IRS Finalizes Rules Pertaining to Electronic Filing – Effect on Employers

On February 21, 2023, the Internal Revenue Service (IRS) issued final regulations amending the rules for filing certain tax returns and other documents by electronic means (e-filing). These requirements include applicability to Forms 1094-B and C, 1095-B and C, 1099, 5500, and W-2s, amongst others.

Effective January 1, 2024, the final regulations will require many filers that had been submitting information via paper format to begin e-filing instead. As a result of the new regulations, the 250-return threshold will be reduced to require e-filing for filers of 10 or more returns in a calendar year. For reference, in 2023 the number of returns that an employer can file without being required to e-file is 250; in 2024 and thereafter, that amount will be reduced drastically to just 10. This will certainly have a prominent effect on smaller employers. The final regulations also introduced some additional rules mandating e-filing for other documents that were not required under previous iterations of the regulations. Additionally, filers will be responsible for aggregating the various types of returns that they are required to file to ascertain whether they meet the 10-return threshold. 

Although, it should be mentioned that the regulations will continue to offer hardship waivers to small businesses that do not e-file due to the costs associated with obtaining the proper e-filing software and will extend relief from penalties for failures to e-file if appropriate and there is reasonable cause to do so.

Note: Section 3 of Rev. Proc. 2015-47 provides that, because filers of Form 5500 and Form 5500-SF are required to file those returns electronically through DOL's EFAST2, a waiver of the electronic-filing requirement for those forms will not be granted.

 

We will continue to monitor any developments closely. Please reach out to your AssuredPartners Account Manager with any questions.

 

Additional Links:

• Electronic-Filing Requirements for Specified Returns and Other Documents (TD 9972)
• Permanent Extension for Providing Forms 1095-B and 1095-C to Employees Finalized