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How the NEW IRS E-File Mandate Impacts Your Business


We received a newsletter from our partner Aatrix that we thought merited sharing!

What The IRS’s Dramatic New e-File Mandate Means For Your Business

What Are The New Requirements

On February 21, 2023, the IRS released final regulations which will affect virtually all employers who file employment tax information forms, such as:

  • Forms 1099 – series
  • Forms W-2
  • Affordable Care Act Forms
  • 1094 B/C
  • 1095 B/C

These final regulations are part of the Taxpayer First Act (TFA) enacted on July 1, 2019, which generally reduced the number of returns that can be filed in paper form.

The final regulations adopt the electronic-filing threshold of 10 for information returns required to be filed on or after January 1, 2024.

Why Did The IRS Make Change

The IRS explained that the electronic filing mandate is necessary because the agency receives nearly four billion information returns per year. In 2019, the IRS still received nearly 40 million paper information returns, even though approximately 99% of all information returns for that year were eFiled. The IRS also noted that electronic filing has become more common, accessible, and economical.

The New Requirement Lowers The eFile Threshold From 250 To 10

Prior to the new regulations, a 250 return threshold was applied to each type of information form separately. For example, an employer filing 150 Forms W-2 and 150 Forms 1099 was not previously required to file electronically since each return type did not exceed the 250 return threshold separately.

Under the new 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 add the total number of information forms together return to determine whether a filer meets the 10 return threshold and is thus required to file electronically.

In addition to W-2s and all 1099 series, it also includes forms:

  • 1042–S
  • 1094-series
  • 1095-B/C
  • 1097-BTC
  • 1098–C/E/Q/T
  • 3921s
  • 3922s
  • 5498 series
  • 8027s
  • W-2Gs
  • As well as Forms W-2 variations for U.S. territories such as Forms 499R-2 /W-2PR

Fines And Penalties For Non-Compliance

Penalties under the new regulations may apply for non-electronic filing of information returns when electronic filing is required are severe. Such penalties for non-filing, late filing, or incorrect information may also apply. The potential penalty in 2023 is up to $310 per Form W-2 if filed after August 1st and up to $580 for intentional disregard.

Source: EFORMed Aatrix Payroll News

Contact us to add an e-file subscription to your Sage 50.

eFile subscriptions include:
  • Unlimited eFiling for federal and state unemployment, new hire, withholding and all associated payments.
  • eFiling of 330+ federal and state forms.
  • HR forms, packets, and alerts.
  • Discounted year-end eFiling Services for W2s, 1099s, & 1095s (ACA).

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