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1099 Software: How can I efile corrections?

November 24th, 2016 No comments

A replacement arises when you electronically submit a file to the IRS and the file comes back as “Bad”.  You put together a new file to replace the bad file that was originally uploaded.

A correction arises when you electronically submit something to the IRS and the file comes back as “Good”. Then later (maybe days, maybe weeks, maybe months) after you have efiled you realize that you transmitted payee data that was erroneous.   You need to paper file or electronically file information returns that correct just the records that were erroneous.

A few comments before we lay out the steps to efiling corrections.

  1. You can only electronically correct payee or recipient data.  The IRS says in Publication 1220 “[i]f an error is discovered in reporting the payer (not recipient) name and/or TIN, the payer should write a letter to the IRS” which explains the payer error in detail.  They also provide a mailing address to where you can mail these types of corrections.
  2. If the file status is “Good, Not Released”, then you have a 10-day window where you can call the IRS and ask them to delete the file before it is released.  You call the IRS at 866-455-7438 x3 and provide your TCC number and the file name and while you are on the phone the IRS agent can delete that file.  You can then Check File Status to verify that the file is deleted.  If the file is deleted in time, you can then efile a new original and this time make sure there are no errors in the file.
  3. If you transmitted a file of 100 records and one (1) of the records has erroneous data, then you put together a correction for just this one record and not resubmit the entire file.
  4. The payer/filer must furnish corrected information returns to the recipient.  You don’t have to re-mail to the recipient but you can if you want to.  You can print out and hand a corrected Copy B to the recipient, fax or email a corrected Copy B to the recipient or just let the recipient know what the change is.

 

If the file status is “Good, Not Released”, then you have a 10-day time-frame where you can call the IRS and ask them to delete the file before it is released.  The IRS phone number is 1-866-455-7438 x3 and you provide your TCC number and the file name and the IRS can pinpoint the file and delete it.  If the file status is “Good, Released”, then you need to efile a correction.

There are 2 types of corrections:  1-step and 2-step correction.

A 1-step correction generally arises when you are correcting a money amount or if the information return should have not been efiled (in which case you are voiding the transaction).  Put together:

  • A file with just the records you are trying to correct
  • Put a check in the corrected box
  • Use the correct money amount or use 0 if you are trying to void a transaction).
  • Transmit as a correction.

The software will automatically update the 1096 (or transmittal summary).

A 2-step correction typically arises when you are correcting a name/TIN of the recipient.  You need to put together 2-files of just the records that you are trying to correct.  The first file has the original incorrect payee name and/or TIN that you transmitted, the money amounts set to 0 and the corrected box checked.  This first step essentially voids the original transaction.  The second file has the correct payee name/TIN, the correct money amounts, and the corrected box checked.  You then upload both the 1st and 2nd step as corrections.

We can efile corrections on your behalf.  We do charge for that service. Just email us at info@1099fire.com or call our sales office at (480) 460-9311 and they can get you started.

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