Turbo Tax did not notify me that my Tax Return was REJECTED last tax year!

[Raeka]

I finished my 2022 return last year and it showed it was accepted by TT. There was no tax owed because there was a loss in my S corp. plus I had filed an extension just in case last Jan. 2023. So I thought I was good. Then this year, I needed to make a small change to that return and was shocked when I opened it to receive a message my return was REJECTED and not printed or filed. It was all because there was an empty text box that needed something written in it because another text box next to it had a 0. When I ran the form again, there was no such error. I went through but I am not sure if I'm going to be penalized some how for this? I never received any email from TT that my return was rejected so I only now fixed this problem. I don't feel like its my fault.

My VA return had to be printed and mailed because TT kept throwing an error when I tried to file it. So at least that one went out but you are not supposed to mail those anymore.

So what happens now?

[DavidD66]

I don't know why your return was actually filed, but I will say that TurboTax does not "accept" tax returns.  Only the IRS and the states can do that.   You should make the change(s) to your return that need to be made and file your return.  If you do not owe any tax, you will not incur any penalties.  

[Critter-3]

TurboTax sends an email when the IRS accepts or rejects your return ... so if you failed to notice the email it is not the program's fault.  It is your responsibility to confirm the return was efiled successfully so if you did not see an  email after a couple of days  then simply log in and look.  

[Raeka]

" If you do not owe any tax, you will not incur any penalties. "

Well, it's good to know that. Thanks.

Now if it will just allow me to e-file the state portion!

[Critter-3]

ONLY 2023 returns can be efiled at this time.  All prior year returns must be paper filed.  

[Raeka]

Below is the email I first received. What surprises me is that TT allowed it to be transmitted if there was some glitch regarding a space in the text box. The next email I got went to another email folder so I didn't see it until this year - a year later. So my fault yes. But if there was a problem, it shouldn't have transmitted I don't think.

TRANSMISSION CONFIRMATION
2/28/23 6:19 PM

RETURNS SENT
2022 Federal S-Corporation
2022 Virginia S-Corporation

RETURNS TRANSMITTED
February 18, 2023, 3:15 PM PST

EST ACCEPTANCE DATE
February 20, 2023

----------------------------------------

February 18, 2023 8:19 PM

Your 2022 Federal S-Corporation filing has been rejected

This happens from time to time, but we're here to help.

icon

We'll walk you through updating and e-filing your return every step of the way, free of charge.

[Raeka]

@Critter-3  Are you speaking of State returns only? So the issues I was having with the 2022 State file should be resolved for the 2023 state e-filing?

I hope so because now the 2022 won't e-file because of issues with the form being improperly formatted and not allowing me to be able to manually make changes to the form needed to e-file, like changing negative numbers to 0 and such. Its also showing other errors like even the name of my business.

[RobertB4444]

The IRS does not allow a number of characters that are not letters and numbers to be transmitted through the efile system.  You may have to remove those characters from names and addresses.

@Raeka 

[Raeka]

@RobertB4444  So you are referring to my comment about the company name?

So I should change The Company, Inc. to The Company Inc   ?

The Federal return went through with The Company, Inc. but even if I change for the State, I still have the

problem with negative numbers on the form which state filing won't allow. I haven't yet tried to file the 2023 return. All of this is happening with the 2022 return.

Thanks

[DawnC]

You can't e-file a 2022 tax return in TurboTax now, the return has to be printed and mailed.   TurboTax will only e-file 2023 tax return right now (and some amendments).  

[Raeka]

@DawnC 

Good to know. I didn't know that because years past, I'm pretty sure I E-filed the state a couple of years. Most of time I printed and mailed to save the $20.

Well, I guess I'll find out soon enough  if this 2023 S corp return (which also shows a loss) will E- file the State return. I'm thinking I'll still have these issues with the negative numbers.

[Raeka]

@DavidD66wrote: " If you do not owe any tax, you will not incur any penalties. "

Well I received a penalty letter today in the mail in the amount of $2,200!

So that was not correct!!

[ThomasM125]

There is a penalty for late filing of an S corporation return even if no tax is due. I suggest you call the IRS at the number on the notice they sent you. If necessary, write a letter and explain what happened and include a copy of the notice you received showing you submitted it on time and was not aware it had been rejected. The IRS is often lenient when you have a good excuse. 

Also, if you have a good history of timely tax filings, you can apply for first time penalty forgiveness. This may apply if you didn't have any tax penalties during the previous three years.  Here is some information on that:  IRS 1st Time Penalty Abatement

You can also file form 843 Claim for Refund and Request for Abatement Form 843

[Raeka]

@ThomasM125 Thank you for that advice. I tried calling the phone # same day I got it (yesterday) and couldn't get through to anyone so sent an overnight letter explaining and documenting the issue. They will receive that today. I received a penalty notice in past couple of years but it was in error and they removed it. I had timely filed for an extension and they took forever processing it. I sent what I had on my computer to prove I filed it. Unfortunately I didn't have a post office receipt just a time stamp on my extension form and sent that with copy of computer system file. Since that happened, when I file for extensions I do it with tracking numbers as proof. I don't always need the extensions but do them just in case of an emergency. So I hope they don't count that one as a one time forgiveness. When they removed the penalty I don't recall if they said whether that they found my extension was timely filed. I will check on that.

I think Turbo Tax should modify their notices when you transmit your returns. Rather than showing animated balloons and Congratulations etc., they should put a CAUTIONARY statement out to put people on notice that they have only completed the first step and to make sure they check back for a notice that IRS ACCEPTED the return and to also check their Junk mail folder for future follow up notices. When I received their cheery Congrats etc., I thought all was done and I never saw the Rejection notice that went to junk mail apparently until a year later. I was floored when I learned this year that my 2022 business return was "not filed"!

I know now only because I have learned the hard way by being billed $2200 for that hard lesson. That would have been avoided had Turbo Tax sent a notice that alerted me to this issue rather than their stupid Congrats and balloons. I never had this happen before so I didn't know.

It seems like there is always something with Turbo Tax. I'm still waiting to see if I can file my personal return because of the k-1 issue not being ready and I see notices in my email where people are saying they still can't file because of that.

Also why can we not file our S Corp extension online?? When my CPA did my taxes years ago, he was always able to do that. And other tax prep. companies I believe do allow that. With Turbo Tax, you have to paper file it, document that you did it because that method is sooo slow and if you don't have proof you did it, you get hit with a penalty!

Venting a little here but I appreciate your advice and it has given me some hope that they will remove that penalty.