If your business files 10 or more information returns, you must now file them electronically. This is a significant rule change that went into effect on January 1, 2024, for 2023 tax year information returns.
The threshold for electronically filing most information returns dropped from 250 to 10. Before the new rule, only businesses filing 250 or more information returns were required to do so electronically. 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.
In its final regulations, the IRS stated 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.
The IRS may impose penalties on companies that are required to e-file information returns but file them on paper instead. Filers who would suffer an undue hardship if they had to file electronically can request a waiver from the electronic filing requirement by filing Form 8508 with the IRS.
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