IRS Lowers Threshold for Mandatory e-Filing of Info Returns
New Threshold for Filing Electronic Information Returns Kicked In Jan. 1
A new significant rule affects businesses that file 10 or more information returns. As of January 1, 2024, 2023 tax year information returns must be filed electronically. The previous threshold for electronically filing was 250 returns. Notably, the 250-return threshold was applied separately to each type of information return. But now, businesses must e-file returns if the combined total of all the information return types filed is 10 or more.
Final regulations on the new rule were issued February 21, 2023, by the U.S. Department of the Treasury and the IRS.
Which Information Returns Are Affected?
According to the IRS, it receives nearly 4 billion information returns each year. And by 2028, the tax agency projects it will receive over 5 billion information returns each year.
The IRS’s final regulations state that the new electronic-filing requirements will be imposed on those “required to file certain returns, including partnership returns, corporate income tax returns, unrelated business income tax returns, withholding tax returns, and certain information returns, registration statements, disclosure statements, notifications, actuarial reports, and certain excise tax returns.”
These returns include:
Forms 1099 issued to report independent contractor income, interest and dividend income, retirement plan distributions and other payments,
- Form W-2 issued to report employee wages,
- Form 1098 issued to report mortgage interest paid for the year,
- Form 8300 issued to report cash payments over $10,000 received in a trade or business, and
- Many more.
Penalties may be imposed on companies that file paper returns when they are required to e-file information returns. Waivers from the e-filing requirement can be requested by filling out Form 8508 with the IRS, but only if the filer would suffer an undue hardship filing electronically.
Remember, these changes apply to information returns you need to file for tax year 2023, which are due in 2024. Stay informed and prepared for the transition to electronic filing!
Consult a Brady Ware tax professional if you’re unsure about the new requirements or how to comply.
Here are some helpful resources:
Questions?
Adam manages a variety of tax and accounting engagements for business clients in numerous industries, including manufacturing, real estate, construction, alternative investments, and professional services. He has experience in federal tax, multi-state corporate income and franchise tax, and municipal income tax. In addition to his tax compliance background, Adam specializes in preparing and managing complex partnership engagements.