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IRS e-file Updates for Tax Year 2006
ITINS and IRS e-file Returns
Tax returns filed under an Individual Taxpayer Identification Number reporting wages paid are required to show the Social Security Number under which the wages were earned. This creates an identification number (ITIN/SSN) mismatch. In the past, these returns could only be filed on paper. In the past, returns with this mismatch could only be filed on paper. Due to programming changes the IRS' e-file system can now accept these returns.
The taxpayer's correct ITIN should be used as the identifying number at the top of Form 1040. When inputting wage data, the SSN should be entered exactly as shown on the Form W-2 issued by the employer. It is now possible to e-file a return with an ITIN/SSN mismatch.
This programming change will help ensure that the correct tax information is being captured in the most efficient manner possible. It will reduce the burden on taxpayers filing this type of return, as well as the necessity for the actual owner of the SSN to establish that the income earned was not earned by the owner.
Federal/State Imperfect Returns
In Filing Season 2007 (Tax Year 2006), the IRS will accept Federal/State Imperfect returns when indicated by the Electronic Return Originator (ERO) on the second or subsequent filing when 1) the Child's SSN and Name Control on Schedule EIC does not match Master File, or 2) when the Dependent's SSN and Name Control on Form 1040/A does not match Master File. The IRS will send the Imperfect Return Indicator "E" = Exceptional Processing in the State
Generic Record, SEQ 0015. States must enter "E" in State ACK Key Record Field 0050. The Federal Return will be accepted; however, the Dependent's exemption or Earned Income Credit (EIC) may be disallowed under this condition. This may reduce and delay the refund.
IRS e-file Signature Authorizations
Complete Form 8879, IRS e-file Signature Authorization, for all Practitioner PIN method returns or whenever the ERO enters or generates the taxpayer PIN. Use Form 8878 with Forms 4868 (only when there is an electronic funds withdrawal), and Form 2350 extension of time to file applications. Forms 8879 and 8878 must be completed and signed by the taxpayer before an income tax return or extension of time to file application is either transmitted or released for transmission to the IRS. Retain authorization forms for your records for three years from the due date of the return or the IRS received date, whichever is later. DO NOT SEND them to the IRS unless requested to do so. See Rev. Proc 97-22 for electronic record-keeping guidance.
New Forms and Schedules for IRS e-file
- Form 1040EZ-T – Request for Refund of Federal Telephone Excise Tax
- Form 5695 – Residential Energy Credits
- Form 8888 – Direct Deposit of Refund
- Form 8900 – Qualified Railroad Track Maintenance Credit
- Form 8906 – Distilled Spirits Credit
- Form 8907 – Nonconventional Source Fuel Credit
- Form 8908 – Energy Efficient Home Credit
- Form 8910 – Alternative Motor Vehicle Credit
- Form 8911 – Alternative Fuel Vehicle Refueling Property Credit
- Form 8912 – Clean Renewable Energy Bond Credit
- Form 8913 – Credit for Federal Telephone Excise Tax Paid