A common error that occurs during the press of business in tax season is the failure to transmit a completed return or not realizing that a return rejected. With individual returns, this omission can delay a refund or cause a return with a balance due to not be processed expeditiously. This delay can be embarrassing to a preparer but typically will get identified rather quickly when the individual taxpayer calls a preparer inquiring about the status of the return. However, for Partnerships and S Corporations, this omission may not be detected as quickly by the Partnership or S Corporation if it is not caught by the preparer.
This lack of detection occurs because the items on a 1065 or 1120S are passed through to the partners/shareholders on a Schedule K-1. Thereafter, the partner/shareholder reports the items on the Schedule K-1 to the IRS on their individual tax return. If the underlying 1065 or 1120S return was never filed, it only gets caught by the partner/shareholder if the IRS inquires about the source of their Schedule K-1, or otherwise sends an inquiry to the entity about the lack of a return. Yet, any such inquiry from the IRS will typically not occur for months, if not years, afterwards. In the meantime, significant late filing penalties can be incurred.
Currently, the late filing penalty for Form 1065 or 1120S is $195 per month (or part of a month) up to a maximum of twelve months for each partner or shareholder on the return.
With the upcoming deadline of March 15, 2018, for Partnership (Form 1065) and S Corporation (Form 1120S) returns, this is a great time to run a business returns not accepted report, a business state returns not accepted report, and a business electronic extensions not accepted report before the filing deadline. Each of these reports can identify any returns or extensions of which you have not yet processed an acceptance acknowledgement from the IRS (or state). In essence, it provides a user with an opportunity to catch a potential issue before the filing deadline and/or otherwise alerts a user to the need to file an extension for a business entity.
To run and print these reports, from the main menu of TaxSlayer Pro select:
4 – Business > 9 – Electronic Filing Menu > 3 – Print Reports > 5 – Returns Not Accepted
At the Returns Not Accepted Menu you will have the following three report options:
1 – Returns Not Accepted Report
3 – State Returns Not Accepted Report
5 – Electronic Extensions Not Accepted Report
Also, before submitting any business returns or extensions, please make sure you have downloaded and installed the latest Federal and State Business Updates.