E-filing is quickly becoming the preferred method of tax return submission for consumers, tax preparers and the Internal Revenue Service. The IRS now even requires most tax preparers to submit client returns electronically, unless the client specifically requests for the return to be mailed, but there are a few e-file issues that commonly arise. Some issues are rooted in circumstances beyond consumer and tax preparer control, and some issues involve data entry errors. Despite these common issues, e-filing does reduce calculation and completion problems, and it remains the fastest way to process returns and receive tax refunds.
A common issue with e-filing returns occurs when the IRS has late legislative changes to tax laws. This can cause some tax forms to be available later than other forms. If a tax form you need to file is not ready, you won’t be able to e-file until the form is redrafted and made available by the IRS for electronic submission.
Incorrect Social Security Numbers
If you e-file a return that contains an incorrect Social Security number for any person claimed on your return, the IRS e-file system will automatically reject your submission. When a return is filed, IRS computers match the names and Social Security numbers you supply with information recorded in Social Security Administration computers. If the information doesn’t match, your return can’t be processed until the error is resolved.
In addition to Social Security number mismatches, e-filed returns can also be rejected when other information doesn’t match. Data included in these rejections includes incorrect birthdates for taxpayers or their dependents, misspelled names, and incorrect identifying entries for prior-year adjusted gross income or reported addresses. Whenever your return is rejected, you will be given a reason for the rejection so you’ll have an opportunity to correct it. Fixing and re-submitting a rejected return does not flag you for audit or raise any red flags with the IRS.
Amendments and Prior Year Returns
The IRS does not accept electronic submissions of amended or prior-year returns. Most tax preparation software is sophisticated enough to disallow e-filings of these two types of returns. In the event you are able to click the “submit” button through any software for an e-filed amendment or prior-year return, expect to have that return immediately rejected by the IRS. When making changes to a return that has already been accepted by the IRS, or when submitting a late return, be prepared to print out the return and mail it in.
With a background in taxation and financial consulting, Alia Nikolakopulos has over a decade of experience resolving tax and finance issues. She is an IRS Enrolled Agent and has been a writer for these topics since 2010. Nikolakopulos is pursuing Bachelor of Science in accounting at the Metropolitan State University of Denver.