Final regulations (T.D. 9972) requiring certain companies to e-file their tax returns and other documents will take effect in 2024, the IRS said Tuesday. The final regulations reduce the threshold for the e-filing requirement and expand the list of returns that must be e-filed.
The regulations, which will be published Thursday in the Federal Register, require certain companies to e-file for tax years ending on or after Dec. 31, 2023. They affect filers of partnership returns, corporate income tax returns, unrelated business income tax returns, withholding tax returns, certain information returns, registration statements, disclosure statements, notifications, actuarial reports, and certain excise tax returns.
The final regulations reflect changes made by the Taxpayer First Act, P.L. 116-25, in 2019 to increase e-filing “without undue hardship on taxpayers,” the IRS said in a news release.
The regulations reduce the 250-return threshold in prior regulations to generally require e-filing by filers of 10 or more returns in a calendar year. The regulations also require e-filing of certain returns and other documents that previously did not have to be filed electronically. In determining whether they meet the 10-return threshold, filers are required to aggregate almost all information return types covered by the regulation. (Previously, the 250-return threshold applied separately to each information return type.)
The new regulations also eliminate the e-filing exception for income tax returns of corporations that report total assets under $10 million at the end of their tax year and require partnerships with over 100 partners to e-file information returns. In addition, partnerships that must file at least 10 returns of any type during the calendar year now must e-file their partnership return.
“The Treasury Department and the IRS believe that making the new provisions for electronic filing applicable to returns and other documents required to be filed during calendar year 2024 will give affected persons ample time to prepare,” the IRS said in the regulations.
The IRS created a new, free online portal last month to aid in this process by helping businesses file Form 1099 series information returns electronically. The portal, known as the Information Returns Intake System (IRIS), may be especially helpful to small businesses that now mail their 1099s, the IRS said.
In 2021, about 82% of all corporate income tax returns were e-filed, and almost 90% of partnership tax returns were e-filed, the IRS reports.
The IRS said it receives nearly 4 billion information returns per year and expects to receive nearly 5 billion per year by 2028. In 2019, the IRS still received nearly 40 million paper information returns, even though approximately 99% of all information returns for that year were e-filed.
The final regulations generally provide waivers for filers that would experience hardship in complying with the e-filing requirements and administrative exemptions from the e-filing requirements.
— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.
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