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e-file Status Report #2014-03

We might characterize the current status of our Modernized e-file Project as follows:

1) The impossible we can do immediately
2) Miracles take a little longer

As of today, we find ourselves somewhere between #1 and #2.

This year, the IRS completed its switchover to Modernized e-file (“MEF”), with the 1041 family being the last one to be moved completely off of the Legacy format that we supported for the past four years. This is a once-in-a-generation file format change that was more complicated than expected. The roots go back to 1996 (when the XML format was introduced) and 2004 (when the IRS began to implement MeF for corporate tax returns).

After a substantial effort to build the foundation for 6-in-1 e-file for the new IRS “Modernized” format (starting last August), and heroic nonstop efforts over the past 40 days to incorporate the 16 key forms and schedules in 6-in-1, it is possible that we will finally receive official IRS approval today for 1041 e-file and state approval today or tomorrow for e-filing extension requests for NJ, NY, and PA. More details below.

Bottom Line: you should file automatic extensions for your federal and state returns on or before Wednesday, April 15, 2015, as follows:

File Form 7004 (available in 6-in-1)

File NJ-630-V Payment Voucher (available in 6-in-1)

File NY IT-370-PF on line (the only way to extend an IT-205 other than via e-filing).

NY IT-370-PF Extension (for IT-205)

(a) No tax due: PA extension unnecessary. PA will accept federal Form 7004 (which should be included with the PA-41 that is eventually filed)

(b) Tax due: File PA REV-276 (available in 6-in-1)

We recognize that this situation is less than ideal, and apologize for the inconvenience. To say that the challenge was monumental would be an understatement.

1) Data. Over 1,600 “Element Names” (fields) had to be connected to 6-in-1 data.

2) IRS Approval. The process of getting a sample return accepted by the IRS computer was a little like peeling a 500-pound onion. Once you solve one XML validation error, three more pop up. One cannot know what to expect until each successive round, until all validation errors eventually disappear. We were confident that we were close to IRS acceptance during the first few days of April, but were not able to get IRS advanced technical assistance for a period of nine days during a critical period (April 1 through 10). True, the IRS is a busy place, processing 100m e-filed returns every year. We finally received the technical assistance that we needed during a 30-minute impromptu conference call at 5 pm on Friday, April 10, with four IRS e-file experts. That call allowed us to make enough changes to get Test Scenarios #3 and #4 accepted that evening, and #5 the next day (#1 and #2 had been accepted the day before). This morning, the IRS is reviewing these five required test returns, and we hope to receive official approval later today.

3) Outside Help.. We did eventually secure the able assistance of an e-file expert in one of the state departments of revenue, as well as another person who was instrumental in implementing e-file at Intuit a few years ago.

4) 6-in-1 Validation. Based on the 3/4/2015 release of 6-in-1, many of you encountered an error message when trying to validate a 2014 for which a 2013 return already existed. If we have not already resolved this with you, please let us know. It takes about five minutes total via a GoToMeeting session. Otherwise, you may proceed with filing extensions without validating your returns, and wait for the next upgrade in which this issue has been resolved.

5) Printing All Extension Requests in One Batch. Last year, 118 firms e-filed over 2,000 1041s and 700 PA-41s, an average of just over 25 returns (federal and PA) per firm. Of these, 24 firms e-filed 25 or more 1041s, and 29 firms e-filed 10 or more PA-41s. We can help you print all of your extensions (1041, NJ, and PA) with a single print command for each jurisdiction. Please let us know and we will gladly set up a brief GoToMeeting session to do this with you.

We appreciate your understanding, loyalty, and support (for some of you, that’s nearly 30 years!).

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