S Corp Efile Rejection

[Brainstrom]

I have an existing client who became a S Corporation in 2023. Efile return and everything was fine in  2023, tried to Efile the 2024 tax return and it is being rejected. Error R0000-900-01 saying the EIN number does not match the return type established with the IRS.

Any ideas??

Thank you

[abctax55]

Call the number on the reject notice.  They might be able to provide some info.  You will need the letter your client received from the IRS, approving the S election.

Hopefully, that letter exists.  I have one that the attorney faxed the election to the IRS, but the approval seems to be MIA.  I have another one that the attorney never filed the election, and is just now saying 'hey, it wasn't our responsibility'.

On both of them, the 2022 returns went thru as efiled, but the 2023 returns were rejected.  One just got a notice from the IRS that 'oops' the 2022 return really shouldn't have been a 1120-S.

I would bet your client is in the same situation. 

It's a mess. 

[rbynaker]

I've seen multiple posts on just about every tax forum I'm on about these S Corp messes.  I believe there is a systemic problem in the S Corp unit and recommend folks contact their Stakeholder Liaison to make them aware of the problems they are having.  The 2553s are not always getting into the system and it seems to be taking YEARS along with multiple back-and-forth contact with the IRS to get this resolved.  If we all scream loud enough in the same direction . . .

I'm in the middle of an IRS webinar right now about the online accounts.  Sounds like you can log in to a Corp business tax account to retrieve the S Corp approval letter (of course, if the 2553 never got processed, nothing's going to be there!)

Rick

[abctax55]

Thanks Rick....

One I have just found out was NEVER filed as the attorney dropped to ball.  Guess we will be asking for retroactive approval.  JUST what I want to be dealing with as filing season starts.

The other one... I suspect is caught up in the back/forth mess as the attorney does have proof of the faxing of the F 2553

[Brainstrom]

I did call the phone number on the rejection notice and the IRS lady was clueless, waited to talk to her for 20 minutes. she then forwarded me to another department with an hour wait time. (NO Thanks)

I do have the original letter stating the S Corp election, so I attached that to the return in hopes it would go through. NOPE

And it begins!!!!!!

[IRonMaN]

You can always paper file if you can't get things to work.  You could try checking the box on the 1120S (line G) saying that the corporation is electing to be taxed as an S corp with this return.  Doing so might leave the software looking for a 2553 attachment, but you could attach the letter and label it as a 2553.

[Brainstrom]

IronMan, That worked!!! Thank you

Didn't want to paperfile!!!

[IRonMaN]

You betcha!

[BobKamman]

Proof you faxed something to IRS and $3 will buy you a cup of coffee at Starbucks.  

But you can ask the attorney what date the office "tickler" system is set up to check on whether the approval letter was received.  

[abctax55]

Bob, I know that.  Just like advice you get on the phone from the IRS is worth zilch.  

I'm simply stating the facts; the ball is in the attorney's court  to try to fix the issue.

[BobKamman]

But the ball is in your court to educate the client and attorney about what happens when they attempt to fax something to IRS.

Remember when for months, they didn't receive any because their machines ran out of paper and ink?  Yes, that was during Covid, but you still have to wonder about their technology and systems.  

[abctax55]

Sure, 'cuz attorneys are so easy to educate?