When e-filing a state SMLLC, the following federal diagnostic is generating and prevents the transmission of the state SMLLC return:
- E-file: This Federal return may not be electronically filed. There are less that two partners entered for the return, and Federal single member LLC's are specifically not allowed to be e-filed. At least two K-1's are required for a Federal partnership return to be accepted via e-file. Federal single member LLC's must be paper filed. (ref. #11201).
Why is this diagnostic generating?
When validating the state return, some states (for example, CA or TX) will also validate the federal return. Because the federal return doesn't allow Form 1065 to be filed with less than two partners, this diagnostic prevents the federal validation and disrupts the validation process for the state filing.
Because the federal return isn't being filed and the SMLLC has only one member, the e-file diagnostics must be disabled in order to transmit the state return.
Follow these steps to disable the e-file diagnostic checking system:
This process allows e-filing in Lacerte. However, if the e-file diagnostics are valid and relevant, the return may be rejected by the taxing authority.
- Go the Clients tab.
- Highlight the Client file.
- From the E-File menu, select e-file Support Tools.
- Click on Disable e-file Error.
- Click OK to the E-file diagnostic error Checking has been disabled prompt.