouchers, etc.), or edited and saved the return in another way. To ensure the e-file reflects the current return, you must re-create the e-file before transmitting it.

Rejected by EFC

The return did not pass our validation process and has not been transmitted to the IRS or state. SeeCorrecting E-file Rejection Errorsfor instructions on

correcting the errors.

Rejected by Agency

The e-file was successfully transmitted to and received by the IRS or state, but it contained errors. SeeCorrecting E-file Rejection Errorsfor instructions on correcting the errors.

Accepted Return was successfully transmitted to and received by the IRS or state. It has

now been processed and validated. This is the final status for most e-files.

E-filing Extensions, Estimated Payments and Payments

The program allows you to create extensions and estimated payments as allowed by the taxing agency. Examples include:

l Federal Extensions - 7004 (business)

l State Extensions - NY CT-5 (New York, business) l State Estimated - NY NYC-400 (New York)

If they are present in a return, each of these items appears as a separate item in theCreate E-file Dialog.

For the small number of states that allow them, the system also allows you to create and submit payments after the return is e-filed.

To create and e-file an extension, estimated payment, or payment:

1. Start the application.

2. In Return Manager, click the New button. The Select Forms dialog appears.

3. In the Find field, enter your search criteria, such as extension, estimated, or payment. 4. Press Enter.

A list of forms appears.

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7. To name the extension, estimated payment, or payment, click Save. The Return Name dialog appears.

8. Enter a name for this extension, estimated payment, or payment; then, click Save. 9. Click the E-file button.

The Create E-file dialog appears. The following screen captures show results for a federal extension:

The following screen capture is an example of an estimated payment:

10. Follow the message directions in the dialog to add required forms; or, resolve any other problems indicated by the message.

When every problem is resolved, the corresponding checkbox is enabled. 11. Click the checkbox for the item for which you want to create the e-file. 12. Click the Create button.

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The E-file Creation Results dialog appears. If your e-file is not created due to errors, you'll see the following message:

13. If your e-file has errors:

l Open each error in the Check Return pane and fix it.

l After you've fixed each error, click the Re-Create E-file(s) button.

Repeat this until your e-filed Federal Extension is created successfully:

14. Click the OK button.

15. To view the e-file, click E-file Manager. The E-file Manager appears:

16. Select the checkbox beside the item you want to e-file. 17. Click the Transmit button on the toolbar.

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18. Click the Transmit Marked E-files button. The Transmitting... dialog appears:

When the transmission of the extension is complete, the Transmitting... dialog turns into the

Transmission Results dialog:

19. Click Close.

Deleting E-files

You can delete e-files with Created or Rejected statuses. However, e-files that have been Transmitted or Accepted cannot be deleted.

To delete a selected e-file:

1. Click the E- File manager tab. The E-file Manager dialog appears:

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The Delete E-file message appears:

4. Click the Delete E-file button.

Deleting Marked E-files

To delete multiple e-files simultaneously, the checkbox must be selected. 1. Click the E- File manager tab.

The E-file Manager appears (shown above).

2. Select the checkbox next to each e-file you want to delete. 3. Click the E-file menu; then, select Delete Marked E-files.

The Delete Marked E-files dialog appears:

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Chapter

4

Managing Acknowledgements

When the IRS receives a file from ATX, it electronically transmits an acknowledgement (ACK) to ATX. ATX forwards the acknowledgement to you.

An acknowledgement does not mean the return is error-free, or that it has been accepted.

Each time you transmit a return or request acknowledgements, the program automatically updates the status for all your e-file returns.

In this chapter, you'll learn about:

l Managing Acknowledgements (ACKs) l Updating E-file Acknowledgements

l Reviewing the Acknowledgement History l Correcting E-file Rejection Errors

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Chapter 4: Managing Acknowledgements

Managing Acknowledgements (ACKs)

When the IRS receives an e-file, it acknowledges receipt of the e-file by sending an acknowledgement, or ACK, to the EFC, which processes the ACKs and makes them available in the program.

Each time you transmit a return or request acknowledgements, the program automatically updates the status for all your e-file returns. If the IRS or a state rejects one of your returns, review and correct the errors, re-create the e-file, and then transmit the return again.

ACK Timeliness

ATX tracks all e-files transmitted to the various IRS service centers and direct states. We ensure you receive ACKs from these agencies in a timely manner. IRS and direct state acknowledgements generally take 24 to 48 hours from the time of transmission.

If returns are pending for more than 24 hours, we'll contact the appropriate IRS service center or state agency directly to quickly resolve any issues that may be causing a delay and will tell you when to expect acknowledgements.

If significant processing delays are encountered by a state or the IRS, information will be posted to the ATX Customer Support site.

State E-file ACKs

If you have state returns pending for more than 5 days, we'll contact the appropriate state agency to quickly resolve any issues and provide you with up-to-date information about when you should expect to receive your acknowledgements.

When we request a re-hang of acknowledgements from the IRS or state agencies, we expect to receive the acknowledgements the same day. However, when there are additional problems requiring us to retransmit a batch of returns, we expect to receive the acknowledgements the next day.

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Updating E-file Acknowledgements

To update acknowledgements:

1. Open E-file Manager.

2. Select the e-filed return(s) for which you want acknowledgements. 3. Click Receive Acks.

The Transmission Results dialog appears showing the status of all EFC communication. The scroll bar to the right of the Details pane to view all transmission information:

4. Click Close.

Reviewing the Acknowledgement History

You can view the acknowledgement History of one or more e-files from either the E-file Manager or from the open return.

To review ACK histories for returns:

1. From the E-file Manager, do one of the following:

l Select (highlight) a return; then, click the E-file menu and select Display Selected E-file

Acknowledgement History.

l Mark (check) one or more returns; then, click the file menu and select Display Marked

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The Acknowledgement History dialog appears for the return(s) that you selected or marked:

To review ACK history from an open return:

1. Open the return whose acknowledgement history you want to review. 2. Click the E-file menu; then select Display Acknowledgement History.

The Acknowledgement History dialog appears. 3. To print the acknowledgement history, click Print.

Correcting E-file Rejection Errors

If one of your federal or state e-files is rejected, you must correct the errors, create the e-file, an re-transmit it. Failure to correct all errors will cause the return to be rejected again.

E-file errors are displayed in the diagnostics pane below the return.

To correct e-file errors:

2. Select the Rejected filter checkbox.

3. Select the rejected return you want to correct.

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The return opens, and the E-file Rejection Errors pane displays the errors, number of errors, and fields in which they are located.

5. Click a specific error to navigate to the field containing the error, and then correct it. 6. After you have corrected the errors, re-create the e-file.

7. Transmit the re-created e-file to the EFC.

If you get an error referring to a duplicate Submission ID or DCN, simply re-create the e-file to correct the error. The system will generate a new Submission ID or DCN. SeeE-file IDfor more information.

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Index

A acknowledgements managing 42 reviewing history 43 updating e-file 43 acknowledgments overview 41 C Check Return 20 Create E-file dialog 26

Creating and Transmitting E-files overview 23 creating e-files 24

D

DCN (Declaration Control Number) 12

assign DCNs in multi-computer environment 13 error message 14

setting the range 12

deleting

marked e-files 40

E

E-file Creation Results dialog 27 E-file ID 11

e-files

creating 24

creating state e-files 29 deleting 39 EF Info Worksheet 15 holding marked 29 overview 23 rejection errors 32 releasing marked 30 signatures 21 statuses 35 transmitting 31 e-filing estimated returns 36 extensions 36 federal requirements 5 general, overview 1 Modernized E-file (MeF) 2 payments 36

prerequisites 4 resources for 2

state or local requirements 6 system requirements 3

e-filing, preparing returns for 9 EFIN

entering 10

EFInfo Worksheet 15

electronic filing, see e-filing 1 electronic preparer signatures 11 ERO

extensions, e-filing 36

I

Internet connection 4

M

marked e-files. holding 29 Modernized E-File (MeF) 2

O overviews e-filing 1 Managing Acknowledgments 41 P payments, e-filing 36 PDF documents 16 deleting attached 19 other documents 18 viewing attachments 19 preferences

Automatically include Business E-file Info Form(s) 15

preparers

enter an EFIN 10 insert on returns 14

preparing returns overview 9

R

rejection errors

common reasons, e-file 34 correcting, e-file 44 displaying e-file 32

resources for e-filing 2 returns

checking for errors 20 insert preparer/ERO 14

S

setting DCN range on multiple workstations 12 signatures

add preparer signature to return 11 e-file 21

state e-files 29

state or local e-filing requirements 6 Submission ID 11

T

Transmitting and Creating e-files, overview 23 transmitting e-files 31

Electronic Filing. User Guide