Managing payroll taxes is complicated enough—dealing with rejected e-files or e-payments can feel overwhelming. Whether you’re using QuickBooks Online Payroll or QuickBooks Desktop Payroll Enhanced, resolving these issues quickly is essential to staying compliant and avoiding penalties. This comprehensive guide explains the most common payroll rejection reasons, why they happen, and the exact steps to fix and resend your forms or payments.
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Understanding Payroll E-File and E-Pay Rejections
When the IRS or your state agency rejects an electronic tax form or payment, it’s usually due to incorrect information, timing issues, or mismatched account details. If you received a notice inside QuickBooks or directly from the IRS or a state agency, don’t panic. Most rejections can be corrected easily with the right steps.
Below are the primary reasons payroll filings or payments are rejected and how to resolve each one.
Top Reasons Your Payroll E-File or E-Pay May Be Rejected
Several common issues can trigger an IRS or state rejection, from duplicate filings to incorrect account details. Understanding these reasons will help you correct errors quickly and prevent future disruptions.
1. Duplicate Tax Filing: Why It Happens and What to Do
A duplicate tax filing rejection means the IRS or state agency received more than one return for the same tax period under the same business information. This often occurs when businesses switch payroll providers mid-quarter without canceling the previous service.
QuickBooks Online Payroll
- Contact the IRS or state agency to verify which return was accepted or rejected.
- After receiving clarification, reach out to QuickBooks support to determine if your forms need to be corrected or resubmitted.
QuickBooks Desktop Payroll Enhanced
- Contact the IRS or state agency for verification.
- Depending on the agency’s response, you may need to file an amendment or resend the form directly through the agency’s system.
2. Invalid or Incorrect Account Numbers
If your Federal Employer Identification Number (EIN) or state tax account numbers don’t match what agencies have on record, your e-file or e-payment will be rejected.
QuickBooks Online Payroll
- Contact the IRS or applicable state agency to confirm your correct account number.
- Contact QuickBooks support to update your EIN or state account number.
- If your form was rejected, check your Payroll Overview → To-Do List for next steps.
- For rejected payments, ask the IRS or agency to transfer funds to the correct account.
QuickBooks Desktop Payroll Enhanced
- Update your EIN or state account number inside QuickBooks.
- Resend the rejected tax form.
- For rejected payments, contact the IRS or state agency to request a payment transfer.
3. Form Submitted Too Early
Some agencies do not accept early tax filings or payments. Sending an e-file or e-pay before the official filing period opens can result in automatic rejection.
To Fix It: Simply resend the form or payment closer to the official due date.
4. Incorrect Tax Deposit Schedule or Filing Schedule
If the IRS or state agency updates your filing frequency—such as changing you from monthly to semi-weekly deposits—and QuickBooks still uses your old schedule, your form or payment may be rejected.
QuickBooks Online Payroll
- Contact the IRS or state agency to confirm your correct deposit or filing schedule.
- Update the schedule inside QuickBooks.
- Send any additional required forms or payments.
QuickBooks Desktop Payroll Enhanced
- Follow the same steps: confirm the schedule, update QuickBooks, and resubmit the required documents.
Must Read: How to Fix an Incorrect QuickBooks Sales Tax Liability Report?
QuickBooks Desktop Payroll Enhanced: Additional Rejection Reasons
Some rejections are unique to the Desktop version. Below are the most common errors and how to resolve them.
Incorrect Federal E-Pay PIN
If you updated your bank account on the EFTPS website but did not update your PIN in QuickBooks, your e-payment will fail.
- Go to Employees → Payroll Center.
- Select Pay Liabilities.
- Under Pay Taxes & Other Liabilities, choose your federal tax and click View/Pay.
- Select E-payment → e-pay.
- Uncheck Remember My Information for Next Time.
- Enter:
- New 4-digit PIN
- EFTPS internet password
- Submit the payment.
You’ll need to re-enter the PIN and password next time before saving it.
If you don’t know your PIN, contact:
- IRS EFTPS Help Desk: 800-555-4477
- IRS E-File Help Desk: 866-255-0654
Incorrect Federal E-File PIN
A wrong e-file PIN will immediately trigger a rejection from the IRS.
- Go to Employees → Payroll Tax Forms and W-2s → Process Payroll Forms.
- Select the federal form you need to file.
- Choose Create Form, enter the filing period, then review for errors.
- Select Submit Form → E-file.
- Uncheck Remember My Information for Next Time.
- Enter your correct 10-digit IRS e-file PIN.
- Save the information if desired.
If you need assistance retrieving your PIN, contact the IRS using the numbers above.
Expired EFTPS Internet Password
Your EFTPS Internet Password (12–30 characters) is required for federal e-payments. If it expires, your payment will be rejected—even if your 4-digit e-pay PIN is correct.
- Log in to EFTPS.gov and update your internet password.
- After updating, resend your e-payment or tax filing through QuickBooks.
Final Thoughts
Payroll e-file and e-pay errors are common but preventable. To reduce the chances of future rejections:
- Keep your IRS and state account numbers updated.
- Confirm deposit schedules annually—or whenever notified by agencies.
- Maintain accurate employee and company records.
- Make sure your QuickBooks payroll setup matches agency requirements.
- Update EFTPS credentials promptly.
By staying proactive and knowing how to quickly resolve rejections, you can keep your business compliant and your payroll running smoothly.
If you need help updating information or resubmitting rejected forms, QuickBooks support and agency help desks are always available.
Frequently Asked Questions
A federal tax payment can be rejected if the IRS or state agency doesn’t accept it. This often happens because the EFTPS credentials (such as PIN or password) stored in QuickBooks are outdated or incorrect, or the payment was submitted with incorrect information. In some cases, the withdrawal date may fall on a weekend or holiday, triggering a rejection.
1. Open QuickBooks Desktop and go to Employees > Payroll Center.
2. Select the Pay Liabilities tab.
3. Click E-Payments under the Payment History section.
4. Find the federal tax payment that shows as Agency Rejected.
5. Click the Agency Rejected link to view the rejection reason.
6. Select Void Rejected E-payment. This restores the liability so it appears again in the Pay Liabilities list.
7. Update any incorrect information (especially EFTPS credentials: PIN and internet password).
8. Go back to Pay Liabilities, select the restored tax payment, and resubmit it as an E-Pay.
First, make sure your QuickBooks software and payroll tax tables are fully up to date. Then, review the rejection message in the Payroll Center → Pay Liabilities → E-Payments, and either void the rejected payment or update your credentials and resubmit. Ensuring your EFTPS PIN and Internet password match what the IRS has on file is often key to resolving errors.
To resubmit a rejected payroll tax payment:
1. Go to Payroll Center → Pay Liabilities.
2. Open the E-Payments tab and locate the rejected payment.
3. Use the “Void Rejected E-Payment” option so the liability reappears.
4. Once the liability is back in the list, enter updated credentials if needed, then resubmit the payment electronically.
If a payment was recorded as “Manual” instead of electronically:
1. In QuickBooks Online, go to Payroll tax → Payment history.
2. Find the manual payment, then delete it using the Edit menu.
3. After deletion, resubmit the payment electronically through payroll tax e-pay options.
This ensures the payment goes through the IRS and is no longer treated as manually paid.
To set up e-pay in QuickBooks Desktop Payroll Enhanced, you need to enroll with the Electronic Federal Tax Payment System (EFTPS) and obtain your 10-digit IRS e-file PIN. Once enrolled and accepted by the IRS, QuickBooks will allow you to pay federal taxes electronically. If enrollment is rejected or the PIN is lost, contact IRS E-File services for assistance.
