Electronic Filing Requirements May be Expanded | Clarus Benefits Group

Overview

On May 31, 2018, the Internal Revenue Service (IRS) published a proposed rule that would expand the electronic filing requirement for a number of tax forms. Current IRS rules impose a 250-return threshold for mandatory electronic filing, which applies separately to each type of information return. However, the proposed rule would require:

  • All information returns, regardless of type, to be taken into account to determine whether a reporting entity meets the 250-return threshold; and
  • Any reporting entity subject to the electronic reporting requirement to file corrected information returns electronically, regardless of the number of corrected information returns being filed.

ACA Compliance BulletinThe existing IRS rules require electronic filing for 250 or more information returns. However the 250 threshold applies to each individual form. Generally the forms this rule covers include:

  • W-2's (Wage & Tax Statement)
  • 1094 series forms (including 1094-B & 1094-C, as required under Section 6055 and 6056)
  • Forms 1095-B & 1095-C (the individual or employee statements under Section 6055 & 6056)
  • 1099 series forms

The proposed expansion of the electronic filing requirement would take the threshold from 250 individual forms and require that 250 or more information returns of any type covered by the rule be filed electronically. 

Example: Company W is required to file 200 Forms 1099–INT (Interest Income) and 200 Forms 1099–DIV (Dividends and Distributions), for a total of 400 returns. Because Company W is required to file 250 or more returns covered by this rule for the calendar year, Company W must file all Forms 1099–INT and Forms 1099–DIV electronically.

 

When the electronic filing rules were initially established this type of technology and filing was still in its early stages. Since then with advances in technology, more organizations are utilizing electronic filing options. The IRS stated that approximately 98.5% of information returns in the 2016 tax year were filed electronically. Due, in part, to that statistic the IRS believes the proposed change would help facilitate efficient and effective tax administration. Although many forms are currently filed electronically, this change would still require a significant amount of reporting entities to move to an electronic fling reporting system. There are existing regulations that allow for organizations who would otherwise be required to file electronically to request a waiver of the requirement. This waiver request would not be changed with the new rules. 

Effective Date

If finalized the proposed rule would generally be effective for:

  • Information returns required to be filed after December 31, 2018
  • Corrected information returns filed after December 31, 2018