What Does Code 1201 Mean for IRS Tax Returns?

When you finally finish your federal income tax returns and hit the "Submit" button to electronically file your taxes, few situations are more frustrating than getting an obscure error message. The IRS has hundreds of codes to let you know there's a problem with your return. Some problems are common, such as omission of your Social Security number or a mismatch between your surname and the name on IRS records. Other errors are relatively rare, such as "error reject code 1201," a message the IRS has used to indicate a problem with information regarding Canadian retirement plans.

E-File and Error Codes

Although the IRS still accepts tax returns on paper, almost 100 million taxpayer returns were filed electronically in 2012 through the IRS e-file system. Before returns are accepted by the IRS, e-file checks the submitted forms for accuracy and completeness. If the IRS detects an error, your form is rejected, and the error must be corrected before you can resubmit. The IRS issues an "error reject code" identifying the specific error, along with a text description of the problem. Some of the error codes change from year to year.

Error Reject Code 1201

The text for error reject code 1201, used for 2011 tax returns, is: "Form 8891 -- Beneficiary Plan Status Box (SEQ 0130) and Annuitant Plan Status Box (SEQ 0140) cannot both equal 'X', and cannot both equal blank."

Form 8891

The form referenced by error reject code 1201 is "U.S. Information Return for Beneficiaries of Certain Canadian Registered Retirement Plans." This form is used by some recipients of pension or other retirement benefits from plans originating in Canada. Item 5 of Form 8891 asks you to indicate your status as either a beneficiary or annuitant of the plan by checking the appropriate box. One box must be checked. If neither box is checked or both boxes are checked, you have made an error, and e-file will reject the form and indicate error reject code 1201.

Corrections

Identify your proper status as either a beneficiary or annuitant and correct Form 8891 accordingly. Your tax adviser or tax software program can provide guidance as to your correct status. You can also contact your pension plan administrator for clarification. The instructions for Form 8891 include detailed explanations of the two terms. Once corrected, you can resubmit your return through e-file.