1120 E-file: Rules for E-file
Mandatory E-file
Corporations with $10 million or more in total assets and that file 250 or more returns a year are required to e-file Form 1120, 1120S, and 1120-F.
Business Name Control
Name Control matching is a process in MeF that checks the Employer Identification Number (EIN) and Name Control of the corporation, partnership, or tax-exempt organization filer with the IRS’ National Account Profile (NAP) database. Name Control mismatch is one of the most common causes for rejects of returns in MeF. It is very important to ensure that the submitted return has the correct Name Control.
The name control is generally derived from the first four characters of the business name, but other rules exist for names that contain special characters or other non-standard formatting.
If you are unable to determine your business name control with certainty, you can contact the Telephone Assistance for Businesses (1-800-829-4933) and request assistance with verification of your organization's Name Control. Click the link below for detailed information on Name Control:
Corporations:
Address Changes
The IRS accepts domestic and foreign address changes as shown by the taxpayer in the entity portion of the parent return. If the Name or Address Change check box is selected, the entered address becomes the taxpayer’s new official address of record. In the case of a consolidated return, the name change is effective only for the top consolidated entity.
Foreign Addresses
Returns and extensions with a foreign address in the entity portion of the return can be e-filed. MeF requires foreign countries to be identified with the two-character Foreign Country Code recognized by the US Department of State. See IRS Publication 4163 (Exhibit 2) for a list of valid country codes.
The IRS instructions for some forms specify a foreign address must be entered with the country name using the full country name rather than an abbreviation; however, per IRS Publication 4163, a taxpayer e-filing should continue to use the country code for the country name. The form instructions might be updated in the future to reflect this process for e-file.
Signing the E-file
As with any income tax return filed on paper, an e-file income tax return must be signed by an authorized tax return signer, the ERO (if applicable) and the paid preparer (if applicable). An authorized person must sign and date the Declaration of Taxpayer on the applicable Form 8453 or Form 8879.
The MeF system requires taxpayers and providers to use one of the alternative signature options for signing e-file returns. The two available options are the Practitioner PIN method and the scanned Form 8453. MeF validates that a signature exists for each return. If the e-file return does not contain the required signatures, it will be rejected.
Practitioner PIN Option
To use the Practitioner PIN option, the taxpayer must use an ERO. Although the Practitioner PIN option is totally electronic, the ERO must still retain the signed Form 8879. With this option, the taxpayer and ERO are required to sign the return with self-selecting PINs as described below. The taxpayer’s authorized person decides whether to enter a personal PIN or to authorize the ERO to enter the PIN. The ERO prints Form 8879 and has the taxpayer’s authorized person choose a five-digit PIN.
The following information must be included in the e-file if the Practitioner PIN option is used:
- Practitioner PIN – 11 digits, with the first six digits the same as the Electronic Filing Number (EFIN)
- Taxpayer PIN – Five numeric characters (cannot contain all zeros)
- Indication of who entered the PIN – The ERO or the taxpayer’s authorized person
- Title – The title of an authorized person
- Date – The date return is signed by an authorized person
The ERO must retain Form 8879 for three years from the due date or the IRS received date, whichever is later. If the return was prepared for a fee, the ERO must ensure that the paid preparer also signs the return. If the paid preparer is also the ERO, the preparer can check the Also the Paid Preparer box and does not complete the Paid Preparer’s Use Only section. Paid preparers do not have to disclose their SSNs or EINs on the copies they provide to taxpayers. The ERO should provide a copy of the Form 8879 to the taxpayer, but it should not be mailed to the IRS.
Scanned Form 8453 Option
The scanned Form 8453 must be used if the taxpayer decides not to use the Practitioner PIN option. If this option is selected, the authorized tax return signer and the ERO, if applicable, must sign the paper Form 8453. The signed Form 8453 must then be scanned into a PDF document and inserted into the e-file return as a PDF attachment. The scanned Form 8453 attached must be named 8453 Signature Document.
If the e-file data on a corporate income tax return is changed after the taxpayers signs the Declaration of Taxpayer, taxpayers must sign a new declaration if the Total Income amount differs by more than $150 or the Taxable Income amount differs by more than $100.
Refunds and Payments
Refunds
A refund can be applied to next year’s estimated tax, received as a direct deposit or paper check, or split so that a portion is applied to next year’s estimated tax and the rest received as direct deposit or paper check. Taxpayers who choose direct deposit must provide account numbers and routing numbers to providers for qualified accounts. Qualified accounts must be held by financial institutions within the United States.
Payment Options
Taxpayers have several choices when paying any taxes owed on their returns.
Electronic Funds Withdrawal (EFW) The MeF Program allows a taxpayer to pay the balance due on
For Form 7004, the payment must equal the amount shown as the balance due.
Up to four quarterly estimated tax payments can be submitted with Form(s) 1120/1120-F/1120S.
The bank account information must be specified from which the payment should be withdrawn and the date on which the withdrawal will be made. This allows the taxpayer to pay the balance due either as soon as the tax return or form is processed, or schedule the payment for withdrawal on a future date that is not later than the return's due date. For returns transmitted after the due date, the payment date must be the same as the date the return is transmitted. Domestic corporations must deposit all income tax payments by the due date of the return using the Electronic Federal Tax Payment System (EFTPS).
For an e-filed Form 7004, an Electronic Funds Withdrawal (EFW) can be used. If using an ERO, a Practitioner PIN is required. If not using an ERO, then an ACH Debit Agreement Indicator must be included in the XML file.
If the EFW is authorized, an IRS Payment record must be attached to the e-file return/extension and an EFW consent statement must be signed.
For consolidated returns, the payment record can only be attached at the top-level return. Any payment attached otherwise will not be processed.
The following information is required in the payment record:
- Routing Transit Number
- Bank Account Number
- Account Type
- Payment Amount
- Requested Payment Date
- Taxpayer's Daytime Phone Number
It is important to note that the 10-day transmission perfection period does not apply to payments. If a submission was rejected, a return can be corrected within 10 days, and be given the received date of the original rejected return. When a return is rejected on the due date, it is recommended that the EFW payment not be transmitted with the return. The balance due can be paid through Electronic Federal Tax Payment System (EFTPS) or by check or money order.
A foreign corporation without an office or place of business in the United States and which does not bank in the United States, cannot pay using EFW or EFTPS. These corporations must pay using checks or money orders.
Electronic Federal Tax Payment System (EFTPS) Balances due and estimated taxes can be paid year around using the Electronic Federal Tax Payment System (EFTPS).
Domestic corporations must deposit all income tax payments using the EFTPS. If the corporation expects to have a net operating loss carryback, the corporation can reduce the amount to be deposited to the extent of the overpayment resulting from the carryback, provided all other prior year tax liabilities have been fully paid and Form 1138, Extension of Time for Payment of Taxes by a Corporation Expecting a Net Operating Loss Carryback, is filed with Form 7004.
Foreign corporations who maintain an office or place of business in the United States must pay their tax as described above for domestic corporations.
If a return is rejected, the time to make a timely payment has lapsed and a payment must still be made, the IRS strongly encourages making the payment using a Federal Tax Deposit through the Electronic Federal Tax Payment System (EFTPS). All business taxpayers are authorized to use EFTPS.
Payments by Check Balance due payments can be made by mailing a check. Payments do not have to be mailed at the same time an e-file return is transmitted. For example, the return can be transmitted in January and the taxpayer can mail the payment and voucher at any time on or before the return due date.
Record Keeping and Documentation Requirements
Providers must retain the information listed below until the end of the calendar year in which the return was filed or nine months after a fiscal year return was filed. Providers must make the records available to the IRS upon request:
- A copy of signed IRS E-file Consent to Disclosure Forms for taxpayers who signed using a scanned signature Form (Form 8453).
- A complete copy of the electronic portion of the return that can be readily and accurately converted into an e-file transmission that the IRS can process.
- The acknowledgment file for IRS accepted returns.
- The acknowledgment for all extensions.
Forms 8879-C, 8879-I, and 8879-S must be retained for three years from the due date of the return or IRS received date, whichever is later.
E-filers who originate their own returns must retain all information that a taxpayer would retain for the appropriate time period.
Providers can electronically image and store all paper records they are required to retain for IRS e-file. This includes signed signature documents as well as any supporting documents not included in the electronic record. The storage system must satisfy the requirements of Revenue Procedure 97-22, Retention of Books and Records.
E-file/1120_ef_rules.htm/TY2020
Last Modified: 03/20/2020
Last System Build: 09/13/2021
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