Preparers Can Soon Override Rejects

For tax year 2005, any return that receives reject code 501 or 504 will not be rejected again if the tax preparer corrects the erroneous information or requests Exception Processing. Returns requesting Exception Processing will be issued an “E” acceptance code. However, if the SSN/Name Control information is proved incorrect, the refund will be delayed and may be adjusted based on the disqualification of an exemption or credit. Exception Processing may take four to six weeks.

Explanation of Rejects:

ERC 501 – The qualifying SSN on Schedule EIC and the corresponding year of birth must match what the Social Security Administration has on file. In addition, the qualifying SSN on Schedule EIC and the corresponding dependant’s name must match what the IRS has on file.

ERC 504 – A dependent’s SSN and name on Form 1040/1040A must match what the IRS has on file.

Note: The rules on the treatment of these rejection codes are currently under development. Look for future issues of Taxing Subjects for more information on these changes.

From September 2005