IRS Releases New Electronic Filing Requirements
By: Caitlin Fansler
In an effort to continue improving processes and cut down on paper filings, the IRS published regulations on February 23, 2023, that have significantly expanded the mandatory electronic filing requirements of tax and information returns. The new regulations require almost all returns filed on or after January 1, 2024, to be submitted to the IRS electronically instead of on paper. Beginning in tax year 2023, filers with 10 or more returns of any type in a calendar year, in aggregate, must file the returns electronically. This is a significant change from the previous threshold of 250 returns. We expect this to impact a large number of our clients. It is important not only to determine if you meet this requirement, but to take the steps necessary to ensure compliance.
First, let’s take a closer look at who is affected:
The new electronic filing threshold is based on the aggregate total of all return types, rather than the number of returns per return type, as it was in the past. The new regulations will also require e-filing certain returns and other documents not previously required to be e-filed. Returns affected by the electronic filing mandate include partnership returns, corporate income tax returns, unrelated business income tax returns, withholding tax returns for U.S. Source Income of Foreign Persons, information returns (1099 forms and W-2 forms), registration statements, disclosure statements, notifications, actuarial reports, and certain excise tax returns, among others. However, the 10-return threshold does not make electronic filing mandatory for employment tax returns, such as Forms 940 and 941.
If you have determined that your business falls in this requirement, let’s talk about what to do next:
To assist with this new requirement, the IRS has developed a free and secure online portal called IRIS (Information Returns Intake System). This portal can be used to help get these returns electronically filed. IRIS is available to filers of any size, and no additional software is required. The IRS is encouraging those businesses that currently file on paper to take advantage of this platform. The system allows filers to upload, edit, view, and download completed forms for distribution or verification. The system also automatically detects filing errors and missing information. You may now begin enrolling for the IRIS filing platform. In order to enroll you will need your Employer Identification Number (EIN) and your IRIS TCC (Transmitter Control Code). You may apply for a TCC via the IRS website. Once you receive your TCC, you can e-file with IRIS.
Here is the link to apply for a TCC.
Here is the link to access IRIS.
Due to the complicated nature of these requirements and the penalty exposure, contact your trusted BRC advisor to determine if the new electronic filing requirements apply to you!
The information contained in this article is for informative purposes only and should not be relied on when making any business, legal, or other decisions. This information may be updated without notice and/or may not contain the most current information that is available related to this topic. Please consult with your advisor to determine how this information applies to your specific facts and circumstances.