The IRS has warned businesses for years that e-filing would become a requirement rather than an IRS recommendation.
For the nonprofit sector, this is already a reality. The IRS no longer accepts paper copies of 990 Series Forms.
Based on the latest updates from the IRS, it seems time has come for information returns. 2024 will likely be the year that this takes effect.
This blog will provide you with an overview of the IRS mandates for e-filing information returns. Plus, we’ll discuss how this could affect your business in the upcoming tax season.
What is the 2023 E-filing Threshold for Information Returns?
This is the current rule for e-filing information returns with the IRS:
Businesses filing more than 250 of any type of information return are required to file electronically.
For example, businesses can file 250 W-2s and 250 1099-NECs (250 of each form type). However, if the business is filing 50 W-2s and 300 1099-NECs, the IRS requires e-filing for the 1099-NEC forms because the form count exceeds 250.
What is T.D. 9972 and Why is it Important?
T.D. 9972 is very important for businesses to be aware of, this is the IRS’ final declaration regarding e-filing thresholds. This document lays out the IRS e-filing requirements that will take effect in 2024.
You may be wondering if the IRS is referring to tax year 2024, the answer is no. The IRS will be reducing the e-filing thresholds starting in the calendar year 2024. This means that year-end forms for tax 2023 that are due in January of 2024 WILL be affected.
Here are the key takeaways from this IRS declaration:
Effective in 2024, businesses can file no more than 10 paper forms with the IRS.
This doesn’t mean 10 of each form type, this means 10 forms TOTAL. For example, if a business files 10 W-2s and 10 1099-NEC forms, they MUST file all of their forms electronically.
This declaration removes the e-filing exceptions for corporate tax returns reporting total assets under $10 million.
Partnerships with over 100 partners are required to file information electronically. All partnerships filing 10 or more tax forms during the calendar year must file ALL of them electronically.
How will the New E-filing Thresholds Affect Businesses?
The short answer to this question is that the majority of businesses and corporations in the U.S. will feel the effect of this IRS mandate.
The IRS is mandating any business that files 10 or more information returns in a calendar year to file electronically. This means that e-filing will become a requirement for even some of the smallest businesses.
This is a drastic reduction compared to the current requirements. While this may create a major shift in how many businesses file their information returns with the IRS, it is ultimately a positive change.
The IRS recommends e-filing for good reason. They are able to process electronic forms at a much faster and more efficient rate. Therefore, businesses will see a better turnaround time on the forms they file, plus the IRS is able to provide status updates for electronic forms.
The key to a smooth and successful transition from traditional paper filing to electronic filing is choosing an IRS-authorized e-file provider. Don’t worry, the TaxBandits team is here to help!
Get Started with TaxBandits
TaxBandits offers a streamlined solution for meeting the new IRS e-filing requirements for 2024.
We offer bulk upload options for your form data, built-in error checks using the IRS Business Rules, and prepaid credits for more affordable filing! TaxBandits is here to increase the accuracy of your filing and minimize the time spent completing tax forms.