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Electronic Filing Mandates and How Your Business Can Prepare

November 29, 2023

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On February 21, 2023, the IRS released final regulations addressing new requirements implemented by Section 2301 of the Taxpayer First Act. Starting January 1, 2024, an organization filing 10 or more returns or statements in a calendar year must file electronically. This is a significant change from the previous threshold of 250 returns.

To determine if the 10-return threshold is met, organizations need to aggregate various information return types expected to be filed during the calendar year. The types of returns to consider include:

  • Partnership returns
  • Corporate income tax returns
  • Unrelated business income tax returns
  • Withholding tax returns for U.S. Source Income of Foreign Persons
  • Forms 1099
  • Forms W-2
  • Forms 1094/1095-C.

If a return is required to be filed electronically, any corresponding corrected information returns must also be filed electronically. If a return is permitted to be filed on paper, any corresponding corrected information must also be filed on paper.

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.

Penalties may apply for non-electronic filing of information returns when electronic filing is required. Such penalties may also apply for non-filing, late filing or incorrect information. The potential penalty for incorrectly filing Form 1099 is up to $310 per payee statement.

If your business anticipates challenges or requires support in adapting to the new electronic filing requirements for Forms 1099, please contact our office as soon as possible so that we can help prepare you for this transition.