IRS Dramatically Expands Electronic Filing Mandate in 2024

The Internal Revenue Service (IRS) released final regulations on February 21, 2023, requiring organizations to electronically file specified returns and other documents. TD 9972 affects virtually all organizations that are required to file returns to the IRS, including filers of employment tax returns and information returns, such as Forms 1099-series, Forms W-2, and Affordable Care Act Forms 1094 and 1095–C, among others.

Organizations filing 10 or more IRS returns of any kind in aggregate will need to file almost all required returns electronically.

Generally, an organization filing 10 or more returns or statements (previously more than 250) in a calendar year will be required to file electronically in 2024. 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, registration statements, disclosure statements, notifications, actuarial reports, and certain excise tax returns, among others. However, the ten-return threshold does not make electronic filing mandatory for employment tax returns, such as Forms 940 and 941. Filers must aggregate almost all return types covered by the regulation to determine whether a filer meets the ten-return threshold.

Under the new aggregation rule, the number of Forms W-2 and 1099 would be combined to determine whether the threshold is met. The final regulations require filers to aggregate across return types to determine whether a filer meets the ten-return threshold and is thus required to file electronically. This includes Forms 1042–S, 1094-series, 1095–B, 1095–C, 1097-BTC, 1098, 1098-C, 1098–E, 1098-Q, 1098–T, all 1099 series, Forms 3921, 3922, 5498-series, 8027, and W–2G, as well as Forms W–2 (Wage and Tax Statement) and variations for U.S. territories such as Forms 499R–2/W–2PR (Withholding Statement (Puerto Rico)) and Form W–2VI (Virgin Islands Wage and Tax Statement). Examples provided in the final regulation follow:

Example 1

Company W is required to file five Forms W-2 and five Forms 1099-NEC for a total of ten returns. Because Company W is required to file ten returns, Company W must file all its 2023 Forms W-2 and 1099-NEC electronically.

Example 2

In 2023, Corporation S, an electing small business corporation, is required to file one 2022 Form 1120-S (U.S. Income Tax Return for an S Corporation), two Forms W–2 (Wage and Tax Statement), two Forms 1099–DIV (Dividends and Distributions), one Form 940 (Employer’s Annual Federal Unemployment (FUTA) Tax Return), and four Forms 941 (Employer’s Quarterly Federal Tax Return). Because S is required to file ten returns during the calendar year 2023, S is required to file its 2023 Form 1120-S, Forms W-2 and Forms 1099 electronically.

The electronic filing threshold for returns required to be filed in calendar years 2022 and 2023 remains at 250. The final regulations adopt the electronic filing threshold of ten for returns required to be filed on or after January 1, 2024.

To help with this process, the IRS created a new, free online portal to help businesses file Form 1099 series information returns electronically. Known as the Information Returns Intake System (IRIS), this free electronic filing service is secure, accurate and requires no special software. Though available to any business of any size, IRIS may be especially helpful to any small business that currently sends their 1099 forms on paper to the IRS.

If Dent Moses processed your Forms W-2 and Forms 1099 electronically last year, you will receive an informational email in the next few days with instructions on how and when to submit your data to us. 

Link to IRS info for IRIS portal

Final E-file Regulations 

Link to IRS Regulation (Federal Register)