Tax Byte

The IRS issued final regulations yesterday that delay until 2024 the lowered, mandatory business e-filing threshold of 10 returns – down from 250. Thus, the e-filing threshold for returns required to be filed in calendar years 2022 and 2023 remains at 250.

The Taxpayer First Act of 2019 (P.L. 116-25) reduced the 250-return e-filing requirement to 100 for calendar year 2021 forms (to be filed in 2022) and down to 10 for calendar year 2022 forms and years thereafter. The final regs, T.D. 9972, scheduled to be published in the Federal Register on February 23, affect filers of partnership returns, corporate income tax returns, as well as other information returns and certain documents not previously requiring e-filing.

Generally, the finalized rules:

• reduce the 250-return threshold enacted in prior regulations to generally require electronic filing by filers of 10 or more returns in a calendar year;
• create several new regulations to require e-filing of certain returns and other documents not previously required to be e-filed;
• require filers to aggregate almost all information return types covered by the regulation to determine whether a filer meets the 10-return threshold and is required to e-file their information returns;
• eliminate the e-filing exception for income tax returns of corporations that report total assets under $10 million at the end of their taxable year;
• require partnerships with more than 100 partners to e-file information returns; and
• require partnerships required to file at least 10 returns of any type during the calendar year to e-file their partnership return. 

The IRS’s new online filing portal for Form 1099 series information returns known as the Information Returns Intake System (IRIS) is expected to help facilitate some of these new filing requirements. The IRS announced the new portal’s launch last month.

In its effort to address any undue hardship that these e-filing rules may have on certain small businesses that are paper information-return filers, the IRS states it will continue to grant hardship waivers “fairly and consistently.” Additionally, the IRS will grant reasonable-cause relief from penalties for the failure to e-file returns in appropriate cases.