As the 2019 tax filing season approaches, it promises to be one with many changes for you and your clients. While tax reform has been in the forefront of everyone’s mind, there is also a new state electronic filing requirement related to the application of software updates. This change may impact your internal workflow and we encourage you to review the following information so that you may evaluate your filing processes to ensure a smooth transition.
As background, in preparation for filing season, each state establishes specific standards for software vendors. At Wolters Kluwer — as with other vendors — we work closely with our state partners to find optimal solutions that accommodate our customers while also addressing individual state concerns. This new requirement has been implemented for every software company and is intended to reduce the error rate of returns filed without the latest update(s), as well as to ensure a more consistent standard throughout the software industry.
The requirement mandates that “users/customers of this product who attempt to e-file 10 or more business days after a production release will be required to download and apply the product update.”
List of Current States Requiring This Action
There are currently 39 states that have implemented this requirement and we expect there will be many more as preparations for tax season progress. We’ll continue to update the list as we receive more information, but in the meantime, the current list includes:
|Delaware||District of Columbia||Georgia||Hawaii||Iowa|
|Montana||Nebraska||New Hampshire||New Jersey||North Carolina|
|North Dakota||New Mexico||Ohio||Oklahoma||Oregon|
|Pennsylvania||Rhode Island||South Carolina||Tennessee||Utah|
An Example to Help Explain the New Requirement
Here’s an example of how the new rule would work for an Alabama state return:
- February 3 – Return is created on version 2.4 which contains a change to AL
- February 4 – User calculates return as version 2.4 and the review period begins
- February 7 – Return is exported to Electronic Filing and Form 8879 is sent for signature
- February 10 – Release of version 2.5, containing a change to AL
- February 16 – Form 8879 received from taxpayer and released from Electronic Filing (within the 10 day time frame)
- February 22 – All returns on 2.4 must be recalculated to 2.5 prior to e-filing (this is 10 business days from the release date of February 10, 2019)
Note: If version 2.5 did not contain an update for Alabama, the return would not be subject to expiration.
Wolters Kluwer is Taking Steps to Help Firms Identify Affected Returns
In order to assist in this process, Wolters Kluwer will be adding filters that can be utilized to identify returns that are “nearing expiration” and “have expired”. Additionally, there will be two new features designed to catch these “expired” returns more quickly in the process. For example, when a return is exported to Electronic Filing and when the return is released from Electronic Filing, there will be an error notifying the user that they need to go back and calculate the return on the latest release.
More specific information and details regarding these enhancements will be made available soon, along with specific information in the Release Notes for Wolters Kluwer’s Tax solutions: CCH Axcess Tax and CCH ProSystem fx Tax. In addition, we’ll continue to develop and implement tools to assist you in identifying impacted returns.
Take Time Now to Prepare
We recommend that Public Accounting firms of all sizes and complexities take time now to assess their tax return processes while considering this information. If you’d like to have a Regional Solutions Consultant make contact to review ways you can streamline your tax workflow and move it to a more digital format, click here, fill out the form, and we’ll call to set up an appointment.