E-Filing Tips-New for Tax Year 2010

[sua.thao]

I attended the 2009 IRS Tax Forums this year and I felt that this class was pretty interesting. The name of the subject was “The E’s Have It”. Hopefully, this will help other professionals.

IRS Improvements: MeF
The Modernized e-File (MeF) system is a replacement of the current IRS tax return filing technology with a modernized, Internet-based electronic filing platform. This transaction based system allows tax return originators to transmit returns electronically to the IRS in real-time, improving turnaround times. This is a major improvement over the current 1040 e-file system which processed returns in several batches per day, rather than in real time.
IRS plans to rollout 1040 MeF using a three-phase strategy over three years:
-Starting Tax Year 2010 through 2012.
Once MeF is fully implemented, the current 1040 e-file program will be phased out.

*The first phase of 1040 MeF occurs in January 2010 and will include Form 1040, Form 4868 and 21 1040-related forms and schedules that can be attached to the 1040. The complete list is found on the Forms for 1040 MeF Program webpage.
*The second phase of 1040 MeF occurs in January 2011 and will include the same forms as the first release, additional hardware and code optimization.
*The third phase of 1040 MeF occurs in January 2012 and will include the remaining forms filed under the current individual e-file program.

Advantages for Practitioners
• Faster acknowledgements (5 minutes):
Their goal is to provide a response time of about five minutes to the transmitter in non-peak periods. MeF returns are processed as they are received instead of being delayed in a batch system, as they are under the legacy program.

• Year Round Filing (E-file after Oct.15th):
Preparers can electronically file returns year round, filing date doesn’t end on October 15th.

• Specific explanation of errors:
MeF error codes use simple wording to clarify each error that triggers a rejection.

• Improved processing:
Form 1040 and any attachments will be submitted electronically to MeF in XML (Extensible Markup Language) format. This will allow for more effective use of data. MeF will also allow attachments in PDF (Portable Document Format) to accommodate late-legislation and form changes.

• Prior year returns:
Practitioners will need to talk with their transmitter to determine which prior year returns will be accepted by MeF.
For example:
In January 2010, 1040 MeF will accept tax years 2009.
In January 2011, 1040 MeF will accept tax years 2010 and 2009.
In January 2012, 1040 MeF will accept tax years 2011, 2010, and 2009.

Note: MeF does not accept prior year extensions (Form 4868)
Practitioners should discuss MeF with software development companies, especially when it comes to error codes. They should find out specifically what the provider is offering. Practitioners should learn whether or not their provider will support MeF, how the provider will handle acknowledgements and error codes, and if they will support PDF files.

For more information:

MeF User Guides and Publications page:
http://www.irs.gov/efile/article/0,,id=171946,00.html

Main 1040 MeF “Coming Soon to the MeF Program” page:
http://www.irs.gov/efile/article/0,,id=204750,00.html

[manuel11]

That was a great blog, i hope to hear more great posts in the near future. E filing is getting better and better each year.

[sua.thao]

Thank you Manuel11. I appreciate that you took the time to read my blog. If I hear anything new about E-filing, I will definitely post something on here. I'm just so excited for the coming tax years. I can't believe that they're going to allow prior year returns to be e-filed.