Drake Tax - Disaster Relief: Messages, Payments, Data Entry, and IRS Announcements

Article #: 13729

Last Updated: October 21, 2024

 

Tags: Drake Tax

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EF Messages and Payments

The following EF Messages are produced preventing e-file of the federal return when an invalid date is entered:

  • Individual (1040), Fiduciary (1041) and Tax Exempt (990) - EF Message 5299

  • Corporate (1120) - EF Messages 0008 and 0009

  • S corp (1120-S) - EF Messages 0036 and 0037

Generally, you are unable to choose a direct debit payment date that is after the due date for all filers. Payments can be arranged with the PMT screen, and you can enter a Requested Payment Date on the PMT screen, however, it must meet the following guidelines or you cannot e-file the federal return as it would be rejected (IRS reject FPYMT-072-01). The EF message that is produced varies depending on the return type being filed, however, the federal guidelines are all the same:

  • The Requested Payment Date cannot be prior to five days before the current date.

  • If the return is transmitted to the IRS on or before the due date in the current processing year, the Requested Payment Date cannot be later than the regular due date.

  • If the return is transmitted to the IRS after the due date, the Requested Payment Date cannot be later than the current date.

Important  The IRS rules apply even when a disaster declaration extends the payment due date for certain taxpayers. The IRS would reject the return with reject FPYMT-072-01 if the payment shows a later date. The only way to schedule a payment for a later date is online at https://www.irs.gov/payments (1040 filers) or https://www.eftps.gov/eftps/ (1120, 1120-S, 1041, 990 filers).

Some states may have different guidelines. The PMT screen has an override field to enter a Requested Payment Date for the state payment. You will need to review the Transaction Summary in View/Print mode to verify payment dates and check for EF messages for the state return to ensure that it can be arranged for the desired date and e-filed. You may need to make payment arrangements outside of Drake Tax if attempting to pay after the original due date for all filers.

Letter and Filing Instructions

You can use the COMM screen to adjust the return due dates that appear on the letter and filing instructions. This does not affect payment dates (see above for more details on payments).

Data Entry

A Disaster Designation entry field is available on the MISC screen. This field should be used to indicate if the return is subject to disaster special rules. Be sure to include the type of disaster and location of the disaster area. The disaster designation field is limited to 75 characters, including spaces.

Some states have additional data entry related to disasters. California has a Disaster Processing (Explanation) section on CA screen 540 where you can enter the appropriate disaster details. See the CA disaster list for a list of codes.

Note  Generally, when the taxpayer’s address of record is located in the disaster area, the IRS will recognize that they are eligible for disaster relief. While no entry is required, you may want to enter the applicable disaster designation and code to ensure that the IRS processes the return accordingly.

A taxpayer with an address outside the disaster area that qualifies for relief will need to contact the IRS at (866) 562-5227.

This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

If the taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment, or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

Announcements

See the IRS Tax Relief in Disaster Situations web page for announcements.

NOL

If you are not seeing a calculated NOL on the return, you should review the amounts flowing to Form 1045 pg 3 in View/Print mode.

Tip  If you do not have Form 1045, page 3, you can force print the form by using the PRNT screen.

The non-business deductions are entered as a positive amount on Form 1040, page 3, line 6. If the taxpayer is using the standard deduction, this amount would include their standard deduction plus the net qualified disaster loss (entered as a positive amount). Follow the form instructions to see if there is an NOL. Note that if the result is zero or more, there is no NOL.

In some cases, it may be more beneficial for the taxpayer to itemize deductions instead of taking the standard deduction. To force itemized deductions when standard is generally more beneficial, use the Force Itemized box on screen A. This will change what amount carries to line 6 of Form 1045 which may result in NOL being calculated.

Note  In order for a personal casualty loss to be allowed and carried to the 1045, a FEMA code must be entered, or the Qualified disaster loss check box must be marked on the 4684 screen.

For more information, see the Form 1045 Instructions and Form 4684 Instructions.

IRS Notice CP14

The IRS recently sent notices to taxpayers who had a balance due for tax year 2022. Taxpayers in a federally declared disaster area should review the insert that explains that they still have until the extended deadline to pay their amount due. Per the IRS alert:

"The IRS reassures California taxpayers that they continue to have an automatic extension until later this year to file and pay their taxes for those covered by disaster declarations in the state. The IRS Notice CP14, the current mailings being received by some taxpayers, are for taxpayers who have a balance due, and they are sent out as a legal requirement. While the notice received by taxpayers says they need to pay in 21 days, most California taxpayers have until later this year to pay under the disaster declaration. Taxpayers in federally declared disaster areas in other states who receive this notice also have additional time to pay; a full listing of disaster areas in various states is available. These letters include a special insert that notes the payment date listed in the letter does not apply to those covered by a disaster declaration, and the disaster dates remain in effect."