E-filing update: IRS modifies time for correcting errors, permits paper, PDF filing of some forms.

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Tax Executives Institute continues to work with the Internal Revenue Service to iron out the chinks in the IRS's corporate e-filing mandate. Following two August conference calls with TEI's Forms and Attachments Task Group, the IRS announced that it will permit taxpayers 20 days (rather than the 5 days previously announced) to correct rejected e-filed Forms 1120 and 1120S. Thus, the IRS explained, if the return is rejected on September 15, 2006, the corporation will have until October 5, 2006, to successfully e-file the return. If the return is accepted by the latter date, the original date the filing was attempted will be considered the filing date of the return.

The IRS announcement marks a major step forward, according to TEI President Mike Boyle. The IRS's change of heart will make the rules for the mandatory electronic filing of large corporate returns more administrable. Mr. Boyle cautioned, however, that TEI remains concerned about the administrability of the IRS's corporate e-filing mandate. (TEI has met with the IRS on the e-filing mandate many times since the IRS announced its e-filing initiative last January; TEI has also filed written comments on the IRS rules and testified at a public hearing on the subject.)

Mr. Boyle commended the TEI representatives who have worked with the IRS to overcome the challenges and narrow the differences between what the IRS has mandated, what vendors can deliver, and what taxpayers should be required to do. "We may believe that the IRS has gotten ahead of the available technology in this field," he added, "but we are pleased with the progress TEI and the IRS have made to ensure a more workable result."

In addition to providing more time to correct errors, the IRS has decided that, at least for the first year of the mandate, taxpayers required to file more than 25 of 5 international forms will be permitted to file those forms on paper, in lieu of including them as part of the XML transmission. (This is a per form requirement; only the forms where the corporation has more than 25 will be eligible for the paper option.) The IRS also noted that 20 other forms will be permitted to be filed in PDF format (see "Forms Permitted to Be Filed in PDF Format").

Mr. Boyle stated that the IRS has also announced the following:

* In respect of Forms 8283, 8611, 8824, and 8861, if more than 25 forms are required to be filed, then a summary form may be submitted in XML and the forms themselves submitted as PDF.

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