Items #7 and #6 were added on 03/07/2014
#7 – Form 8960 should not be filed with Estate and Trust returns if Form 8960 Line 21 is zero or less. See Form 8960 instructions dated 02/26/2014.
Form 1041 will reject with Business Rule F8960-012 if:
Line 18c is not equal to Line 18a minus Line 18b.
MeF does not allow a negative number on Line 18c; therefore, 1041 returns with a larger amount on Line 18b than Line 18a will receive the F8960-012 reject.
If Line 18c is zero or less, then Line 21 will also be zero or less.
To clear the F8960-012 reject when Line 18c results in an amount of zero or less, remove the Form 8960 from the submission.
#6 – Form 1041 filers reporting estimated tax payments allocated to beneficiaries on Line 24b must file by paper.
Neither the Modernized e-File (MeF) program nor the Legacy e-file program allows an entry on Form 1041 Line 24b.
Items #5 through #1 were added 03/05/2014
#5. Schedule D (Form 1041) XML and Grantor Type Trusts
Trusts that are entirely Grantor Type Trusts should not have Schedule D (Form 1041) XML included in the electronic submission. MeF will set Business Rule F1041-017 if Form 1041 Line 4 is blank and Schedule D (Form 1041) is included as XML with an amount on Line 19.
The Schedule D (Form 1041) Instructions, page 1, indicate that if Form 1041 is filed through MeF, then the Schedule D (Form 1041) must be filed through MeF. This guidance is about not mailing documents to IRS when filing through MeF (the Legacy e-file system allows documents to be transmitted by mail). It does not mean that the Schedule D (Form 1041) XML should be included on trusts that are entirely Grantor Type Trusts.
To clear the F1041-017 business rule reject, remove the Schedule D (Form 1041) XML from the MeF submission. The Schedule D (Form 1041) information should be included in the Grantor Type Trust Income and Deduction Statement. Including additional documentation as a PDF is allowed.
#4. Business Rule R0000-900-01
MeF checks the IRS database to ensure the EIN provided is for the correct form type. Business Rule R0000-900-01 is set when the EIN on the return is not in the IRS Database for a Form 1041.
To clear the R0000-900-01 Business Rule reject:
- verify the EIN in the electronic return is correct
- allow 2 weeks from the time the EIN was assigned to you before you file the 1041 return
- if the EIN is correct and it has been more than 2 weeks since the EIN was assigned, contact the IRS Business and Specialty Tax Line at 1-800-829-4933
#3. PDF attachments and the Binary Attachment XML file
When including a Binary Attachment in a MeF return, the name of the PDF must match the Attachment Location in the XML file that references the PDF (the BinaryAttachment file). Otherwise, the return will reject.
For example, Business Rules R0000-057, R0000-058 and R0000-062 will reject the return when:
- the PDF is named “ExampleTrust.PDF” and
- the value of the AttachmentLocation element in the BinaryAttachment XML is “ExamplesTrust.PDF”
To clear the business rule rejects in the example above, either:
- Change the name of the PDF to “ExamplesTrust.PDF” (add an “s” after Example), or
- Change the data in the Attachment Location element of the Binary Attachment XML to “ExampleTrust.PDF” (remove the “s” after Example)
#2. Business Rule 8949-019
Only one Form 8949 can be associated with a Schedule D (Form 1041) electronically. A paper return may have multiple Forms 8949 for the different checkboxes: Short Term Transactions (Part I Checkboxes A, B or C) or Long Term Transactions (Part II Checkboxes D, E or F). However, the MeF Form 8949 has repeating groups that allow for multiple checkboxes on one Form 8949.
A MeF return will reject under Business Rule F8949-019 if more than one Form 8949 is attached to Schedule D (Form 1041).
To clear this reject, include all transactions on one Form 8949 and attach that Form 8949 to Schedule D (Form 1041). Remove any other Forms 8949 attached to Schedule D (Form 1041)
#1. Schedule D (Form 1041) data not matching with Form 8949 when multiple Forms 8949 are attached.
MeF will validate that the amounts from Form 8949 Line 2h are correctly transferred over to Schedule D (Form 1041). Since only one Form 8949 should be attached to Schedule D (Form 1041), MeF will only validate data from one Form 8949. If multiple Forms 8949 are erroneously used in the MeF submission, you will see the following rejects for mismatched data: SD-F1041-011, SD-F1041-010, SD-F1041-009, SD-F1041-008 and SD-F1041-007.
To clear the above rejects, include all transactions on one Form 8949 and attach that one Form 8949 to Schedule D (Form 1041). Remove any other Forms 8949 attached to Schedule D (Form 1041).