IRS Expands E-File Requirements for Businesses

IRS Expands E-File Requirements for Businesses

Sep 28th 2023

Businesses large and small will be impacted this January by the significant reduction of the electronic filing threshold for tax and information returns.  For tax year 2023, it is mandatory for businesses with 10 or more required forms to submit electronically instead of on paper.

On February 23, 2023, the IRS released final regulations lowering the e-file threshold requirements for tax and information returns from 250 to 10 forms, including the total of all aggregated forms filed (W-2, 1099, 1095, etc.)

Who Is Impacted?

Under the new regulation, businesses must file electronically if they file 10 or more W-2, 1099, 1095, or other certain information returns.  Paper filing is no longer allowed.

Filing less than 10 forms?  Electronic filing is still preferred, but paper is still acceptable.

Which Forms Are Included?

1042-S, 1094 series, 1095-B, 1095-C, 1098, 1098-E, 1098-T, 1099 series, 5498 series, 8027, W-2G, W-2, 499R-2/W-2PR, W-2VI, W-2GU, W-2AS, 1098-C, 1098-Q, 3921, 3922, 1097-BTC.

How To Prepare?

  • Start by evaluating the type and amount of forms your company will need to file for the 2023 tax year.  The new rule requires the total for all aggregated forms filed, instead of by individual form type.  This means the number of forms is a combined total of 10 or more information returns (W-2, 1099-MISC, 1099-NEC, 1095, etc).

For example, if a filer has seven W-2 (wage and tax statement) and three 1099-NEC (nonemployee compensation) for a combined total of 10 returns, the filer must file all returns electronically.

  • Preparing early gives your business the best advantage to avoid fines and year-end stress.  The extra time will allow you to learn about the new IRS requirements so reporting data can be prepared and processed accordingly.  In most cases, businesses will also need to look for an electronic filing option.
  • Find an electronic filing solution that makes it easy for your businesses to file year-after-year.  With the complexities of the ever-changing regulations and requirements, many businesses find it more cost-effective and time saving to use an all-inclusive service for e-filing.  A total filing solution, like Nelco (a leader in W-2, 1099 & 1095 forms and technology) offers resources and seamless electronic filing options through partnered software providers.  Nelco’s team of experts stay on top of all the federal and state requirements year-round, so businesses can contact them with any filing or compliance questions.  Many businesses already have Nelco’s e-filing services available through their software.  Taking advantage of a service like this can save hours of work for companies.  

Learn more about the new IRS electronic filing regulations here.