The Internal Revenue Service (IRS) and the Department of the Treasury recently announced final regulations updating the rules for electronically filing returns and other documents, known as e-filing. The regulations contain changes made by the Taxpayer First Act to increase e-filing efforts without burdening taxpayers. As a result, certain filers will be required to e-file starting in 2024.The new rule impacts filers of the following documents:

• Partnership returns
• Corporate income tax returns
• Unrelated business income tax returns
• Withholding tax returns
• Certain information returns
• Registration statements
• Disclosure statements
• Notifications
• Actuarial reports
• Certain excise tax returns

Details of the New Regulations

The final regulations decrease the 250-return threshold previously enacted to generally require e-filing by filers of 10 or more returns within a calendar year. Several new requirements were also put into effect requiring the e-filing of certain documents not previously required to be e-filed.Filers must now aggregate nearly all information return types covered by the regulation to determine whether a filer meets the 10-return threshold and must e-file their information returns. Previous regulations applied the 250-return threshold separately to each type of information return listed.The regulations removed the e-filing exception for income tax returns of corporations reporting total assets less than $10 million at the end of their taxable year. Additionally, partnerships with greater than 100 partners are now required to e-file information returns and must file at least 10 returns of any type during the calendar year in order to e-file their partnership returns.

New Online E-Filing Portal

To streamline this new process, the IRS introduced its new online portal, the Information Returns Intake System (IRIS), last month to help companies e-file their Form 1099 series information returns. The IRIS is free, secure, accurate and does not require any additional software to be downloaded. It can be used by businesses of all sizes, but may be especially helpful to small businesses that traditionally send paper 1099 forms to the IRS.

The Way of the Future

There has been a boom in the availability of e-file services over the past few years, with 82% of all corporate income tax returns and 90% of partnership tax returns being e-filed in 2021. E-filing is sure to continue in popularity due to its overall efficiencies, reduced cost of postage and ability to free-up staff. For more information on e-filing your returns or other documents, contact Doeren Mayhew’s business tax accountants today.