Filing a Tax Return After an E-file Rejection (...


Question: I have a client who tax return I filed on April 15, and the return was was rejected late in the evening, on April 16. No extension was filed (my bad). I resubmitted on April 17, but the client received an IRS notice with a penalty for late filing. I would like to try and have this late filing penalty abated. What should I do?


Christy's Answer: Late filing penalties are always a bummer. But in your case, you're in luck! The taxpayer qualifies for an automatic abatement because the return wasn't actually LATE! If you e-filed on the due date, and have proof of that, then the return is NOT late as long as you either

(1) resubmitted the return within 5 days, or

(2) filed it on paper within 5 days of the rejection.

This is officially called the "transmission perfection period". There is a longer "perfection period" for most entities, which is 10 days. This gives the tax practitioner more time to correct the return and submit it, without the return actually being considered late. If the IRS does send the taxpayer a notice, then you would have to respond to the notice with proof of the e-file submission (the date the return was submitted to the IRS), as well as proof of the rejection. 

Note: The perfection period is not an extension. It is generally a good business practice to file an extension for each taxpayer who is close to the filing deadline. However, in the case of the extended filing deadline (October 15) the transmission perfection period STILL APPLIES. So if the taxpayer's return is e-filed on October 15, and the efile is rejected, the taxpayer still has 5 days to correct the return and resubmit it, (either on paper or via e-file) and the return will still be considered timely. 

References: IRS Publication 1345, IRS efile handbook

 

posted Oct 29, 8:00 am (159 days ago)