We received back our first results for 1041 Test Scenarios #1-5. Two issues were noted:
A. Lines for some blank forms and schedules were included but were not required for the given return. We have made the software “smarter” so that it submits only the required forms and schedules and omits the blank ones.
B. Some of the returns required attached statements (i.e., “Interest Paid On Seller Provided Financing Statement”). There were 14 such statements (of several hundred possible statements) associated with the test returns, and we are in the process of completing them. Interestingly enough, this requirement was not enforced at the XML or Business Rule validation level, but only at the level of human review.
A couple of questions arose yesterday in response to e-file Status Report #3. Answers appear below:
1) How to find the extension forms in 6-in-1:
US 7004: 1041, Page 1, large gray button on the right (“C, E, F…7004…”). On the next screen, choose the 7004 from the “List of Forms” button.
(a) 7004 Line 6 (Tentative Total Tax) defaults to the Total Tax reported on the 1041 Line 23
(b) 7004 Line 7 (Total Payments and Credits) is a user-defined field. It should normally equal 1041 Line 25 (Total Payments) plus Line 26 (Estimated Tax Penalties)
(c) A 7004 is created the very first time that you click on the “C, E, F…7004…”) button on the right panel of the 1041. If you haven’t needed this form or any of the other auxiliary forms and schedules for this 1041, then you will need to take this step. Otherwise, the 7004 will not yet be available to print all of your 7004s in a single batch (as we offered to help you do in e-file Status Report #3).
PA REV-276: PA-41, Page 1, Ext button (right panel)
NJ-630-V: NJ-1041, Page 1, X button (right side)
2) Already Paid Tax. What if I already mailed the tax due with the 1041-V, PA-41 Payment Voucher, or NJ-1041-V?
1041-V: We checked with the IRS, and were told that “[p]ayments are processed and posted to accounts with priority.” This question has raised an interesting ambiguity involving the 1041, 1041-V, and 7004. The IRS plus-4 zip code to be used for 1041s with checks and for all 1041-Vs is 0148. The IRS plus-4 zip code to be used for the 7004 is 0045. The 7004 itself doesn’t make explicit reference to attaching a check, but the 1041, Line 24d, does refer to “Tax paid with Form 7004”.
Whether you use Form 7004 or Form 1041-V to pay the tax due on an already-prepared but extended 1041 would not appear to matter (subject to any reply to a further inquiry raised yesterday with the IRS). In either case, the tax due on the 1041, Line 27, will not reflect payments made on the 7004 or 1041-V, but the IRS will have processed the payments by the time that the 1041 (whether paper filed or e-filed) arrives.
Minutes ago, we heard back from the IRS, acknowledging the ambiguity in the 7004 instructions (in not explicitly referring to attaching a check to the form). It suggested that the instructions be changed in this regard, and confirmed that “the IRS does not refuse payments and processes them very quickly.”
PA REV-276: The PA Department has assured us that paying via the PA-41 Payment Voucher, then extending via the REV-276 (with no money), then filing/e-filing the PA-41 will work just fine.
NJ-630-V: We will check with the NJ Department about this.
3) Paper filing the PA-41: This year, for the first time, the PA-41 requires that you attach a copy of the entire 1041 (including all schedules and attachments). Because of this extra administrative burden, we encourage you to wait for the PA-41 e-file software (in which this requirement will be handled invisibly and almost instantly).
4) 1041 e-file Mandate: You are subject to this mandate only if your firm files or expects to file a total of 11 or more 1040s and/or 1041s (in the aggregate) for the current processing year. If you are not subject to the mandate, you do not need to file any form with the IRS explaining why you are not e-filing.
5) Multiple Copies of Auxiliary Schedules: Although it’s uncommon, we occasionally get a request for a second copy of Schedule C, E, F, etc. The MeF e-file design contemplates multiple instances of these forms and schedules. In the next upgrade, we will add a feature that lets you copy a schedule, then provide you with an ability to navigate back and forth. If you need to do this sooner, we can help you via a GoToMeeting schedule.
6) Beneficiary K-1 Matching: Two customers raised concerns about beneficiaries who have reported on their own 1040s income and expenses (including excess deductions), but for which the corresponding 1041 K-1s will not yet be on record with the IRS. Should the firm paper file rather than wait for e-file? We don’t have a definitive answer to that question yet. One observation is that e-filed returns will be processed far more quickly than paper-filed returns. Thus, it’s probably better to e-file a 1041 a week from now than it is to paper file today.
7) Screen Zoom: When we have connected with some customers via GoToMeeting, we have noticed that 6-in-1 appears at a very small zoom level. After each upgrade, the 6-in-1 zoom level reverts back to the 150% level (a default that was based on the old VGA 1024 x 768 resolution). This zoom level will cause newer monitors with higher resolutions to display 6-in-1 at a very small size. The solution is simple. From the 6-in-1 Main Menu, click on the Zoom button in the upper left, then choose a zoom level of 200 (or even 300) in the top center. Then choose “Close” in the top left to return to the Main Menu. Before you make your selection, you can also test for the right size by clicking on the “mountain” buttons in the lower left corner of your 6-in-1 screen. Note: If you are in a firm with multiple users with different screen resolutions, this change on any one computer will change the zoom level for all users. To change it just for yourself, from the 6-in-1 Main Menu, scroll to the far right (off screen), and change the zoom level at the the top of the screen. This change will affect only your screen, and will remain in effect only until you restart 6-in-1 (at which point you would need to set this zoom again).
8. If I have validated a return, may I still paper file it? Yes, the validation process is purely internal to 6-in-1, and does not communicate in any way with the IRS.