Form 7004 reject with year-end date mismatch

[jklcpa]

A May 31st fiscal year C corp had their 7004 rejected today with the error code indicating that the year end did not match the IRS database. The IRS rep on the practitioner priority line told me that an entity code is missing from the client's file and that IRS systems now think this is a calendar year taxpayer.  Last year's return on extension e-filed without a hitch in Feb 2016, and  when asked what changed since then, she then added that IRS is updating systems that might stop the e-files of some older companies that are missing these sorts of "codes" and that she's had more calls recently for this situation.  Similar situations are occurring with S corps and the IRS system thinking those companies should be reporting as C corps.

The bottom line is that even the paper-filed 7004 will be in limbo until the database is corrected, that the 1120 itself will also reject, and it is probably also holding up the processing of an 1120X for an NOL carryback.  Rep told me that this might be fixed sooner, but the advice is to wait at least 30 days or more, and that the entity division might or might not send out paperwork requiring signatures.

I have this work almost done and now will be holding the return for e-filing until this is straightened out. No way we want to paper file this.  With 2 calls to the client, getting the POA, the call to IRS, and the trip to the post office, I wasted a lot of time on this today for something that should have taken a couple of minutes. 

/rant

Anyone else run into anything like this recently?

[SaraEA]

Ran into the exact same thing for an estate I was trying to put on extension.  I am using a fiscal year and filed the first 1041 with whatever year-end date.  The extension for the second fiscal year kept rejecting because year end did not match IRS database, even though it exactly followed the prior year end.  Thanks for sharing this tidbit.  Now I know it's not me doing something stupid.

[Randall]

Thanks for the heads-up.  I have a C corp fiscal year June 30 I'll be sending in the 7004 soon.

[jklcpa]

Maybe none of you will have this trouble, and it's a first for me.  This is a company that's been in existence for a long time before computerized databases existed at the IRS. They'll celebrate their 100 year anniversary next year, my client purchased it and formed the C corp in 1946, and I've been their accountant for close to 35 years.  Ok, that might be longer than the age of some of our members, and now I feel really old. 

[Randall]

Just got my 7004 accepted for my 6/30 FYE C corp client.  They have been in business for a long time but not 100 years.  Not sure how long but daughter (not young) runs the dry cleaning business that her father started years ago.  Has always been a C corp.  So for  me at least, I didn't have the problem.

 

[SaraEA]

I filed an extension for a fiscal year estate today and it was accepted within a couple of hours.  The last one I tried to do the same thing for had that database mismatch.  So it was the IRS, not me.  Not too often we can say that.