extension rejected irs believes the entity type of the clients does match extension

[Grammy]

the EIN is for a sole prop. i'm using to set up a 1120S and will file the 2553 with return,the extension was rejected because irs thinks it's a schedule C and I'm extended a 1120S with the EIN # 

[taxiowa]

Yep.  That's what happens.

[dkh]

Mail the extension.

[abctax55]

"... will file the 2553 "

Until that's filed, the IRS has no way of knowing that the future intent is to be an S-corp.

(We don't invite them to our mind-reading classes.)

[TaxGuyBill]

Just to clarify  ... I assume you mean the EIN is for a LLC, that has previously been designated as a disregarded entity, right?

[Grammy]

Yes that's right.  So I have to file the Sch C on that EIN and disregard any payroll, (paid as a sub S employee) 

[TaxGuyBill]

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@Grammy wrote:

So I have to file the Sch C on that EIN and disregard any payroll, (paid as a sub S employee) 

---

Wait, you don't file a Schedule C if they are electing to be treated as a S-corporation (assuming they qualify for the late election).  Just paper-file the extension, and because you are making the qualifying late-election with the actual tax return, that should be able to be e-filed.

[Grammy]

I thought about that, should I attach a copy of the extension to the return?  

Client does qualify to elect 1120S. Never had this problem, other clients I did same with return and

went without an  issue.  Last year a partnership to S Corp on tax return, and extended.  Thanks, TaxGuyBill.

[TaxGuyBill]

I don't know why the extensions were able to be e-filed in the past, and does not allow it now.  Maybe the IRS changed their programming.

Assuming you mail the extension, I would make sure you have good documentation that the extension was mailed on time, so you have some evidence that it was done (in addition to that, I would even print out a copy of the e-file rejection, which would support that the item you mailed was the extension).

[Grammy]

I haven't checked with support if I did something wrong.  Yes I will send it UPS to get tracking as well as a signature and I print out all rejections.  I mail the extension, should I then mail the 2553 in giving IRS time to record both.  I will have a few months on the actual return.  By the way, their are 2553's I've sent in during Corvid that I haven't hear anything on.  The return processed with a problem. Grammy

[Grammy]

This is to All who Responded:

I'm filing the extension by mail (UPS) tomorrow.

The 2553 happens to go to the same address, so I will also send that with the same envelope.

Hope all go well, to be continue....

Grammy

[poolcleaner]

I am a little confused. Are you electing on Form 2553 for the client to become an S Corp for the tax year 2022 and filing an extension for the client as a sole proprietor for the 2021 tax year? Or are you filing a Form 2553 for a 2021 return and also filing an extension for that same return as an 1120-S?  Additionally, you could fax the 2553.  The fax numbers to use are in the instructions for the form.

Another former All Star