Fiscal Year Follies

[TaxmannEA]

Since 1998 our S-corp has been filing with a fiscal year ending 9\30. We just received a letter from IRS Entity Unpostables informing us that our last return can't be processed as they believe that we should be using a calendar year as they have no record of a Form 1128 being filed. We have never received any notices on this before now. When our current ownership took over, we simply continued the same year as had been used in the previous years. I got the feeling from talking to a representative in that office that they may not have been processing any of the returns that have been filed in the past. (Couldn't lock him down on that point.) This could be a major problem if it is true. I'm going to try to get us grandfathered in, but I'm not optimistic about the chances. It would have been nice to have received notice back in 1998 or 2009 when I started doing the returns, Anyone seen anything like this or have any suggestions on how to proceed? I have no files on the S-corp prior to 2009 as they are with the previous owners.

[jklcpa]

I had a reject of form 7004 last Aug when I filed it for a 5/31 C corp that had used that fiscal year since its incorporation in 1946!  When I called in to the practitioner priority line, the rep told me that the IRS had updated one of its systems and that most of the companies having this issue were older companies that were missing an entity code in the IRS' database and making the system want to default to calendar year filing.  I paper-filed the extension, and I do not recall how the client and I decided it had been resolved. The rep took down all of the information that she passed on to the IRS entity division for correction and said that it might take 30 days or more to correct.  By the time we filed the return in mid-Nov, the e-filed form 1120 was accepted without any troubles at all.

Here's that post with more details and a couple of other members that had similar troubles:
 

 

[Catherine]

That's what must have happened to MY client!  C-corp in existence since before I was born has *always* filed a fiscal year return.  We got letters demanding calendar year tax returns because they "had never been filed" for like the last three years (all the letters within a week of each other), plus problems with application of estimated tax payments for the corporation.  Took a LONG time on the phone to get it straight, and the IRS agent was never really able to articulate why it got messed up in the first place.  We'll see for sure in October, when I file the extension request for 2016 fye 9/30/17.

Thanks, Judy!

[TaxmannEA]

You all have made me feel a little better about this. I'm hoping that it's just a computer glitch causing the problem. I really don't need a 6-month project at this time. Thanks.

[Catherine]

2 hours ago, TaxmannEA said:

You all have made me feel a little better about this. I'm hoping that it's just a computer glitch causing the problem. I really don't need a 6-month project at this time. Thanks.

I did find that I had to CALL to resolve this one; repeated letters did absolutely nothing.  Once I had someone on the phone, we resolved it (I hope!!!).  It did take about an hour on the phone, but quite a bit of that was holding while the agent went to look up something or try to fix something.  Think I played solitaire for a while, while waiting.

[TaxmannEA]

Thank God for sollitaire  during wait times !