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.
The IRS significantly expanded electronic filing requirements for tax returns. Employers filing 10 or more returns of any type on or after January 1, 2024, must now submit returns electronically instead of via paper filings. The previous threshold was 250 or more returns.Under the new rule, the number of Forms W-2 and 1099 would be combined to determine whether the threshold is met. The threshold of 10 returns is calculated based on the aggregate number of different types of returns — rather than the number of returns per each return type.
Example
An employer with nine W-2s, one 1099-NEC, and one 1099-DIV is required to electronically file, because one must combine the total number of information returns (11 total) to determine if the threshold has been met.
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.
