We discovered that 1040-ES Q1 payments were not withdrawn properly for certain returns filed between March 25, 2021 and April 19, 2021. The calculations and printed returns were correct. There was an issue with the electronic filing transmission to the IRS for 1040-ES Q1 payments selected for electronic funds withdrawal. This issue has been corrected in ProSeries for future filings with 1040-ES however impacted returns will require actions to complete Q1 1040-ES payments.
We identified three situations impacting electronically filed Q1 1040-ES payments
Note: For returns where you applied all overpayments available from the 1040 to next year’s estimates and did not increase the Q1 estimate there are no additional actions required.
Situation 1: If you scheduled Q1 AND Q2 payments, then your Q1 payment was not transmitted and was instead combined with the Q2 (June 15th) payment. No other quarterly payments you may have scheduled were affected.
Now, you need to:
Situation 2: If you scheduled a Q1 payment and did not also schedule a payment in Q2, then the Q1 payment did not transmit and it did not move to Q2. Any Q3 or Q4 payments would not be affected.
You need to:
Situation 3: If you scheduled only a Q1 payment and did not schedule a payment in Q2 ($0), BUT left the direct debit button checked, then the Q1 payment did not transmit and was instead rescheduled to Q2.. Any Q3 or Q4 payments would not be affected
You need to:
We’re sorry for any inconvenience this may have caused you. If you have additional questions, please click here.
Was this caused by the IRS’ processing delay?
No, this is a separate issue from the IRS’ delay in processing form(s) 1040, 1040-X, and 1040-ES payments submitted via modernized e-file. We’ve created a separate article with information directly from the IRS. So, if the situations described above apply to you, please take the recommended actions for each situation that applies to you.
What about overpayments used to cover Q1 payments? Did they go through correctly?
They should go through correctly as long as you did not enter in an additional Q1 payment amount indicated in the Electronic Funds Withdrawal of Estimated Tax Smart Worksheet for electronic filing.
What returns were impacted by this software issue?
Returns with 1040-ES withdrawals scheduled for Q1 that were transmitted and accepted from March 25 to April 19 may have been impacted.
No state or business filings were impacted. This is a 1040-ES issue only. Resolving the technical error does not retroactively correct the impacted returns. You must take the actions we listed above as prescribed by the IRS in order to address them.
Please read through each situation above to understand if your clients’ returns may have been impacted.
What actions do I need to take to address this for my clients?
Take the specific list of actions for each situation for impacted returns as described above.
You should use IRS Direct Payment system to make Q1 payments or to schedule Q2 payments with corrected amounts. You should only call IRS e-file Payment Services 24/7 at 1-888-353-4537 to cancel a payment. Calling will not allow you to change the Q2 amounts.
Do my clients have to do anything?
No, you are authorized to make Q1 payments, cancel and reschedule Q2 payments on their behalf through the specific channels we listed.
We have received reports from several tax preparers who use ProSeries that 2021 federal individual estimated tax payments are not being withdrawn as scheduled.
We are investigating this and will provide more information and guidance as we learn more.
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