On February 21, 2023, the IRS released final regulations which requires organizations to electronically file specified returns and other documents. The final regulations significantly reduce the threshold for mandatory electronic filing of all “information returns.”
In 2024, organizations filing 10 or more returns or statements in a calendar year will be required to electronically submit these returns to the IRS. Previously, the mandatory filing requirement was reserved for organization with 250 or more returns.
Information returns or statements may include, but not be limited to the following:
- Form W-2;
- Form 1099-NEC;
- Form 1099-MISC;
- Form 1099-R;
- Form 1095-C;
- Form 1095-B;
- Form 1094-C; and
- Form 1094-B.
Businesses must total all information returns to determine whether they meet the 10-return threshold. In addition, an employer that must file its information returns electronically must also file any corrected information returns electronically, regardless of the number of corrected forms it must file.
Of note, the IRS recently released a new online portal (Information Returns Intake System (IRIS)) to facilitate compliance and to help businesses file Form 1099 series information returns electronically. IRIS is limited to employers that file no more than 100 Forms 1099 per submission. Employers must apply for authorization before being able to use IRIS.
Employers may be subject to penalties for failing to file returns electronically. Exemptions may be permitted under certain circumstances, and hardship waivers may be available for those that would experience hardship. Employers seeking hardship waivers from the electronic filing requirements must file Form 8508.
Next Steps for Employers
Employers should be aware that the reduced threshold does not apply to employment tax returns, such as Forms 940 and 941. Impacted employers that use a third-party administrator such as a payroll processor for the filings may wish to consult with their vendor to determine if their services will extend to meeting this new requirement. Employers should also consult with their tax professional to ensure they are prepared to comply in 2024.
The electronic filing threshold for information returns required to be filed in 2023 remains at 250 or more returns.
