Publication 1437 (12-2013) PROCEDURES FOR THE FORM 1041 E-FILE PROGRAM U.S. INCOME TAX RETURNS FOR ESTATES AND TRUSTS FOR TAX YEAR 2013
Publication 1437 (12-2013)
- Institutional AuthorsInternal Revenue Service
- Jurisdictions
- LanguageEnglish
WHAT'S NEW FOR TAX YEAR 2013
Provide America's taxpayers top quality service by helping them understand and meet their tax responsibilities and by applying the tax law with integrity and fairness to all.
1. Beginning in Processing Year (PY) 2014, Modernized e-File (MeF) will be implemented for Form 1041, Income Tax Return for Estates and Trust.
2. The Publication 1437 and 1438 will become obsolete for the Tax Year 2014. The following MeF publications are available for the 1041 MeF program and will be found on the MeF User Guides and Publications page on IRS.gov. Publication 4163, MeF Information for Authorized e-Filed Providers for Business Returns, Publication 4164, MeF Guide for Software Developers and Transmitter, Publication 5078, MeF Test Package and the MeF Submission Composition Guide for Tax Year 2013, Processing Year (PY) 2014.
3. Beginning in Processing Year (PY) 2014, amended returns can be processed through MeF.
4. On December 2, 2013, the Internal Revenue Service will begin the Business Acceptance Testing System (BATS) for Software Developers and Transmitters.
5. Effective January 31, 2014, the Internal Revenue Service (IRS) will begin to accept and process Tax Year 2013 Estate and Trust returns electronically. NOTE: PRODUCTION FILING WILL END OCTOBER 15, 2014. THE LAST DAY TO RETRANSMIT REJECTED RETURNS IS 10/20/14.
6. All electronically filed Estate and Trust returns must consist of the Form 1041, Schedule K-1, and related forms and schedules.
7. All electronically filed Estate and Trust returns must be transmitted to the Electronic Management System (EMS) (Front end processor) at the IRS ECC-MEM in Memphis, Tennessee.
8. Review Publication 1438 for forms and validation changes for Tax Year 2013.
9. The Form 5884-B is being deleted.
10. Form 1041 Multiple Tax Return Listing (MTRL)
As part of a regular review process, the IRS has determined that the Multiple Tax Return Listing (MTRL) process used to sign electronically filed Form 1041, U.S. Income Tax Return for Estates and Trusts must be modified. Beginning Jan. 1, 2015, the IRS e-file Signature Authorization document, Form 8879-F, can only be associated with a single 1041 return, not with multiple forms as used today. The MTRL process, as it is currently implemented, will continue for 2014.
In December, the IRS had announced a change to the MTRL process for this filing season. However, the agency is delaying the change for one year.
This change is required for two reasons following additional legal review by the IRS. First, the perjury statement on the form refers to amounts in Part 1 of the form and the relevant amounts are actually on the attached listing. Second, a signature on one form cannot ensure that the signer reviewed and approved each of the Forms 1041 in the listing.
Form 1041 MTRL Process for Processing Year 2014:
If a fiduciary or representing officer is authorized to sign more than one Form 1041 return, a Multiple Tax Return Listing (MTRL) may be attached to one Form 8879-F. The MTRL should include the date, Estate or Trusts EIN, Name Control, Tax Period, Total Income, Income Distribution, Taxable Income, Total Tax and Tax Due/Overpayment of the estate or trust.
PURPOSE
Publication 1437 is designed to provide the general requirements and procedures for Form 1041 e-file Program, U.S. Income Tax Return for Estates and Trusts. This publication should be used in conjunction with the following publications for Tax Year 2013 processing:
•
Publication 1438, File Specifications, Validation Criteria and Record Layouts for The 1041 e-file Program, U.S Income Tax Return for Estates and Trusts• Publication 3112, IRS e-file Application and Participation
CHANGE PAGE
If any information contained in this publication changes before its revision, a change page(s) may be issued. New information and changes will be denoted by a vertical bar (|) in the right margin. Any procedure that is added, deleted or has a major impact on the current year processing of returns will be communicated via e-mail and/or displayed on the IRS website.
COPIES OF FORMS AND PUBLICATIONS
Visit our web site at http://www.irs.gov for methods to access and acquire both electronic and print media forms and publications.
You may also call 1-800-829-3676 to order forms to be delivered by U.S. mail.
QUESTIONS, SUGGESTIONS, OR CONCERNS
If you have any questions, suggestions or comments regarding this publication, or are aware of errors, (typographical, technical or usage) please let us know. You may write to the following address:
Internal Revenue Service Electronic Business Returns Section SE:W:CAS:SP:ES:B 5000 Ellin Road, Room C5-348 Lanham, Maryland 20706 Attn: 1041 e-file Program
e-help Desk:
Call the e-help Desk for the following:
• Transmission problems
• Reject Codes
• Status of Processing
• If you need another Test ETIN while filing production returns
• If you need your Acknowledgment (ACK) File "re-hung" because it appears that you did not receive it. (Contact your software developer to make sure that the software is looking for and capable of parsing out each ACK File for a transmission when multiple ACK Files are picked up).
The e-help Desk number is 1-866-255-0654.
Core Hours (Non-Peak): Monday - Friday: 6:30 am to 6:00 pm, Central Time
Extended Service (January 21, 2014 to April 18, 2014) Monday - Friday: 6:30 am to 10:00 pm, Central Time Saturday: 7:30 am to 4:00 pm Central Time
FORM 1041
Form 1041, U. S Income Tax return for Estates and Trusts is used by the fiduciary of a domestic decedent's estate, trust, or bankruptcy estate to report income, deductions, gains, losses, etc. of the estate or trust.
Income that is either accumulated or held for future distribution or that is distributed currently to the Beneficiaries (taxable distributions) is reported to beneficiaries via Schedule K-1.
WHEN TO FILE
April 15th is the due date for paper and all electronic filing of Form 1041, Schedules, K-1s and related forms.
METHODS OF FILING
Non-encrypted options for IRS e-file program participants who transmit directly to the Electronic Management System (EMS) have been discontinued.
All trading partners (transmitters) who directly transmit to the IRS EMS must use either the IRS internet solution or they must purchase and install an IRS Facilities Federal Information Processing Standard (FIPS)-compliant and IRS approved encrypted dedicated leased lines.
NOTE: See Publication 1438 Section B, Data Communications, for more information about discontinuance of non-encrypted options for IRS e-file.
SIGNATURE METHODS
There are two methods to sign Form 1041 e-filed returns. The preferred method is the Practitioner PIN Method, using Form 8879-F, IRS, e-file Signature Authorization for Form 1041.
The alternative method is through the use of Form 8453-F, U.S. Estate or Trust Income Tax Declaration and Signature for Electronic Filing.
Please refer to Sections 11 and 12 for in depth discussions on the two signature methods.
PROGRAMMING
Required programming information for selected schedules and forms required by the IRS and supported by the 1041 e-file Program are provided in Publication 1438, Validation Criteria, Reject Codes, and Record Layouts for the 1041 e-file Program, U.S. Income Tax Return for Estates and Trusts for Tax Year 2013.
FOREIGN ADDRESS
Form 1041 with a foreign address can be filed electronically, See Publication 1438.
ACCOUNTING PERIODS
You must figure taxable income on the basis of a tax year. A "tax year" is an annual accounting for keeping records and reporting income expenses. You adopt a tax year when you file your first income tax return. You must adopt your first tax year by the due date (not including extensions) for filing a return for that year.
The tax years you can use are:
• A Calendar Year
• A Fiscal Year (must end on the last day of a month)
The due date for a fiduciary return is the 15
thday of the 4
thmonth after the end of the tax year.
PROCESSING CALENDAR AND FISCAL YEAR RETURNS
Processing of returns includes the following Calendar and Fiscal year endings:
Calendar Year Returns -- Fiduciary with a Calendar Year ending December 31, 2013.
Example: Tax Year 2013 calendar year beginning January 1, 2013 and ending December 31, 2013, the return is due April 15, 2014.
NOTE: For Calendar Year returns, the Tax period Beginning date and Tax Period Ending date should not be entered on the Form 1041 (Record Layout Fields #0010 and 0020);
Fiscal Year Returns -- Fiscal years ending in January through June 30, 2014.
Example: Tax Year 2013 return beginning February 1, 2013, and ending January 31, 2014 the return is due May 15, 2014. Tax Year 2013 return beginning July 1, 2013, and ending June 30, 2014, the return is due October 15, 2014.
NOTE: The Tax Period Beginning does not have to be the first or last day of the month. The Tax Period Ending has to be the last day of the month.
If a return has a Fiscal Year ending after June 30, 2014, it cannot be filed electronically.
No extensions to e-file are granted/approved for 1041 Fiscal Year Returns with a tax period ending June through December 2014.
AMENDED RETURNS
The current 1041 e-file Program does not accept amended returns electronically. To correct an error(s) on a Form 1041 return that was filed electronically for the current or prior tax year, the amended return must be filed on paper and mailed to the IRS Center where the estate or trust paper return is filed.
SHORT TAX YEAR
A Short Tax Year is a tax year of less than 12 months. A short period tax return may be required when you (as a taxable entity):
• Are not in existence for an entire tax year; or
• Change your accounting period.
Even if you (a taxable entity) were not in existence for the entire year, a tax return is required for the time you were in existence.
The requirements for filing a return and figuring the tax are generally the same as the requirements for a return for a full tax year (12 months) ending on the last day of the short tax year.
SECTION 3 COMPOSITION OF THE RETURN
TAX RETURN DATA
Electronic filing of Form 1041, U.S. Income Tax Return for Estates and Trusts, consists of tax return data transmitted to the IRS, using electronic transmission with the required paper documents,
Required paper documents include signatures and other documents prepared by third parties. In summary, the electronic tax return must contain the same information as a return filed on paper.
REQUIRED 1041 ELECTRONIC FORMS
The following forms must be filed electronically with the 1041 return, as applicable.
These forms cannot be attached to Form 8453-F, unless otherwise specified below in the information provided under "The Paper Part of the Return" section, found below the tables.
ACCEPTABLE FORMS, SCHEDULES AND STATEMENTS
Form 1041 U.S. Income Tax Return for Estates and
Trusts
Schedule C (Form 1040) Profit or Loss From Business
Schedule C-EZ (Form 1040) Net Profit From Business
Schedule D (Form 1041) Capital Gains and Losses
Schedule E (Form 1040) Supplemental Income and Loss
Schedule F (Form 1040) Profit or Loss From Farming
Schedule H (Form 1040) Household Employment Taxes
Schedule I (Form 1041) Interest Expense Allocation Under
Regulations
Schedule J (Form 1041) Accumulation Distribution for a Complex
Trust
Schedule K-1 (Form 1041) Beneficiary's Share of Income, Deductions,
Credits, Etc.
Form 1116 Foreign Tax Credit
Form 2210 Underpayment of Estimated Tax by
Individuals, Estates and Trusts
Form 2210-F Underpayment of Estimated Tax by Farmers
And Fishermen
Form 2439 Notice to Shareholder of Undistributed
Long-Term Capital Gains
Form 3468 Investment Credit
Form 3800 General Business Credit
Form 4136 Credit for Federal Tax Paid on Fuels
Form 4255 Recapture of Investment Credit
Form 4562 Depreciation and Amortization
Form 4684 Casualties and Thefts
Form 4797 Sales of Business Property
Form 4952 Investment Interest Expense Deduction
Form 4970 Tax on Accumulation Distribution of Trusts
Form 4972 Tax on Lump-Sum Distributions
Form 5884 Work Opportunity Credit
Form 6198 At-Risk Limitations
Form 6252 Installment Sale Income
Form 6478 Credit for Alcohol Used as Fuel
Form 6765 Credit for Increasing Research Activities
Form 6781 Gains and losses from Section
1256,
Contracts and Straddles
Form 8082 Notice of Inconsistent Treatment
Administrative Adjustment Request
Form 8275 Disclosure Statement
Form 8275-R Regulatory Disclosure Statement
Form 8582 Passive Activity Loss Limitations
Form 8582 Worksheet
Form 8582-CR Passive Activity Credit Limitations
Form 8586 Low Income Housing Credit
Form 8609-A Annual Statement of Low-Income Housing
Credit
Form 8801 Credit for Prior Year Minimum Tax -
Individuals, Estates and Trusts
Form 8820 Orphan Drug Credit
Form 8824 Like-Kind Exchanges
Form 8829 Expenses for Business Use of Your Home
Form 8864 Bio-Diesel and Renewable Diesel Fuels
Credit
Form 8874 New Markets Credit
Form 8881 Credit for Small Employer Pension Plan
Startup Costs
Form 8882 Credit for Employer-Provided Childcare
Facilities and Services
Form 8886 Reportable Transaction Disclosure Statement
Form 8896 Low Sulfur Diesel Fuel Production Credit
Form 8938 Statement of Foreign Financial Assets
Form 8941 Credit for Small Health Insurance Premium
TYPES OF RECORDS
The following are data records that can be transmitted electronically with the 1041 return and associated forms and schedules.
•
Statement Record-- Statement Records are used when the number of data items exceeds the number that can be contained in the blank provided on the printed form or schedule. Data must be provided in a separate Statement Record. A Statement Record can also be used to explain certain entries on a form or schedule.
• Preparer Note Record -- The Preparer Note Record is to provide additional voluntary information related to the return but not required to be attached to the return.
• Election Explanation Record -- The Election Explanation Record can be used when the taxpayer makes an election for certain tax treatment, status, exception or exemption based on an instruction for the tax form or in a related tax publication when there is no official IRS form designed for that purpose.
• Regulatory Explanation Record -- The Regulatory Explanation Record can be used when the taxpayer cites a specific regulation for certain tax treatment, status, exception or exemption when there is no official IRS form designed for that purpose.
• Summary Record -- The Summary Record or Schedule K-1 Summary Record will contain filer identification data, counts of the schedules, forms and statements included in one return, and indicators for paper documents attached to Form 8453-F.
• Authentication Record -- The Authentication record MUST be included with IRS e-file returns for fiduciaries electing to use the Practitioner PIN Signature Method instead of Form 8453-F.
• Recap Record -- The Recap Record cross-references the transmitter's information from the first record of the Transmission Record. It contains a field that specifies the Total Return count for all the records submitted within the transmission.
• Payment Record -- Electronic Funds Withdrawal Direct Debit Payment Record.
• State Return Record -- New York (NY) can no longer
NOTE: See Publication 1438, for additional information on the Types of Records that can be filed electronically.
THE PAPER PART OF THE RETURN
Use Form 8453-F, U.S. Estate or Trust Income Declaration and Signature for Electronic Filing, is the paper document required when filing Form 1041 return electronically and the Practitioner PIN Signature Method is not used.
Paper attachments for the return will include tax forms other than the Form 1041 that require a signature(s) and other supporting documentation. These items must be attached to the signed Form 8453-F. They include other documents that are:
• not required by the IRS and are voluntarily included by the fiduciary or the participant as supporting material;
• not IRS forms or schedules;
• not covered in this Section, under Acceptable Forms and Schedules;
• in excess of the limits that are allowed for Schedule K-1 statements and statements for all other forms and schedules. Example: Disclosure Statements
Form 8453-F can also be used as a transmittal. A checkbox has been added to indicate when the taxpayer is using the form only as a transmittal for paper documents. See Form 8453-F instructions for more information.
For Estate or Trust Returns that require more than one of the forms or schedules listed below, the entire return must be filed on paper.
Example:
• Two (2) Form 2210s or two (2) Schedule Ds
Schedule D Form 5884
Form 2210 Form 6478
Form 2210F Form 6765
Form 8582
Form 3800 Form 8582-CR
Form 4136 Form 8586
Form 8801
Form 4952 Form 8820
Form 4970
SECTION 4 EXCLUSIONS
TYPES OF RETURN
The following types of estate and trust returns cannot be filed electronically:
• Amended returns
• Prior Year returns
• Fiscal year returns ending during any month after June 30 of the current processing year
• Returns with dollar and cent entries--only whole dollar amounts are accepted; (Round entries to whole dollars only upon output; computed percentage distributions on Schedules K-1 (Form 1041) may not balance due to this rounding.);
• Returns with Powers of Attorney (POA), and the IRS does not have a POA on file. In order to file electronically, the POA should be filed prior to the transmission of the electronic filed return.
NOTE: The POA must be submitted on paper to the IRS Center where the taxpayer would normally file a paper return. The POA must be submitted at least 6 weeks prior to transmitting a return that includes the Power of Attorney.
• Returns filed under Sections
6020(b)of the Internal Revenue Code;
• Returns with any dollar amount greater than $99,999,999,999
• Bankruptcy estate returns
• Returns with refund amounts equal to or greater than $10,000,000
FAILURE TO FILE PENALTIES
Parties involved in the transmission of electronic filing of Form 1041 returns may be liable for failure to file penalties due to missing, incomplete or unsigned signature forms.
SECTION 5 ACKNOWLEDGMENT (ACK) PROCESS
ACK FILE
IRS acknowledges each transmission of electronic return data. A return can be acknowledged (ACK) as accepted, even though it has not been through any mathematical verification. There are two types of ACK files: the Transmission ACK File and the Validation ACK File. The IRS will provide an outbound mailbox for pick up of ACK files by the transmitter.
TRANSMISSION ACK
The Transmission ACK File is generated if there is a problem in the basic formatting of the entire file. If a Transmission ACK File is generated, individual forms and schedules are not validated. This ACK file should be available within two workdays after receipt of a transmitted file.
VALIDATION ACK
The Validation ACK File is generated when there is a problem within the return. The ACK file counts for the number of 1041 Forms, related forms and schedules. The file provides the reject code numbers for up to 96 errors per return.
PROBLEMS AFTER TRANSMISSION
The transmitter should immediately contact the e-help Desk at 1-866-255-0654: if the following situations occur after returns have been transmitted to the Enterprise Computing Center:
• The transmitter does not receive a transmission acknowledgement file within two (2) work days; or
• The transmitter receives an acknowledgement for returns or records that were not transmitted on the designated transmission; or
• The transmitter receives an acknowledgment, but it does not include the reject code(s) for forms transmitted.
SECTION 6 METHODS OF PARTICIPATION
TYPE OF PARTICIPANTS'
A 1041 e-file Electronic Participant is considered in one or more categories or business types listed below, depending on the specific function(s) the participant performs in relation to the estate or trust or IRS:
•
FIDUCIARY:A trustee of a trust; or an executor, administrator, personal representative, or person in possession of property of a decedent's estate. It is the responsibility of the fiduciary to ensure that the return is transmitted to the Enterprise Computing Center in Memphis, TN.
• ELECTRONIC RETURN ORIGINATOR (ERO): Originate the electronic submission of tax returns to the IRS. An ERO originates the electronic submission by:
• electronically sending the return to a transmitter that will transmit the return to the IRS;
• directly transmitting the return to the IRS; or
• providing a return to an Intermediate Service Provider for processing prior to transmission to the IRS.
•
PAID PREPARER:A firm, organization, or individual who:
• deals directly with the estate or trust from which the return is due;
• prepares a return or collects return data for purposes of having electronic records of the Form 1041, Schedules K-1 and related forms and schedules produced; or collects a prepared return for purposes of having electronic records of Forms 1041, Schedules K-1 and related forms and schedules prepared; and
• obtains the fiduciary signature on Form 8453-F (See Section 12 for Form 8453-F Procedures)
•
TRANSMITTER:Receives Form 1041 data from clients and transmits the data to IRS electronically, in a format IRS can process.
• SOFTWARE DEVELOPER: Designs or produces software, used to:
• prepare returns;
• format Form 1041 return, Schedules K-1 and related forms and schedules according to IRS specification for electronic filing; and/or
• transmit the Form 1041 return and the electronic records for Schedules K-1 and related forms and schedules directly to IRS.
REGISTER
The first step to participate in the 1041 e-file program is to register FOR e-services: on-line e-services at http://www.irs.gov. Use e-services to complete and submit an IRS e-file Application electronically.
WHOM TO CONTACT
If you have a question regarding the application, call the e-help Desk at 1-866-255-0654 (toll free).
All foreign callers should call 1-512-416-7750 (not toll free).
The IRS will mail to a Direct Transmitter an Electronic Transmitter Identification Number (ETIN), EMS Login ID and password which are needed to log on to the system and transmit 1041 return data directly to the IRS.
Transmitters are required to change their password every 90 days. Use the password for (1) testing and (2) live processing of returns.
Please refer to Publication 3112 for additional information on suitability checks and procedures for submitting and revising the IRS e-file Application.
NOTE: If your provider role is an Electronic Return Originator (ERO) only, you will still need to complete the on-line IRS e-file Application to be assigned an Electronic Filing Identification Number (EFIN) to participate in the IRS e-file program.
ENTITY REVIEW PROCESS
Participants must ensure that entity information submitted on the IRS e-file Application is correct. Entity information includes the name, address, telephone number (with contact name) of the participant and the Employer Identification Number (EIN). The data will be matched with the already existing IRS records. The participants will be notified of any discrepancies and asked to correct the problem(s) before acceptance into the program.
After review of the IRS e-file Application, the IRS will assign an Electronic Transmitter Identification Number (ETIN), Electronic Filing Identification Number (EFIN) and a temporary password to each applicant. The ETIN will be assigned only if transmitting return(s) directly to the IRS. The ETIN, password and EMS login ID will be used to logon and transmit test data. Participants will be required to create a new password for their particular ETIN the first time a login to the Electronic Management System (EMS) is initiated or by December 2, 2013, the beginning of BATS testing. Participants will use their current password for this login. This includes new transmitters who receive their initial password in the mail and transmitters transmitting test or production.
SECTION 8 BUSINESS ACCEPTANCE TESTING SYSTEM (BATS) AND ACCEPTANCE PROCEDURES
BUSINESS ACCEPTANCE TESTING SYSTEM (BATS)
Business Acceptance Testing System (BATS) is mandatory and required each year for all participants who develop software and/or transmit returns. The purpose of testing is to ensure that IRS can receive and process the electronic returns. In preparation for processing Tax Year 2013 fiduciary returns, the IRS will accept test returns through BATS beginning December 2, 2013.
Transmitters will subsequently be required to change their passwords upon login on or after 90 days have elapsed since their last password change. A lost, forgotten, or compromised password will require a call by the transmitter to the e-help Desk to initiate a referral to an EMS Assistant to reset the password. Testing should begin at least sixty (60) days prior to live transmission of return(s) to allow ample time to resolve any testing problems prior to transmitting live returns.
The software package used to prepare/transmit the return data must pass testing with the IRS prior to live transmissions.
NOTE: Testing must be completed before the participant transmits live data. See Section 8, Test Scenarios.
READY TO TEST
When applicants are ready to test, they must call the e-help Desk at 1-866-255-0654 to make arrangements for a Team to assist in the testing process. You will receive email communications from your assigned Team with their names and designated telephone extension, so that you may contact them directly.
TESTING REQUIREMENTS FOR TRANSMITTERS
Transmitters must make arrangements for a test transmission. The test file must be transmitted using the same medium that will be used to file the live returns electronically. A test file must be similar to the types of returns the participant expects to transmit for live processing. For example, if a participant successfully transmits test data that contains records for Forms 1041, Schedules D and Schedule K-1; IRS will authorize the applicant to file these records only.
In addition, transmitters using accepted software must complete an error-free communications test by transmitting two returns in separate transmissions in the same day. The two transmissions must have returns in sequential order.
After software developers have successfully completed BATS scenarios, transmitters must transmit two same day transmissions. The two transmissions must be three returns in the first transmission and two returns in the second transmission to check the sequential order. In addition, transmitters using accepted software must complete an error-free communications test by transmitting a minimum of three returns in the first transmission and two returns in the other. The two transmissions must have returns in sequential order and done the same day.
TESTING REQUIREMENTS FOR SOFTWARE DEVELOPERS
If the software packages and communication systems are used by more than one transmitter, each must test consistently as described in Section 8, Page 23, Testing Requirements for Transmitters.
Software developer's submission of test files:
• After acceptance, two same-day transmissions must be made, three returns in the first transmission and two returns in the second to check the sequential order.
• In some cases the software developer may test software specific return data. The software developer must notify the e-help Desk assistor and provide the information on the forms and schedules that will not be tested. The IRS will not allow these forms and schedules during live data transmissions.
Computer software must provide the same software capabilities and, if applicable, identical data communications capabilities to all users. Other accepted participants may use software packages that test successfully. Software packages will only be authorized for those forms and schedules that were tested by IRS.
ACCEPTANCE PROCEDURES
The IRS will process each test transmission and communicate by telephone or email if necessary with the applicant concerning his/her transmission. If the test file is not correctly formatted, or if the test returns contain errors, the IRS will notify the applicant regarding what errors were encountered on each return. The applicant must then correct the software to eliminate the errors and retransmit the test file. When the test file is accepted, you will be notified by e-mail. An acceptance letter is submitted when the IRS e-file Application is approved. To date, a separate letter is not generated when software has been approved. The communication of acceptance for Software testing is done by e-mail. The IRS will inform participants when to begin transmitting live data.
TEST SCENARIOS
You are required to transmit test scenarios using the Form 1041 return, Schedules K-1, and forms and schedules associated with the 1041 return. A test file consisting of at least 10 returns, but no more than 20 with the related forms, schedules and attachments must be transmitted.
Refer to Publication 1438, File Specifications, Validation Criteria and Record Layouts for the Form 1041, e-file Program, U.S. Income Tax Return for Estates and Trusts for Tax Year 2013, for changes to reject codes and validation criteria for Tax Year 2013. Some of the testing requirements are optional. It is highly recommended that test scenarios be developed with the requirements provided below in addition to other changes that impact returns within the scope of your operations.
1. Software Developers may still participate in BATS testing without providing actual EIN's in their test scenarios. If you elect not to test the entity information on your returns, you must use an EIN range of 41-0000001 through 41-0001000. However, use of the "test" range of EIN will result in generating Reject Code 122 which you may ignore due to the use of the test EIN range.
2. Create a scenario to test the inclusion of the Authentication Record as part of the record if the Practitioner PIN electronic signature method is used.
3. Several forms have changed for the current tax year. If any of the forms listed in Publication 1438 under "Significant Changes Summary for 1041 E-file, Tax Year 2013, is within the scope of returns you prepare, create a scenario to test each form.
4. Major changes have been made to the following Forms: Form 1041, Form 8801, Form 8941 and Summary Record. If these forms are used within the scope of the types of returns filed on behalf of your clients, create a scenario to test the changes. See Publication 1438 for new record layouts and reject codes.
5. Validation changes: The following Reject Codes have been added or deleted: 124, 148, 149, 150, 158, 164, 192, 270, 272, 282, 290, 292, 300, 307, 308, 318, 322, 373, 456, 457, 460, 500, 520, 521, 523, 595, 613, 648, 917, 918 and 921.
6. Create a test scenario to include Schedule K-1 and Schedule I with the Form 1041 Return.
7. Create scenarios to test the following most common reject codes:
Reject Code
Description
Errors
128 Duplicate returns 4,550
200 Form 1041, Page 1 Name Control (Field 2,672
#030) must be valid and left-justified
308 Form 1041, contains a significant entry 2598
then corresponding Field must contain
a "STMnn"
714 Form 1041, Page 2, Foreign Tax Credit 1,586
Claimed: Amount must be included on
Form 1116, Field #1250
115 Tax Periods on 1041 and Schedule K-1 1,553
don't match or 1041 equals calendar
year, but K-1 Fiscal Year fields are
significant
192 All date fields must be in the valid format 1549
And fall with the valid range
274 Statement Record was present but 1500
"STM nn" Reference was missing
276 Statement Record was use but 1408
statement record was missing
100 Form 1041, Field 0020 cannot be filed 1354
before the end of the tax year, except
when TRANA, Field 0160 is equal to T
212 Invalid character in 1304
1041 or K-1
SECTION 9 FILING REQUIREMENTS AND RESPONSIBILITIES
CONTINGENCY PLAN
If the electronic filing system is inoperative for an extended period of time, the Ogden Submission Processing Center, Electronic Filing Section will provide contingency instructions to participants.
INTEGRITY AND ACCURACY
Participants must maintain a high degree of integrity and accuracy in order to participate in the program.
REVOCATION
IRS reserves the right to revoke the electronic filing privilege of any participant who does not maintain an acceptable level of quality, or who deviates from the procedures and specifications set forth in the following publications for Tax Year 2013:
•
Publication 1438, File Specification, Validation Criteria and Record Layouts for the 1041 e-file Program, U.S. Income Tax Return for Estates and Trusts• Publication 1437, Procedures for the 1041 e-file Program, U.S. Income Tax Return for Estates and Trusts
SECURITY
Participants are responsible for the security of all transmitted data.
START-UP DATE
Effective January 31, 2014, the IRS will begin to accept and process TY 2013 Estate and Trusts Returns.
Participants (Transmitters) must contact the e-help Desk to inform them of when they intend to begin transmitting Form 1041 returns, Schedules K-1 and related forms and schedules electronically. IRS will not accept live return data before the start-up date (January 31, 2014).
DRAIN TIMES
January 31, 2014 - February 28, 2014 One (1) Drain - 7:00 p.m. Central Time, Monday - Saturday
March 1, 2014 - April 30, 2014 Two (2) Drains - 1:00 p.m. and 7:00 p.m. Central Time Monday - Saturday
May 1, 2014 - October 20, 2014 One (1) Drain - 7:00 p.m. Central Time, Monday - Friday
REQUIRED CONSISTENCY TESTS
The electronic data must meet all the consistency tests required as specified in this publication and Publication 1438. The fiduciary or paid preparer must correct the return data prior to transmitting the return to the IRS. If the transmitter corrects any material, he or she becomes the preparer as explained in Section 6.
REQUIREMENTS FOR SOFTWARE DEVELOPERS
In addition to the requirements outlined in Section 8, Software Developers must:
• correct software errors that cause electronically filed data to reject;
• distribute their software corrections, quickly, to all participants who use their software package.
DUE DATES
Participants must be aware of and adhere to the following dates when transmitting the estate or trust return electronically:
•
December 2, 2013is the date to begin transmitting test scenarios.
• January 31, 2014 is the date to begin transmitting live 1041 e-file returns for Tax Year 2013.
• April 15, 2014 is the due date for electronic filing of Form 1041, Schedules, K-1s, and related forms.
NOTE: If April 15th falls on a Saturday, Sunday or holiday, the due date of the return is the next business day.
•
September 30, 2014is the last day to transmit test transmissions (scenarios).
• October 15, 2014 is the last day the IRS will accept initial 1041 e-file returns for Tax Year 2013.
NOTE: If the last day to file falls on a Saturday, Sunday or holiday, the due date of the return is the next business day.
•
October 20, 2014is the last day the IRS will accept retransmissions of corrected fiscal year Form 1041 returns that were previously transmitted but were rejected.
NOTE: If the last day to file falls on a Saturday, Sunday or holiday, this will be the due date of the return, and not the next business day.
• From the due date of the return, in most cases April 15, transmitters are allowed up to
(5)calendar days to successfully retransmit electronic return data that was timely transmitted, but was rejected. The
(5)calendar days to retransmit may not always apply to the extended due date of the return.
• If IRS has not acknowledged a transmission of Form 1041 returns, Schedules K-1 and other related forms and schedules within 2 working days after transmitting the data, the transmitter should immediately contact the e-help Desk. The telephone number is:
1-866-255-0654
• Transmitters should also contact the e-help Desk when the Electronic Acknowledgment contains a reject code for a return/schedule that was not transmitted.
EXTENSIONS
Estates or trusts that expect to file returns late must apply for an Automatic 5-Month Extension of Time to File Certain Business Income Tax, Information, and Other Returns. Form 7004 replaces Forms 2758, 8736 and 8800 which are now obsolete.
WHEN TO FILE
Form 7004 must be filed on or before the due date of the Form 1041.
WHERE TO FILE
Form 7004 should be mailed separately to the Service Center where filers would normally send their paper returns.
Note: Extension Form 7004 does not extend the time for payment of tax. Extension Form 7004 should not be attached and mailed with Form 8453-F.
ADDRESS CHANGE
If the Estate or Trust changes its address, Form 8822, Change of Address, must be sent to the Ogden Submission Processing Center at the address listed in Section 13, Method of Delivery.
CHANGING ENTRIES ON THE RETURN
After IRS accepts an electronic return, it cannot be recalled or intercepted in process. If the participant or estate or trust needs to change any entries after the return has been acknowledged as accepted; an amended or corrected return must be filed on paper. The amended or corrected return should be mailed to the IRS Center where you would normally file your paper return. (See Form 1041 instructions for more information)
SECTION 10 FEDERAL/STATE REQUIREMENTS
GENERAL DESCRIPTION
Federal/State Electronic Filing is a cooperative one-stop filing program between IRS and state tax administration agencies. This program allows the filing of both Federal and State income tax returns through the IRS Electronic Filing System. Only the State returns file will be forwarded to the State. All federal information the filer wants to share with the State must be included in the State record. To assist in inclusion of federal information in the state file, the IRS created State Attachment E to accommodate federal data, including Schedule K-1. The tax return data must be placed into a format for transmission as specified by the IRS and the state. New York State will no longer participate for Tax Year 2013 via Legacy system.
RETURN REJECTION
A combined return will be rejected in its entirety if it contains any error conditions specified in Publication 1438. If the error(s) is of such a nature that it can be corrected and the return(s) processed, the combined return may be retransmitted to ECC in Memphis. The participant may elect to retransmit the Federal tax portion of a rejected return and then file the State return using State tax paper forms.
STATE RETURN
The State return shall be available to the State within two hours after receipt of the combined state files from the State Retrieval System (SRS).
After the receipt acknowledgment has been provided to the transmitter, the IRS is responsible for making the accepted combined return available to the State agency.
Once the state agency has successfully completed the transmission session and received the return, the responsibility for data integrity is that of the State agency.
Should subsequent errors of any type be detected during State processing, they are resolved between the State agency and the fiduciary using normal State paper procedures.
FED/STATE
Participation in the 1041 Fed/State e-file program gives IRS authorization to release Federal tax information common to the Federal and State return to the designated State along with the information that is required only for State tax purposes.
REQUIREMENTS FOR ELECTRONIC FILING
In order to file an electronic state Fiduciary Income Tax Return the following conditions must be met:
• The state return must be electronically filed with the federal return through the Enterprise Computing Center;
• The return must be filed between January 31, 2014 and April 15, 2014;
OVERPAYMENTS
When preparing electronic returns, fiduciaries may elect to have their overpayments:
• Applied to their Tax Year 2014 estimated tax,
• Sent to them in the form of a refund check, or
• Split -- part applied to their Tax Year 2014, estimated tax and the remainder issued in the form of a refund check.
EXCLUSIONS FROM ELECTRONIC FILING
Returns with the following criteria cannot be filed electronically:
• Amended return;
• Calendar Year Returns (January through December) ending prior to December 31, 2013;
• Returns for part-year residents of a state, or cities associated with that particular state;
• Returns reporting liabilities for nonresident earnings tax for cities associated with the particular state;
• Returns with a Power of Attorney currently in effect in which the refund is to be sent to a third party, or
• Returns with any correspondence requesting special consideration or procedures.
• Any State (New York returns can no longer be efiled via the Legacy system).
RETURN SEQUENCE ORDER
The State return Header and Attachments must be received immediately following the Federal return and preceding the summary record.
ACK REPORT
IRS acknowledges receipt of State data with Federal Form 1041 and passes this data on to the appropriate State for further validation.
SECTION 11 ELECTRONIC SIGNATURE (FORM 8879-F)
PRACTITIONER PIN METHOD
The Practitioner PIN method is the preferred method for estates and trusts to sign e-filed returns. Unlike Form 8453-F, U.S. Estate or Trust Income Tax Declaration and Signature for Electronic Filing, which has to be mailed to the IRS after successful transmission, Form 8879-F is retained by the transmitter, allowing a truly paperless system.
FIDUCIARY'S PIN
The fiduciary chooses any five digits, except all zeros, as the PIN signature and must use an Electronic Return Originator (ERO) to e-file under this method.
If the fiduciary agrees, it is acceptable for an ERO and/or software program to generate or assign the taxpayer PIN. The fiduciary consents to the ERO's choice by completing and signing Form 8879-F.
The fiduciary's PIN can be systemically generated or manually assigned into the electronic format and/or the signature authorization form. However, the ERO must receive the signature authorization signed by the fiduciary before the ERO transmits the return or releases it for transmission to the IRS.
ERO's EFIN/PIN
The ERO's EFIN/PIN consists of eleven digits. The first six positions is the EFIN, and the last five is any five numbers except all zeros.
If the return is prepared by the ERO that originates the electronic submission of the tax return, the ERO is required to input a PIN as a signature in the Authentication Record of the electronic return in the location designated for the ERO EFIN/PIN.
If the return was prepared by someone other than the ERO that originates the electronic submission, the ERO must ensure that the electronic record contains the information the preparer entered in the "Paid Preparer Use Only" section of the return. By entering a PIN in the location designated for the ERO's EFIN/PIN in the electronic record, the ERO attests that the return preparer manually signed the paper copy of the return and that the electronic return contains tax information identical to that contained in the paper return.
PURPOSE OF FORM 8879-F
Form 8879-F, IRS e-file Signature Authorization for Form 1041, is used to authorize an Electronic Return Originator to enter a personal identification number (PIN) as the fiduciary's signature on an electronically filed form 1041. Form 8879-F is provided as a convenience when the fiduciary is unavailable or unable to return to the office, or it is inconvenient for the fiduciary to personally sign the electronically prepared tax return.
The ERO may enter the fiduciary's PIN in the electronic return before the fiduciary signs Form 8879-F, but the fiduciary must sign and date the Form 8879-F before the ERO originates the electronic submission of the return. The fiduciary must sign and date the form 8879-F after reviewing the return and ensuring the tax return information on the form matches the information on the return.
The practitioner must provide Form 8879-F to the fiduciary, along with a copy of the completed tax return, personally or by U.S. mail, private delivery service, e-mail, or an internet web site. Upon review of the tax return, the fiduciary completes Part II of Form 8879-F with his/her PIN, signature and date. The fiduciary must return the form to the ERO, either personally or by U.S. mail, private delivery service, or FAX transmission. The ERO must retain the completed Form 8879-F as instructed on the form.
REQUIRED RECORDS
An Authentication Record is required when a trust or estate files an electronic return and elects to use the Practitioner PIN Method as the signature on the return. Please refer to Publication 1438, File Specifications, Validation Criteria and Record Layouts For the Form 1041, e-file Program, U.S. Income Tax Return for Estates and Trusts for Tax Year 2013.
SECTION 12 PAPER SIGNATURES (FORM 8453-F)
PURPOSE OF FORM 8453-F
Form 8453-F serves the following purpose:
• authenticates the return;
• authorizes the participant to transmit via a third-party transmitter;
• authorizes the transmitter to transmit the return on behalf of the estate or trust;
• serves as a transmittal for related forms and schedules that require signatures different than the signature that authenticates the return;
• if the Practitioner PIN Method (Form 8879-F) is used to sign an electronically filed return, Form 8453-F can be used as an unsigned transmittal for related forms and schedules that require signatures different than the signature that authenticates the return; and
• authorizes an Optional Electronic Funds Withdrawal payment.
Note: Form 8453-F is needed only when filing a Fiduciary Return electronically, not when filing a paper return
REQUIRED SIGNATURES
The fiduciary and the paid preparer, if applicable, are required to sign Form 8453-F, U. S. Estate or Trust Income Tax Declaration and Signature for Electronic Filing.
All Forms 8453-F must be mailed within three business days after the acceptance date of the original electronic transmission.
FIDUCIARY'S AUTHORIZATION
If the electronic filing participant is not the fiduciary, the participant must get the fiduciary's authorization to file the returns electronically, and if applicable, to transmit, the returns through a third party. To get this authorization, the participant must have the same person who is authorized to sign a paper return sign Form 8453-F.
MULTIPLE TAX RETURN LISTING
If a fiduciary or representing officer is authorized to sign more than one Form 1041 return, a Multiple Tax Return Listing (MTRL) may be attached to one Form 8453-F in lieu of sending separate Forms. The MTRL should include the date, transmitter's name and telephone number, the 5-digit ETIN and the number of pages.
The listing should be formatted to display the 9 digit EIN, Name Control, Tax Period, Total Income, Income Distribution, Taxable Income, Total Tax and Tax Due/Overpayment of the estate or trust. A Multiple Tax Return Listing with a maximum of 5000 estates or trusts may be attached to each Form 8453-F. The signature document for multiple returns must include one (1) Form 8453-F signed by the fiduciary or authorized representative. Landscape layout may be used to accommodate the 12-font requirement.
Example: of MTRL:
TRUST NAME TAX TOTAL INCOME TAXABLE TOTAL
EIN
CONTROL
PERIOD
INCOME
DISTR.
DEDUCT.
INCOME
TAX
[Table Continued]
TAX
OVERPAYMENT
DUE
Note: If the Practitioner PIN Method (Form 8879-F) is used to sign an electronically filed return.
POSTMARK DATE
The package that contains Forms 8453-F must be postmarked within three business days after receiving the Acknowledgement File identifying which returns were accepted.
ELECTRONIC POSTMARK
If the electronic postmark is on or before the prescribed filing deadline but the return is transmitted after that filing deadline, the IRS will deem the return to be timely filed based on the electronic postmark date/time supplied by the transmitter. If the electronic postmark is dated after the prescribed filing deadline, the actual date of receipt by the IRS of the electronic return will be considered the filing date for that return. See Publication 1438, Summary Record, regarding the Electronic Postmark.
SUBSTITUTE FORM 8453-F
Participants must use the official Form 8453-F or an approved substitute form that duplicates the official form in format, language, content, color and size. Use of an unapproved form will result in suspension from the program. Participants must send a sample of their proposed substitute form to the following address for approval:
Internal Revenue Service SE:W:CAR:MP:FP:S:SP Substitute Forms Program Coordinator 1111 Constitution Avenue, NW Room 6411, IR Washington, DC 20224
TRANSMITTING THE RETURN
Estate and Trust returns that are transmitted electronically must have the Form 8453-F mailed within three (3) business days after the return is accepted. The Form 8453-F must not be mailed for those returns that are rejected or identified as duplicates. The Estate or trust must ensure that the Form 8453-F is completed, signed, and that required forms, schedules, and other items are attached before mailing the form to the IRS.
PROBLEMS RELATING TO FORM 8453-F
The fiduciary or paid preparer must resolve any problems relating to Form 8453-F. If IRS determines that a Form 8453-F is missing or unsigned, the preparer must provide IRS with a legible copy of the signed form from their records, or obtain a signed Form 8453-F from the taxpayer. This should be resolved within 15 days of the IRS request for the form.
FAILURE TO FILE PENALTIES
Parties involved in the transmission of electronic filing of Form 1041 returns may be liable for failure-to-file penalties due to missing, incomplete or unsigned signature forms.
SECTION 13 WHERE TO SEND FORM 8453-F AND PAPER DOCUMENTS
PACKAGING INSTRUCTIONS
The paper Form 8453-F, and any other required paper documents, must be sent to the Ogden Submission Processing Center address listed below under "Method of Delivery", using envelopes or cartons, as volume or preference dictates.
NOTE: For electronic transmissions, the package containing Form(s) 8453-F and appropriate paper attachments, must be postmarked within 3 business days after receiving the Acknowledgement File identifying which returns were accepted and contain only IRS accepted e-filed tax return information.
SHIPPING AND PACKAGING
The sequence of the items in a package must be as follows:
• the signed Form(s) 8453-F;
• the corresponding paper attachments for each return (i.e. multiple return listing) attached to the corresponding Form 8453-F.
METHOD OF DELIVERY
Envelopes, packages or cartons containing Form 8453-F and other paper attachments, sent by U.S. Postal Service should be sent to:
Internal Revenue Service Ogden Submission Processing Center Ogden, UT 84201
If you are sending Form 8453-F and other paper attachments through a vendor other than the U.S. Postal Service, call 1-866-255-0654 for mailing address.
RESUBMISSION ON PAPER
If the participant submits the return on paper after attempting to file it electronically, or if at the end of the filing season (October 20, 2014) a participant is unable to successfully retransmit corrected returns electronically, the participant should attach the Form 8948, Preparer Explanation for not filing electronically with the tax return that is filed on paper. A copy of the Acknowledgment File sent by the Enterprise Computing Center-Memphis (ECC-MEM), to the transmitter concerning the return(s) transmitted, should also be included. A copy of this ACK FILE is needed to bypass assessment of any late-filing penalties. In order for the return to be filed timely, the entire paper return (including a copy of the ACK FILE) should be mailed within 10 calendar days from the date the return(s) were rejected electronically. The paper return should be mailed to the IRS center where the estate or trust would normally file a paper return.
SECTION 14 BALANCE DUE RETURNS: TAX PAYMENT
BALANCE DUE RETURNS
Returns containing a money amount on Line 27 (Tax Due), Page 1 of Form 1041 are considered balance due returns.
Balance-due returns (with or without payments) do not have to be transmitted separately from returns with no balance-due.
PAYMENTS
Payments for Form 1041 e-file returns can be made in any of the following ways:
• Electronic Funds Withdrawal (EFW), allows for direct debit payments with balance due returns;
• Electronic Federal Tax Payment System (EFTPS);
• Estimated tax payments, with Form 1041-ES, Estimated Income Tax for Estates and Trusts. The payments should be submitted according to Form 1041-ES instructions;
• A remittance, with Form 1041-V. Send after the return is filed, but by the return due date (i.e., the return can be transmitted prior to the return due date; however, the remittance does not have to be submitted until the return due date.) The payment should be submitted according to Form 1041-V instructions. We strongly encourage the use of Form 1041-V; and
• A paper check, if Form 1041-V is not used. You must include on the check, the Employer Identification Number of the Estate or Trust, the form number and the tax year for which the payment is intended. Refer to the instructions for Form 1041 under "Where to File" for the mailing address.
ELECTRONIC FUNDS WITHDRAWAL
An optional Electronic Funds Withdrawal (EFW) is available with balance due returns. The fiduciary may authorize the U.S. Department of Treasury (through a Treasury Financial Agent) to transfer money from his/her bank account to the Treasury account. The fiduciary must sign the Jurat on either Form 8879-F or Form 8453-F, depending on the signature method used, to authorize the agreement between IRS and their Financial Agent to initiate an EFW (direct debit payment).
• EFW payments will be withdrawn in a single transaction, not installments.
• In the event the financial institution is unable to process the electronic funds withdrawal transaction, the fiduciary will be responsible for the tax payment in addition to penalties and interest.
• In the event Treasury causes an incorrect amount of funds to be withdrawn from the bank account, Treasury is responsible for returning any improperly transferred funds.
The payment record must contain the following information:
• Bank's Participant's Employer Identification Number (EIN);
• Routing Transit Number (RTN), (9 Numeric Characters);
• Bank Account Number, (1-17 Alphanumeric Characters or Hyphen"-");
• Bank Account Type, (Checking (1) or Savings (2));
• Payment Amount, (Whole Dollar Amounts Only);
• Fiduciary's Daytime Telephone Number; and
• Requested Payment Date, Payments can be scheduled up to the due date of the return.
EFTPS
Form 1041 payments (estimated, balance due and subsequent) can be made through the Electronic Federal Tax Payment System (EFTPS). Contact an EFTPS Financial Agent at 800-555-4477 or 800-945-5300 for information.
NOTE: An extension of time to file does not grant an extension to pay tax.
SECTION 15 DISTRIBUTION OF COPIES
PARTICIPANT'S COPY
The participant (preparer) must keep a copy of the Form 1041 return, Schedules K-1 and Form 8879-F or Form 8453-F, depending on the signature method used. The copy of the electronic return may be kept on computer media.
CLIENT'S COPY
The participant should advise clients to keep copies of all materials filed with the Ogden Submission Processing Center. The copy of the electronic return can be a copy of the official forms or in a format designed by the participant, in which each data item refers to the line entries on the official forms. The copy can be on computer media. The computer media copy must be composed carefully to avoid violating disclosure rules.
NOTE: Anyone who receives a copy will be given ONLY the information he or she is entitled to receive.
ELECTRONIC ACK
The participant (Transmitter) should keep a copy of the Electronic Acknowledgment (ACK) (See, Section 5, Acknowledgment Process) received from the Enterprise Computing Center-Memphis (ECC-MEM) for 3 months to facilitate inquiries. If the participant is also the paid preparer or the fiduciary, the normal retention periods for tax return information applies, as specified in the Internal Revenue Code.
FIDUCIARY'S COPY
If the transmitter and the fiduciary are not the same, the transmitter must give the fiduciary a copy of all materials that are described above and filed with IRS for the estate or trust.
IRS COPIES
The participant must give IRS access to all materials that the participant must keep to comply with these procedures.
SECTION 16 ADVERTISING STANDARDS
RESTRICTIONS
Preparers and transmitters shall comply with the advertising and solicitation provisions of 31 C.F.R. Part 10 (Treasury Department Circular No. 230) with respect to their capability to file electronic returns.
ENDORSEMENT
IRS endorsement must not be implied. Acceptance to participate in the program does not mean that the Internal Revenue Service endorses the computer software or quality of services provided. Therefore, any public communication in which a participant's electronic filing capability is referenced, whether through publication or broadcast, must clearly indicate that IRS acceptance of the participant for electronic filing does not constitute an endorsement or approval of the quality of tax preparation services provided.
SECTION 17 SAFEGUARDING THE 1041 e-FILE PROGRAM
PROGRAM REQUIREMENTS
All participants must fulfill program requirements to continue participation in the 1041 e-file Program. Program requirements are included in Revenue Procedure 2000-31, this publication and in other publications and notices that govern the IRS e-file Programs. Adherence to all requirements is expected of all participants regardless of where they are published. Some requirements are specific to the category of the participant and are included in appropriate sections of this publication.
MONITORING
The IRS monitors participants for compliance with the revenue procedures and IRS e-file requirements. Monitoring may include, but is not limited to, reviewing IRS e-file submissions, scrutinizing advertising material, checking Form 8453F submissions, examining records, observing office procedures and conducting suitability checks. IRS personnel may monitor participants during visits to the participant's offices and other locations where IRS e-file activities are performed. Monitoring visits may be conducted to investigate complaints and to ensure voluntary compliance.
SANCTIONING
Violations of IRS e-file requirements may result in warning or sanctioning of the participant. Before sanctioning a participant, the IRS may issue a warning letter that describes specific corrective action for deviations from specific rules. However, sanctioning may be implemented without issuance of a warning letter. Sanctioning may be a written reprimand, suspension or expulsion from the 1041 e-file Program, depending on the seriousness of the infraction. The IRS categorizes the seriousness of infractions as Level One, Level Two and Level Three. Sanctions may be appealed through the Administrative Review process.
SUITABILITY
A check is conducted on all firms and the principals and Responsible Officials of firms when an IRS e-file Application is initially processed, and annually thereafter. To maintain the IRS 1041 e-file Program, integrity annual suitability checks are done to determine whether:
• All personal income tax returns are filed and timely;
• All business tax returns are filed and timely;
• All tax liabilities are paid or appropriately addressed with the Service;
• Penalties have been assessed; and
• There is evidence of disreputable conduct or other facts that would reflect adversely on the IRS 1041 e-file Program.
• The suitability check includes a credit check, a fingerprint card, compliance with tax requirements and meeting state and local licensing and/or bonding requirements for the preparation and collections of tax returns.
NOTE: Failure to meet any of these checks may result in the participant being sanctioned.
Please refer to Publication 3112 for additional information concerning Program Requirements.
SUBMISSIONS
The e-help Desk will monitor each participant's submissions to ensure that quality is kept at an acceptable level. The e-help Desk will counsel the participant, if necessary.
QUALITY
If a participant does not maintain an acceptable level of quality, the electronic filing authorization may be revoked.
SUSPENSION
A sanction revoking privileges to participate in the IRS 1041 e-file Program. The following conditions can lead to suspension:
• Deterioration in the format of submissions;
• Unacceptable cumulative error rate;
• Violation of advertising standards;
• Unethical practices in return preparation;
• Untimely receipt of Forms 8453-F or incomplete, illegible, altered, missing, or unapproved substitute Forms 8453-F;
• Failure to keep a signed copy of Form 8879-F for the required period.
• Misrepresentation on the participant's application; and
• Other facts or criteria that would adversely reflect on the electronic filing.
NOTE: If you were suspended and wish to be reconsidered into the program you will need to reapply by completing a new IRS e-file Application. Or if you were dropped from the program and would like to continue you also need to reapply. When reapplying, remember to include your previously assigned EFIN.
COUNSELING
IRS will counsel suspended participants concerning the requirements for reinstatement in the program.
PENALTIES
Treasury Regulations take precedence over these procedures. Electronic participants are subject to any criminal penalty for unauthorized disclosure or use of tax return information, as described in Treasury Regulation 7701(a)(36) and Treasury Regulation SECTION 18 ADMINISTRATIVE REVIEWS
PARTICIPATION
Applicants and participants who are denied participation, or suspended, have the right to request an administrative review.
REINSTATEMENT
Requests for administrative review of ineligibility or suspension decisions should be directed to:
Internal Revenue Service Office of the Director of Practice (PC: E: P) 1111 Constitution Avenue, NW Washington, DC 20224
SECTION 19 EFFECT ON OTHER DOCUMENTS
REVISIONS
This revision supersedes any Publication 1437 previously issued.
PUBLICATIONS
Publication 1438, File Specification, Validation Criteria and Record Layouts for the 1041 e-file Program, U.S. Income Tax Return for Estates and Trusts for Tax Year 2013;
NOTE: These publications are updated annually
CALENDAR AND FISCAL YEAR RETURNS
These procedures remain effective for calendar year returns ending December 31, 2013, and fiscal year returns ending January 31 through June 30, 2014.
- Institutional AuthorsInternal Revenue Service
- Jurisdictions
- LanguageEnglish
