Modernized e-File to Modify Return Processing
In our continuing efforts to strengthen protections against identity theft refund fraud, the IRS will be making some modifications to the way tax returns are processed through Modernized e-File (MeF). MeF has always used the “Reject and Stop” business rule severity to limit what information is returned in a rejected Acknowledgement. Starting January 1, 2016, new business logic will be used to further limit the information returned in a reject Acknowledgement in some situations. This applies only to electronically filed (e-file) 1040 family tax returns.
These measures should not alter your current business models. Tax returns will continue to be rejected when errors are identified and they will need to be corrected before the tax return can be re-submitted. On resubmission the tax return may be rejected for additional errors which will need to be corrected. This correction and re-submission process is no different from what transmitters currently experience and will continue until the tax return is accepted. It is anticipated that only a small percentage of tax returns will need to be re-submitted, possibly more than once, in order to resolve all of the errors associated with the tax return. We ask Software Developers/Transmitters to monitor rejected returns and report suspicious activity through the Industry Leads Program.
Software Developers can improve the taxpayer experience and minimize the correction process by taking the following actions:
- Require the manual key entry of the TIN as it appears on Form W-2 reporting wages for taxpayers with ITINs.
- Promptly correct any software error causing tax returns to reject and distribute the software correction.
- Ensure that the software package creates accurate tax returns through the use of consistency checks and prompts to confirm data inputs to prevent IRS business rules from setting.
- Adhere to specifications provided by the IRS in publications.
Please refer to Publication 1345 Handbook for Authorized IRS e-file Providers of Individual Income Tax Returns (PDF) and Publication 3112 IRS E-File Application and Participation (PDF) for additional actions software developers can take to improve the taxpayer experience and minimize the correction process.
Transmitters can improve the taxpayer experience and minimize the correction process by taking the following actions:
- Use only other Authorized IRS e-file Providers to perform IRS e-file activities, including but not limited to origination and transmission of electronic submission. A Provider can print a summary of its e-file application via e-Services at IRS.gov and provide it to other Providers as needed.
- Cooperate with the IRS’ efforts to monitor Providers and investigate electronic filing fraud and abuse.
Please refer to Publication 3112 IRS E-File Application and Participation (PDF) for additional actions transmitters can take to improve the taxpayer experience and minimize the correction process.
Return to the Coming Soon to the Modernized e-File (MeF) Program page