Software Vendor Electronic Filing Guide:

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1 Software Vendor Electronic Filing Guide: The Software Approval Process For All Tax Types Tax Year 2014/Processing Year 2015 Revised 7/8/14

2 Table of Contents Introduction 3 Forms and Schedules Supported 3-5 Contact Information 5 Registration 6 Vendor s Responsibilities 6 Testing and Certification 7 Acknowledgment: Federal/State/State Only 8 General Information 8-9 Schemas and Transmission Specifications 10 Changes to e-filed Returns 11 2

3 Section 1: Introduction and Forms Thank you for participating in Minnesota s e-file program. E-filing allows Minnesota s taxpayers to file many of their returns electronically with just a few clicks of the keyboard. We encourage you to promote direct deposit to your users. Electronic filing along with direct deposit, is a fast, safe way for them to get their refunds, and saves the state millions of dollars in processing fees. This guide has been prepared for tax preparation software vendors that have been approved by The Minnesota Department of Revenue. It describes: How to register to participate in the Minnesota e-file program; How to meet product federal and state legal requirements; How to request a review for testing certification; How to format and package data for electronic transmission; and How to submit software test returns to the department. We define a software product by: the product name and its customer focus, the return it s used for, and whether it s web- or computer-based. We publish a list on our website of all software vendors who have been certified to transmit returns in Minnesota. This list is available to both taxpayers and tax preparers. Tax returns and schedules supported electronically in Minnesota Individual Income Tax M1 Individual Income Tax Return M15 Underpayment of Estimated Income Tax M1B Business and Investment Credits M1C Other Nonrefundable Credits M1CD Child and Dependent Care Credit M1CR Credit for Income Tax Paid to Another State M1ED K-12 Education Credit M1LS Tax on Lump-Sum Distribution M1LTI Long-Term Care Insurance Credit M1M Income Additions and Subtractions M1MA Marriage Credit M1MT Alternative Minimum Tax M1MTC Alternative Minimum Tax Credit M1NC Federal Adjustments M1NR Nonresidents/Part-Year M1R Age 65 or Older/Disabled Subtraction M1READ Reading Credit NEW for 2014 M1SA Minnesota Itemized Deductions M1W Minnesota Income Tax Withheld M1WFC Minnesota Working Family Credit 3

4 Estate and Fiduciary M2 Income tax return for Estate and Trust M2MT Alternative Minimum tax M2SB Income Tax Computation for S Portion of ESBT BANK Bank authorization for Direct Debit EST Additional Charge for Underpayment of Estimated Tax ETP Employer Transit Pass Credit JOBZ Job Opportunity Building Zone Exemptions, Exclusions, Subtractions and Credit KPI Partner s Share of Income, Credits and Modifications KF Beneficiary s Share of Minnesota Taxable Income KS Shareholder s Share of Income, Credits, and Modifications C Corporation M4 Corporation Franchise Tax Return M4A Corporation Franchise Tax Return (Apportionment/Fee Calculation) M4I Corporation Franchise Tax Return (Income Calculation) M4T Corporation Franchise Tax Return (Tax Calculation) M15C Additional charge for Underpayment of Estimated Tax AFF Affiliations for Combined Returns AMTT Alternative Minimum Tax (Calculation of Tax) AMTI Alternative Minimum Tax (Calculation of Income) BANK Bank Authorization of Direct Debit DIV Deduction for Dividends Received ETP Employee Transit Pass Credit FSC Foreign Sales Corporation JOBZ Job Opportunity Building Zone (JOBZ) Tax Benefits NOL Net Operating Loss Deduction REC Reconciliation RD Credit for Increasing Research Activities S Corporation M8 S Corporation Return M8A S Corporation Return (Apportionment and Minimum Fee) AFF Affiliations for Combined Returns AWC Alternative Withholding Certificate BANK Bank Authorization of Direct Debit EST Additional Charge for Underpayment of Estimated Tax ETP Employee Transit Pass Credit JOBZ Job Opportunity Building Zone (JOBZ) Tax Benefits KS Shareholder's Share of Income, Credits and Modifications 4

5 Partnership M3 M3A M15 AWC BANK ETP JOBZ KPC KPI Partnership Return Partnership Return (Apportionment and Minimum Fee) Underpayment of Estimated Income Tax by Individuals, Trusts and Partnerships Alternative Withholding Certificate Bank Authorization for Direct Debit Employer Transit Pass Credit Job Opportunity Building Zone (JOBZ) Tax Benefits Partner's Share of Income, Credits and Modifications (for Corporate and Partnership Partners) Partner's Share of Income, Credits and Modifications (for Individual, Estate or Trust Partners) Section 2: Contact Information For technical questions regarding: XML Schema Additional Detailed Information of Schema Elements The Sample Return The Web Application The Summary of Schema Changes Missing Acknowledgments Contact: Additional Contact Information If you have a specific tax type question please contact that division. Individual Income Tax: or Sales and Use Tax: or Corporation Franchise Tax, Partnership Tax, S Corporation Tax, Estate Tax, and Fiduciary Tax: All updates for software vendors will be sent via . We encourage you to sign up for these updates, by going to our home page Click here. Click on the RED envelope in the lower right hand corner. For questions relating to specific tax types, call

6 Section 3: Registration First-Time Software Participants: To participate in Minnesota s e-file program, you must first be an authorized IRS e-file provider. Go to Publications for the IRS program information. Repeat Software Participants: Whether you re a returning Software vendor or registering with Minnesota e-file for the first time, you must notify us each year that you plan to participate. Fax a copy of the Minnesota Registration Form and Software Standards for all tax types. Fax it to Write Attention: Electronic Filing Coordinator on the cover sheet. The registration deadline is Oct. 30. You can find the necessary forms to fill out at Section 4: Vendor s Responsibilities Software vendors must: A. Satisfy all federal and state procedures and requirements. For a list, see IRS Publication 4164, Modernized e-file Guide for Software Developers and Transmitters. B. Successfully complete all testing of their software. C. Provide accurate Minnesota tax returns in correct electronic format. D. Provide data validation, verification, and error detection to prevent transmission of incomplete, inaccurate, or invalid return information. E. Be able to correct any software errors, which may occur after production begins, and be available to work with the department to follow up on any processing issues that may arise during filing season. Vendors who need to release corrected software must do so in a timely manner with proper notification to all Minnesota customers. F. Before you submit a return, include the following statement notifying taxpayers of their legal responsibility: Under penalties of law, I declare by submitting this return that I have personally examined this return, including any accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct and complete. *NOTE Additional vendor standards located on the registration form 6

7 Section 5: Testing and Certification A. Testing: All software vendors must successfully test each of their software products in order to be certified for use. The filing system will reject returns sent by a software product we haven t approved. B. Software Limitations: Software vendors must notify us regarding any software limitations. Such limitations include unsupported forms or schedules (for both federal and state returns), limits on the number of occurrences of particular forms or schedules, or any other limitations on the use of the software that will affect the outcome of software testing. You must list these on your Minnesota Registration Form and Software Standards form. Notify us if your limitations list changes. To do that, send an to Efile.DevSupport@state.mn.us prior to requesting a test review. C. Test Scenarios: Software vendors must provide a series of test-case scenarios for all tax return types their software products handle, except for individual and property tax types, which we provide on our website. These scenarios should reflect the number of returns the vendors expect their clients to submit, including all the forms and schedules covered by the software. Software providers should create their own test returns for Partnership Tax, Corporation Franchise Tax, Fiduciary and S Corporation Tax. PDF documents must accompany all your test scenarios and tax type testing. Software developers must create five different filing scenarios. Those are: 1) Balance Due - Paid By Check, 2) Balance Due - Paid by ACH Debit (Savings Account), 3) Zero Refund/Zero Due, 4) Refund - Paid by Check, and 5) Refund - Paid by Direct Deposit (Savings Account). At least one of the scenarios must feature the greatest number of data fields your product can handle. D. PDFs: PDFs must accompany all test scenarios and clearly reflect test information. PDFs are required for all tax type testing. E. Submissions: Send us your test scenario packages electronically for our review. You must submit your forms in PDF format. You must also describe what you expect from your tests, and include the appropriate federal and state tax returns. Send your test scenario packages to: Efile.DevSupport@state.mn.us F. Review: Your tests must show your software adequately performed the tasks for which you designed it for each test-case scenario. Software developers must receive acceptance on each test-case scenario before requesting a review by Minnesota. An exception might be if your software performs as designed, but you believe the test results were wrong. G. Response: We ll review submissions in the order in which we receive them. If we don t approve the software, we ll let you know what the problems are. If you correct the problems, you can resubmit your test scenarios to us. 7

8 Section 6: Acknowledgment: Federal/State or State-Only A. Federal/State: Minnesota returns included in the combined federal and state e-file program must be transmitted to the IRS along with the associated federal returns. In the combined program, the IRS acknowledges that they ve accepted the returns, and make the state information available to the department within 24 hours for retrieval. We receive no state information associated with federal returns the IRS rejects. B. State-Only: Minnesota-only tax returns still must go through the IRS. All Minnesota returns must include a copy of the corresponding federal return. Possible reasons to file a Minnesota-only return include: a. There is no federal filing requirement; b. The federal return has already been filed; or c. The original state filing was rejected. In the Minnesota-only program, the IRS makes the state information available to us within 24 hours for retrieval. Note: The IRS acknowledges only that it received the federal data. It does not indicate whether the Minnesota Department of Revenue has accepted the state return. If your software supports State-Only and the IRS rejected a federal return, you can resubmit the return. Section 7: General Information Monitoring the quality of your software: The department will monitor the quality of your electronic transmissions. If we decide your software performance is unacceptable, we ll contact you. We ll also monitor complaints about you and your products, whether you re meeting the requirements that govern e-filing in Minnesota, and the accuracy of your returns. If necessary, we ll issue you a warning or letter suspending your e-filing privilege. If we suspend you, we ll let you know what steps you need to take to be reinstated. Due Dates and Filing Extensions: You must transmit electronic returns on time. Filing and payment due dates and extensions for each return type are: Individual (M1) Due Date: April 15. Fiscal year filers have until the 15th day of the fourth month after the end of their fiscal year to file the return and pay their tax. Filing Extensions: Please see M1 instructions on our website at revenue.state.mn.us. Property (M1PR) See Instructions at: 8

9 C Corporation (M4) Due Date: Quarterly installments are due by the 15th day of the third, sixth, ninth and 12th months of your tax year. Installments for a short tax year are due according to the same payment schedule depending on the number of months in the short tax year. No installments are due for a short tax year of fewer than four months. Filing Extensions: All corporations get automatic seven-month extensions to file Form M4. You don t have to submit a form to get that extension. If the IRS grants you a longer extension, we ll extend your state due date to match it. Tax payment, however, is due on the regular due date. Late payments are subject to penalties and interest. S Corporations (M8) Due Date: The 15th day of the fourth, sixth and ninth months of the tax year and the first month following the end of the tax year. Filing Extension: All S corporations get automatic six-month extensions to file, as long as long as you make your tax payments on time. If the IRS grants you a filing extension that s longer than the automatic extension, we ll extend your state filing due date to match it. You still must make your tax payment at the regular due date, or you will be subject to late payment penalties and interest. Partnerships (M3) Due Date: Calendar year returns: April 15 Fiscal year returns: the 15th day of the fourth month after the end of the tax year Filing Extension: As long as the tax is paid by the regular due date, partnerships get automatic six-month filing extensions. If the IRS grants you a longer extension to file your federal return, we ll extend the state deadline to match it. You must still make your tax payment by the due date or face penalties and interest. Accounting Period Use the same accounting period for Minnesota as you use for your federal return. Fiduciary (M2) Due Date: April 15. If you file your return according to a fiscal year, your return and payment are due the 15 th day of the fourth month following the end of the tax year. Filing Extension: All estates and trusts are granted an automatic six month extension to file for M2, if the tax is paid in full by the regular due date. If the tax is not paid by the regular due date, the extension of time to file is invalid. 9

10 Section 8: Schemas and Transmission Specifications A. The department will use the Tax Implementation Group for E-commerce Requirements Standardization (TIGERS). You can find a copy of the TIGERS schema at B. You must use the XML data transmission format. C. If you transmit your returns using the XML format with SOAP (Simple Object Access Protocol) attachments, allow for binary attachments to the submission. Those could include signature documents, balance sheets, statement records, or other documents. You must use file extension.pdf to send attachments. Refer to IRS Publication 4163 for procedures to follow when sending more than one attachment. D. Other packaging guidelines: An electronic transmission must contain either a federal return or a state return. Each submission must be a separate file. Each federal return must be submitted in the agreed upon IRS XML format. Each state return must be submitted in the XML format specified and agreed upon by IRS, state agencies, transmitters, and software vendors. Each state return must include a copy of the federal return and any attachments associated with it. If the IRS rejects a federal/state submission, the state will not receive the state return portion. You must then re-transmit the federal/state tax documents. Each submission must be in Zip archive format. The SOAP message itself must not be compressed or zipped. The transmission must contain a header, a body, and an attachment. See Modernized E-File Logical ICD Model for layout and transmission technical specifications. 10

11 Section 9: Changes to E - filed Returns If you need to make changes to a return we ve already accepted, you must file a paper amended return. Mail the amended return to the appropriate address listed below: C Corp (M4X) S Corp (M8X) Partnership (M3X) Minnesota Revenue Mail Station 1255 St. Paul, MN Minnesota Amended S Corporation Tax Mail Station 1770 St. Paul, MN Minnesota Amended Partnership Tax Mail Station 1760 St. Paul, MN Individual (M1X) Minnesota Revenue Mail Station 1060 St. Paul, MN Property (M1PRX) Minnesota Revenue Mail Station 0020 St. Paul, MN Fiduciary (M2X) Minnesota Revenue Mail Station 1310 St. Paul, MN

Minnesota Department of Revenue (MDOR)

Minnesota Department of Revenue (MDOR) Electronic Filing Developer s Guide: The Software Approval Process for Individual Income Tax, Property Tax Refund, and Estate & Trust Tax Returns Tax Year 2011 Table