Failure to Contact e-Help Desk to Gain Authorization to File Paper Amended Return Not Fatal to Claim When System Would No Longer Accept Year in Question

In Chief Counsel Advice 201545017 the IRS looked at whether an amended return was timely filed where an attempt was made to file it electronically prior to the expiration of the statute, the return was rejected and then a paper return was filed without contacting the e-Help desk to make a waiver request to file on paper. 

The rules regarding electronic filing rejections and resubmissions for entity amended returns are described as follows in the advice:

Notice 2010-13provides rules regarding the timely filing of rejected e-filed returns. Notice 2010-13 provides that if the return required to be filed electronically is transmitted on or before the due date (including extensions) and is rejected, but the electronic return originator or the filer comply with certain requirements for timely submission of the return, the return will be considered timely filed and any elections attached to the return will be considered valid.

Notice 2010-13 provides that for returns filed on or after January 1, 2010, the Service will allow the filer 10 calendar days from the date of first transmission to perfect the return for electronic resubmission. If the electronic return cannot be accepted for processing electronically, the filer must file a paper return with the Service Center where it would normally be filed. In order for the paper return to be considered timely, it must be postmarked by the U.S. Postal Service,  or delivered to the Service by the later of the due date of the return (including extensions), or 10 calendar days after the date the Service last gives notification to the filer that the return has been rejected, as long as:

  1. The first transmission was made on or before the due date of the return (including extensions) and

  2. The last transmission was made within 10 calendar days of the first transmission.

Notice 2010-13 provides that the paper return must be completed consistent with the instructions to file the return. Corporations, partnerships, and tax-exempt organizations that are required to e-file must contact the e-Help Desk for assistance in correcting rejected returns before filing a paper return. If the taxpayer cannot correct the rejected return errors, they must receive authorization from the e-Help Desk prior to filing a paper return.

The italicized portion outlines the key issue here.  A corporate amended return received an e-file rejection when filed as the statute was expiring.  At this point the IRS would no longer accept the electronically filed return, so the taxpayer concluded there was no point in contacting the e-Help Desk to figure out what went wrong since it could not be corrected at this time.

Thus the taxpayer, within the 10 day period, filed a paper return without receiving authorization from the e-Help Desk.  Now the question arose that since no permission was received was the amended return validly and timely filed.

The taxpayer in this situation was a corporation that had an electronic filing requirement pursuant to Reg. §301.6011-5 and, per the same regulation, must also file any amended return electronically.

But, as the ruling notes,

The Service’s Modernized e-file Platform, however, will only accept returns for the most recent tax year and two prior tax years.  For that reason, in cases where the Me-F Platform will no longer accept an amended Form 1120, no waiver is needed to file the amended return on paper.

The advice continues:

It is not clear whether the taxpayer or its Authorized e-file Provider contacted the e-Help desk.  Neither the taxpayer nor the Service has a record of obtaining an e-Case number for the paper filed return.  Although in general, taxpayers should contact the e-Help desk to obtain help in perfecting their e-Filed return, to obtain an e-Case number, and receive permission to paper file their returns, such an attempt would be fruitless in this case when the Modernized e-File Platform could not accept the amended return.  Moreover, guidance on the IRS website advises that no waiver request is required for an amended Form 1120 where the Me-F Platform no longer accepts amended return.

Although contacting the e-Help desk would have ensured “that the paper return is identified as a rejected electronic return and the taxpayer is given credit for the date of the first rejection within the 10-day transmission perfection period,”  in our view, the failure to do so in this case should not deprive the taxpayer of the administrative grace afforded in Notice 2010-13 and Publication 4163 of the additional 10-day period to timely file a return when a taxpayer is unable to e-file a return due to technological barriers. No waiver request was required, the taxpayer substantially complied with the requirements of Notice 2010-13 and Publication 4163, and the failure by the taxpayer to electronically file their amended 2010 return was caused by the Service’s failure to accept an amended return during a period which would have been timely for paper filed returns.   

Accordingly, it is our view that under the unique facts of this case, the taxpayer timely filed its 2010 amended federal income tax return because the amended return would have been timely filed at the time the electronic amended return was transmitted to the Service and rejected, and the paper amended return was postmarked within ten days of the date of the Service’s e-file rejection notice.