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 of Contents: Section Page 1) Introduction... 3 E-file Tax Return Forms and Schedules... 4 2) Contact Personnel... 5 3) Acceptance & Participation... 6 4) Developer s Responsibilities... 7 5) Testing & Certification... 7 6) General Information... 9 7) EPS Record Layouts & Specifications... 9 Diagram, Developing EPS Record Layout... 10 2
Section 1: Introduction & Supported Forms Thank you for participating in Minnesota s e-file program. The Minnesota Individual Income Tax e-file program allows taxpayer s state return data to be transmitted directly to the state from an approved transmitter. To become an approved transmitter of electronic returns, transmitters are required to complete testing through the Participant Acceptance Testing System (PATS). This is to verify that their e-filing software creates a complete return, carries appropriate values from one line/form to another, and formats and transmits Minnesota returns according to the electronic filing specifications. This guide is a supplement to the materials available on the MDOR website. This guide has been prepared to assist software developers, transmitters, and EROs seeking approval from Minnesota to participate in the e-file program for Individual Income Tax, Property Tax refund and Estate & Trust Tax returns. Software products must be tested, reviewed, and approved by Minnesota before live production returns will be accepted. Production returns sent from an unapproved transmitter will be considered not filed. This document describes: How to register for Minnesota s Individual Income Tax e-file program; How to meet product requirements in accordance with state laws and specifications; How to format and package data for transmission; How to submit test returns to Minnesota; How to request a review for testing certification; Which individual return forms are available for e-filing Who to contact with specific questions. 3
Tax Return Forms and Schedules Supported by MN E-filing Individual Income Tax M1 M15 Individual Income Tax Return Underpayment of Estimated Income Tax M1B Business and Investment Credits 2010 M1C Other Nonrefundable Credits 2010 M1CD M1CR M1CRN Child and Dependant Care Credit Credit for Income Tax Paid to Another State Credit for Nonresident Partners on Taxes Paid to Home State M1ED M1H M1LS M1LTI M1M M1MA M1MT M1MTC M1NR M1R M1W M1WFC M2 M2MT M2SB BANK EETP ETP JOBZ KPI KF KS K-12 Education Credit Credit for New Participants in a Section 125 Employer Health Insurance Plan Tax on Lump-Sum Distribution Long-Term Care Insurance Credit Income Additions and Subtractions Marriage Credit Alternative Minimum Tax Alternative Minimum Tax Credit Nonresidents/Part-Year Age 65 or Older/Disabled Subtraction Minnesota Income Tax Withheld Minnesota Working Family Credit Income Tax Return for Estates and Trusts Alternative Minimum Tax Income tax computation for S portion of ESBT Bank Authorization for Direct Debit Electronic Estimated Tax Payments Employee Transit Pass Credit Job Opportunity Building Zone (JOBZ) Tax Benefits Partner's Share of Income, Credits and Modifications (for individual, estate or trust partners) Beneficiary's Share of Minnesota Taxable Income Shareholder's Share of Income, Credits and Modifications 4
Section 2: Contact Personnel For the best possible service, please choose the appropriate contact carefully. A) For technical questions regarding: The Website Record Layouts Forms and Field References Sample returns Web applications Summary of layout changes Missing acknowledgements Contact: Efile.DevSupport@state.mn.us B) For Individual Income Tax questions regarding: Individual Income Tax laws Bills or Refunds Filing requirements Name and address changes Contact: Individual Income Tax Division Minnesota Department of Revenue (651) 296-3781 indinctax.prep@state.mn.us D) Other websites: Minnesota website: www.minnesota.gov Minnesota Department of Revenue website: www.revenue.state.mn.us E-filing information: www.revenue.state.mn.us/taxes/software_developers/index.shtml Internal Revenue Service: www.irs.gov Federation of Tax Administrators: www.taxadmin.org 5
Section 3: Acceptance & Participation A. First-time Participants: Minnesota accepts registered software developers and transmitters who participate in the Internal Revenue Service's e-file program. The department receives a weekly download of registered electronic filers from the IRS; those registered are automatically entered into Minnesota s electronic filing system. If unsure of your status or you are not in Minnesota s system, the department requires a copy of the most recent acceptance letter received from the IRS with FEIN number. Please fax to (651) 556-3130; Attn Dawn. Also include your Electronic Transmitter Identification Number (ETIN) and Electronic Filer Identification Number (EFIN). You can then be added manually to the departments system. Furthermore, each time the IRS requires an update, Minnesota must also receive the updated information. For more information about applying to the IRS e-file program, see IRS Publication 8633, IRS e-file Application and Participation. B. Repeat Participants: Each year software developers will be required to register and complete the forms below before or by October 30, notifying Minnesota of their company s intent to participate in the electronic filing program. Minnesota posts these required forms on the Department's web site located at www.mndor.state.mn.us/taxes/software_developers/index.shtml Registration Requirement: Fax a copy of the following to (651) 556-3130: a) Electronic Filing Developer Agreement and Authorization (one per company) b) Electronic Filing Developer Private Information (one per software product*) c) Electronic Filing Developer Public Information (one per software product*) *Software product is defined by the following attributes: product name and its customer focus (consumer/preparer/other), return type (M1/M1PR/M2/M3/M4/M8), and interface type (web-based/pc-based). C. Product Types: Minnesota publishes two software lists: one for consumer products and another for paid preparer products. Minnesota requires an all-inclusive price for consumer products, including the following: Preparation of both the federal and state return, including Free File information. Electronic processing from transmission through acknowledgement. Providing a printed copy of the return for the taxpayer's records. D. Password: Minnesota will assign a password annually for software developers. Password is the same for both certification testing and production. E. Software Identification: Software developers may self-assign a software identification number by entering their ETIN followed by a unique three digit number. The Department will assign an identification number for each software product if one is not self-assigned. Developers must include this software identification number in its designated location in the return summary record. (The software identification number will not change from year to year.) 6
Section 4: Developer s Responsibilities Developed software must: A. Adhere to all federal and state procedures, requirements and specifications. B. Be developed in accordance with statutory requirements and Department return preparation instructions. C. Successfully complete all testing. D. Provide accurate Minnesota tax returns in correct electronic format. E. Provide data validation, verification, and error detection to prevent transmission of incomplete, inaccurate, or invalid return information. F. Software provider must be available to correct any software errors, which may occur after production begins, and work with the Department to follow up on any processing issues that may arise during filing season. If software providers need to update and/or re-release corrected software, it should be done in a timely manner and proper notification should be made to all customers. G. Software providers must include a statement notifying taxpayers of the following directly before the taxpayer submits the return: 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. Section 5: Testing & Certification A. Who must test: The Minnesota Department of Revenue requires all software developers to complete certification testing for each software product prior to transmitting live production returns. Minnesota will reject returns from a transmitter that has not received approval to submit live returns. B. Why test: The Participant Acceptance Testing System (PATS) verifies that the e-file software creates a complete return, carries appropriate values from one line/form to another, and formats and transmits Minnesota returns according to record layout specifications. Software developers must test all the Minnesota e-file forms they support. 7
C. Software Limitations: Software developers must notify Minnesota regarding any software limitations. Such limitations include unsupported forms or schedules, limits on the number of occurrences of particular forms or schedules, or any other software specific trait that might impact the outcome of testing. These limitations need to be indicated on your Private Information sheet under Software Product Unsupported Forms. If there is a change to this list, please send an e-mail message stating these changes to Efile.DevSupport@state.mn.us prior to requesting a test review. Test Scenarios: Minnesota requires software developers to provide a series of test case scenarios for their product. There are no specific test cases for Minnesota PATS. Developer test scenarios should reasonably reflect the types of production returns that the developer anticipates their clients sending, including all forms and schedules supported by the software product. D. Submissions: Software developers must submit test scenario packages by e-mail. E- mail requires forms in portable document format (PDF). Test case scenarios must describe the anticipated return, and they must be accompanied by complete federal and state returns. E-mail address: Efile.DevSupport@state.mn.us E. Testing: Minnesota certification testing is a self-service process. Software developers submit one or more test cases at their discretion. The test system generates acknowledgements within two hours during the busiest seasons. Software developers may review the status of transmissions by logging in at https://www.mndor.state.mn.us/exchange-test/. The system will prompt for user ETIN and password. Software developers may upload test case scenarios or review acknowledgments at the same site. Generally, return types must be submitted in separate transmission files. F. Review: Software developers must receive acceptance on each test case scenario before requesting a review by Minnesota. (Exception: The software performs as designed and the developer believes the test system is in error. Note: The department treats rejection as a duplicate without additional errors as an accepted return.) To request a review by Minnesota, Step 1: Receive acceptance for each test case scenario. Step 2: Submit all test case scenarios in a single transmission to the test system. Test case scenarios must be in ascending order by test case number. Step 3: Send an e-mail message to Efile.DevSupport@state.mn.us indicating: a) which transmission is ready for review* b) what return type is contained in the transmission to be reviewed c) email corresponding PDF files for all tests *Transmission number is available by logging in at https://www.mndor.state.mn.us/exchange-test/. 8
G. Response and Priority: Minnesota will review transmissions in the order received based on the e-mail date and time stamp. Resubmitted tests will receive a higher priority for approval requests received the same day. The department will respond by email within five (5) business days to the test case contact provided on the Electronic Filing Developer Private Information form. If the product is not approved, the department will provide a list of deficiencies. H. Resubmission: Once any deficiencies have been corrected, follow the steps in Section 5-F to resubmit the test case scenarios for review and approval. Section 6: General Information A. Monitoring & Suspension: The Department will monitor the quality of electronic transmissions. If the quality is unacceptable, the Department will contact the ERO, software developer or transmitter. The Department will also monitor complaints about electronic filers and issue warning or suspension letters as appropriate. The Department reserves the right to suspend the electronic filing privilege of any electronic filer, software developer or transmitter who varies from the requirements, specifications and procedures stated in this guide or any corresponding administrative rules, or who does not consistently transmit error-free returns. When suspended, the electronic filer, software developer, or transmitter will be advised of the requirements for reinstatement into the program. B. Due Dates: EROs must file electronic returns in a timely manner. Form M1 must be filed with the Department of Revenue no later than April 15, 2011. If filing tax according to a fiscal year, the deadline for filing is the 15th day of the fourth month after the end of the fiscal year. C. Changes to Electronic Returns: Electronic returns cannot be recalled or intercepted in process after transmission. Changes to any entries after a return has been accepted must be filed on an amended return through the normal paper filing process to MDOR. Mail amended returns to: Minnesota Amended Individual Income Tax Mail Station 1060 St. Paul, MN 55145-1060 Section 7: EPS Record Layout & Specifications A. Information regarding the required format for transmitted returns, including record layouts, tax form field references, and transmitting in unattended mode may be found online at www.taxes.state.mn.us/taxes/software_developers/index.shtml. Navigate to Electronic Filing Procedures- Individual Income Tax. 9
B. Individual Income Tax returns must be formatted according to Electronic Processing System (EPS) Record Layouts. Layouts for each form supported by Minnesota e-filing can be obtained through the link above. C. Field References for each Individual Income Tax form supported by Minnesota e-filing are also available at the link above. The field references correspond to the specified EPS Record Layouts as in the diagram below. Diagram, Developing Required EPS Record Layout Form with Field References Sample (M1) EPS Record Layout Sample (M1) Form ID and page number Field Code: Corresponds to field reference number found in Forms with Field References documents available online. Field Name: The name of the field as it appears on the paper form. Line Ref: The line number as it appears on the paper form. Stm: Identifies whether a Statement Record may be used. (Y/N) Req: Identifies whether the field is Conditional or Mandatory. (C/M) Field Length: The amount of characters allowable in field. Field Description: Describes the type of values allowed in field, such as numeric, alpha, string, checkbox, etc. In the sample above, field Qualified Child Grade may contain the value KG or numeric values 01-12. 10