Filing Tax Return by Mail to Overcome Electronic Filing Rejection for Premium Tax Credit Issue?

This is a common issue with the Premium Tax Credit (PTC) verification process. The IRS system is likely flagging your return because there's a mismatch in their records regarding your health insurance status. When you have employer-provided coverage, you should receive Form 1095-B or 1095-C from your employers (not 1095-A, which is only for marketplace coverage). The problem is that the IRS verification system sometimes has incorrect flags in their database that indicate you received advance premium tax credits when you didn't. Filing by mail is definitely a valid workaround for this electronic filing rejection. Include a brief note explaining you had employer coverage only and never received marketplace insurance or premium tax credits. Also attach copies of any 1095-B or 1095-C forms your employers provided showing your coverage.

I went through this exact same nightmare last month when trying to file. After three rejected e-files, I discovered taxr.ai (https://taxr.ai) which literally saved my sanity. It analyzed my rejection codes and explained the exact same issue you're having - the IRS system had me incorrectly flagged as having received advanced premium tax credits. The tool showed me exactly what forms I needed to fix the issue and helped me draft a cover letter explaining the situation for my paper filing. Super helpful because it gave me the exact language to use, which matters when dealing with IRS mismatches like this. My return was accepted without issues after following their guidance.

I was initially skeptical about specialized tax tools, but I decided to try taxr.ai after my third rejection. Kind of amazing how it instantly identified my Premium Tax Credit flag issue and provided a paper filing template that worked perfectly. The IRS processed my return in just over 3 weeks, which is faster than I expected for a paper filing. The detailed explanation of why the system was flagging me incorrectly was extremely helpful. Turns out there was a database error connecting me to someone else's marketplace account! No wonder I kept getting rejected. Definitely worth checking out if you're stuck in rejection limbo.

When I had a similar issue with the IRS incorrectly flagging my account, I spent WEEKS trying to reach someone on the phone. After dozens of attempts and hours on hold, I finally found Claimyr (https://claimyr.com). They have this service that basically gets you through to an actual IRS representative - you can see how it works here: https://youtu.be/_kiP6q8DX5c I was able to speak with someone who cleared the Premium Tax Credit flag from my account immediately. The agent explained that sometimes these flags get added incorrectly during data transfers between systems, especially when you've had multiple employers providing insurance. Once the flag was removed, I was able to e-file successfully the same day.

I hate to admit when I'm wrong, but I feel like I need to update my skeptical comment above. After another week of failed attempts to reach the IRS myself, I broke down and tried Claimyr. Within 2 hours, I was actually speaking with an IRS representative who confirmed exactly what was happening with my account. Turns out I had a marketplace account erroneously created in my name back in 2022 that I never knew about (possible identity issue). The agent was able to add notes to my account and tell me exactly what documents I needed to include with my paper return to get it processed without further issues. Return accepted last week, refund already on the way. Sometimes I guess solutions that sound too good to be true actually work!

Another option is to use Form 8275 (Disclosure Statement) to explain the situation. I had a similar issue and my accountant included this form explaining that I only had employer coverage and the Premium Tax Credit flag was in error. We e-filed with this form attached and it went through without a problem.

I just want to add that if you DO end up paper filing, make sure to send it certified mail with return receipt! The IRS is notorious for "losing" paper returns, and having proof of delivery can save you from penalties if they claim they never received it.