53383

The following diagnostic is generating: The program does not support Form 8978 for federal efile. This return must be filed as a conventional paper return (ref. #53383). I suggest Lacerte put this issue high on their agenda of input from form 8978 (input at screen 45.3 - Partner's audit liability under section 6226 (8978) - a positive number for amount due and a negative amount for refund claim. Amounts carry to Sched 3 of form 1040 As result of BBA, partnerships will be pushing out adjustments on form 8986, which is used to generate amounts for form 8978 - this will become quite common in the future - I believe CCH tax products allow efile for this situation
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Comments
johncallagy
‎10-06-2023 01:21 AM
‎10-06-2023 01:21 AM

I agree - forms 8978 will be more common in the future and should be enabled in the federal return for efile.

BobKamman
‎10-06-2023 04:27 AM
‎10-06-2023 04:27 AM

Partnership shouldn't have got its hand caught in the cookie jar in the first place.  Is there any other software that supports this form, or is it really an IRS restriction on e-filing that applies to all programs?

johncallagy
‎10-06-2023 04:39 AM
‎10-06-2023 04:39 AM

Actually, the adjustments pushed out were negative adjustments (positive to the taxpayers) via an AAR form 1065X covering several years.  My client was an upper tier partnership that was getting form 8986 "pushed out" adjustments from mid and lower tier partnerships.  The partnership receiving the forms 8986 then pushed out the 8986 adjustments to its partners, who then prepared form 8978 for their current year federal tax returns.

It appeared to me that some of the CCH software products had this process automated for completion and filing.  I had to FAX the forms 8986 to the IRS, and attach form 8978 to a paper filed federal return, as Lacerte did not allow digital processing of these forms.

You bring up a good point, I am not really sure of the extent of the CCH software support for filing forms 8986 and 8978 - since I only use Lacerte - however, it appeared CCH software did provide some digital processing.

 

Continuouslearner
‎10-26-2023 11:07 AM
‎10-26-2023 11:07 AM

Does attaching the 8978 or the 8986 as a pdf to the e-filed return by-pass this critical e-file diagnostic in Lacerte?

Continuouslearner
‎10-26-2023 11:15 AM
‎10-26-2023 11:15 AM

There is also a related critical e-file diagnostic Ref. 53567 for payments needing to be made on the 8978 that appears to have the same issue as diagnostic Ref. 53383 which is generated from entering refunds reported on the 8978.

I agree the 8978 needs to be corrected so it can be e-filed.

Does attaching the 8978 as a pdf by-pass this diagnostic allowing you to still e-file?

 

johncallagy
‎10-27-2023 05:10 PM
‎10-27-2023 05:10 PM

Good question - I considered doing a "disable e-file error" override, but because the return extension date was approaching, we paper filed 2022 federal personal returns with the forms 8978.  I could not get an answer from Lacerte support, so I followed the program's suggestion to paper file the return.

Subsequently, another CPA firm I know, using Intuit ProSeries, did attach the form 8978 and efiled their client's 2022 form 1040 with the attachment.  

So my guess is the "disable e-file error" and attaching the form 8978 may have worked with Lacerte.  

Hopefully Lacerte will provide guidance for this issue in 2023.

 

 

Continuouslearner
‎10-27-2023 05:22 PM
‎10-27-2023 05:22 PM

Thank you for replying, Johncallagy. I do know one ProSeries user who was so frustrated that they just mailed it in, but it is good to know another CPA firm was able to e-file in ProSeries with the attachment and presumably with the disable e-file error mechanism. 

Yes, Lacerte should be providing more guidance for 2023, as well as the IRS for that matter. More of these filings will be needed for 2023.