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Yes, you can electronically file your corporation state income tax return. The IRS has worked with the Federation of Tax Administrators (FTA) and 28 state tax agencies to develop a fed/state electronic filing system for business tax returns filed on Modernized e-File (MeF). This system was implemented by the IRS in 2006. However, you should check with your state tax authorities for specific information about state electronic filing options available to corporations.
The IRS has designed an electronic filing process for Forms 1120 and 1120S under IRS e-file, which includes file and pay capabilities. This program provides the ability to e-file complex, consolidated returns, including attachments and multiple subsidiaries and foreign entities. It uses Extensible Markup Language (XML) technology, allowing e-filed returns to be processed as they are received rather than in batches. Filers will receive a prompt electronic acknowledgment, and the system includes an integrated payment option.
Corporations can e-file a balance due return and authorize an electronic funds transfer at the same time. The benefits of electronic filing include fast electronic acknowledgment of return receipt, easy-to-understand error messages, automated tax preparation work, and the elimination of paper returns and late filing fees and penalties.
For corporations that prepare their own income tax returns, it is important to ensure that the software used has the capability to file electronically. Corporations should discuss the various electronic filing options with their software vendor and ensure their software supports the necessary forms and schedules required for e-filing.
In summary, while the IRS provides the infrastructure for electronic filing of federal and state returns, the specific options and requirements for state returns should be confirmed with the respective state tax authorities.
Sources:
Publication 4452
Publication 4163 (12/2023)
Publication 1437
IRM Part 3. Submission Processing. Chapter 42. Electronic Tax Administration. Section 4. IRS e-file for Business Tax Returns
Publication 4164 (10/2023)
