IRS Rejecting E-File With Edu. Credits Form 8863 URGENT

[Guest Taxed]

This is what I got from CCH today:

The IRS announced on an industry call with software vendors participating in the Controlled Launch this morning that they would start rejecting any e-file that contains Form 8863 (Education Credits) effective immediately.

What does this mean for returns that you have already sent to the EFC, but have not been sent to the IRS?

Any return that you have sent to the EFC that has NOT been transmitted to the IRS that contains Form 8863 will be rejected by the IRS with either Reject F1040-419 or F1040A-419 Form 8863 is not being accepted by Modernized e-File (MeF) at this time .

[SCL]

if i understand what you want to know...

any transmitted/rejected efiled return basically kicks it back to return manager to correct and (re) create efile.

[Guest Taxed]

The open issue is when can we resubmit the e-file? That has not been answered yet.

Also it appears that the glitch is with IRS programming so sending paper return will not let you get around the problem. I guess those that already landed at IRS and got accepted will be put back into a holding pattern! No early refunds.

I am thinking and I got to do some more research, it to advise my clients who NEED the refund desperately is not to file any of these amended forms that will cause delays and just get their basic refund. Then this summer I will offer to do a 1040X to get the rest. More work but there has to be a way around this mess!

[BulldogTom]

I think we ought to, as a matter of principal, file and amend every one of our client returns this year. With the new MeF, we can e-file the 1040X, so why not test their system to the limit. I think 3 or 4 amends per return would be a good workout for those A-holes in Washington. Let Congress know that they really screwed the pooch this year. Break their system and let them live with the results.

Tom

Hollister, CA

[Guest Taxed]

I got to talk to my attorney friend as to what type of disclosure and indemnification i need from my client if I recommend that they file now and amend later. I am thinking that someone could say you said i would receive my refund soon and it still has to arrived because you played with my return. You know how it goes, you try to be a nice guy and some taxpayer wants it out of your hide when things don't go as planned.

If all of us file and amend I am sure it will push MeF against the wall real soon and then IRS will start cracking their whip, like revoking/suspending your EFIN??

[frazzled]

I think we ought to, as a matter of principal, file and amend every one of our client returns this year. With the new MeF, we can e-file the 1040X, so why not test their system to the limit. I think 3 or 4 amends per return would be a good workout for those A-holes in Washington. Let Congress know that they really screwed the pooch this year. Break their system and let them live with the results.

Tom

Hollister, CA

We can efile a 1040X??

[RitaB]

I am just hoping to e-file an original. That would be the cat's pajamas. At the rate we are going, I fear that I will walk out of my office on April 15th squinting and asking, "What year is this?"

[Margaret CPA in OH]

Are we forgetting that we sign on page 2 that the "(d)eclaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge" (my emphasis)? If we know information and sign and submit a return excluding that information with the intention of amending it later then it seems to me that would not be abiding by Cir. 230 and whatever we have promised as preparers. Ethical? I'm thinking maybe not....

[Guest Taxed]

That is why I wanted to run by an attorney. I am in no mood to stamp out license plates for my state just because my intentions were good but the Govt. does not like it! Too much fine print in Cir 230 if you ask me.

[Jack from Ohio]

Now does everyone understand the wisdom of NOT FILING till Feb.1? "Haste makes waste and unhappy clients when you have given them expectations greater than the IRS has posted."

Also....

There is NO plan in place to allow e-file of amended returns in the forseeable future.

This from an IRS department head last summer.

If anyone has any documented information to the contrary, please let us know.

The IRS is still having issues with 1040's and MEF.

[Jack from Ohio]

We can efile a 1040X??

No. Not for the forseeable future. See my previous post.

[David1980]

Hmm, interesting. Haven't seen an IRS e-alert talking about rejecting returns with 8863, but wouldn't surprise me (software/industry often gets info before they publicly make it available). I know they have been accepting returns during the test period with 8863. Perhaps they've been getting too many returns with 8863. IE, lots of 8863 fraud? Wonder if they're going to require documentation like they did the adoption credit or something?

[Guest Taxed]

I just want IRS to tell us pronto what to do. I am ok with sending paper return with documentation (like adoption credit, First time home buyer) as long as we know what to send and how long it will take to process and get refund. I hate telling clients, "I don't know, IRS has not told us what to do or when". Can you imagine if you took your car for repairs and the mechanic said I don't know haven't got a clue!

I agree the IRS has to do something to reduce Fraud. But tell us what it is we are suppose to do!

[joanmcq]

I doubt this is fraud linked, but just another one of the forms affected by the January legislation. It wasn't initially on the list of 'can't file til late Feb or early March', but my guess is that they've since had issues with it.

So it's not just ATX (and apparently TaxWorks as well), but the IRS headdesking this season.