Many institutions submit paper forms to the IRS for their year end filings, but these institutions may need to switch to electronic filing starting in 2024. The IRS recently published final regulations amending the rules for filing electronically which drastically reduced the paper filing threshold amount.
On February 23, 2023, the Internal Revenue Service (IRS) and Department of the Treasury released final regulations regarding electronic filing requirements for certain returns and tax documents. The final regulations amended the rules for filing electronically and affect those required to file:
- Partnership returns
- Corporate income tax returns
- Unrelated business income tax returns
- Withholding tax returns
- Certain information returns
- Registration statements
- Disclosure statements
- Actuarial reports
- Certain excise tax returns
The final regulations align with the changes made by the Taxpayer First Act (TFA) and its emphasis on increasing electronic filing.
Reduced Paper Filing Threshold
The final regulations made quite a significant change to the paper filing threshold form count. Before these final regulations were released, the form count threshold for many form types was 250 forms each. This means that if a filer had 250 or more forms of any one type, then they would be required to file that form type electronically.
Beginning January 1, 2024, the paper filing threshold form count will be an aggregate of 10 forms. This means that if a filer has 10 or more forms in aggregate, then they would be required to file that form type electronically.
Filers must find the sum of the following form types to determine if they must electronically file:
- Form 1042-S
- Form 1094 series
- Form 1095-B
- Form 1095-C
- Form 1097-BTC
- Form 1098
- Form 1098-C
- Form 1098-E
- Form 1098-Q
- Form 1098-T
- Form 1099 series
- Form 3921
- Form 3922
- Form 5498 series
- Form 8027
- Forms W-2
- Form W-2G
If a filer has 10 or more of these forms total, then they must submit electronic filings.
Electronic Filing Advantages
E-filing has always been encouraged by the IRS and offers many benefits over paper filing. These benefits include immediate form submission, quick turnaround time, status updates, and more.
When e-filing it is always important to use an authorized IRS software provider to make e-filing as simple and easy as possible.
When using an authorized IRS software provider there are typically many rounds of data validation to ensure that the data is ready to file.
Quick and Efficient
E-filing with an authorized software provider ensures that the filing will be submitted and results will be returned quickly! This allows filers to review any errors and make corrections much faster than is typical with paper filing.
Most e-filing software providers will send updates regarding the status of your filing.
Are there penalties for not filing electronically?
Yes, there are penalties for failure to file electronically when required.
For tax year 2023, penalties were up to $310 per form that was incorrectly filed.
Please note: There are special circumstances that the filer may be exempt or that the IRS may waive these penalties. However, waivers and exceptions are not automatic and are processed in a case-by-case basis.
This paper filing threshold change will require many more employers to electronically submit their forms than in the past. That means that employers and filers should start looking for electronic filing solutions as soon as possible.
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BoomTax, The Boom Post, and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors prior to engaging in any transaction.