The Internal Revenue Service (IRS) issued final regulations on e-file for businesses, requiring certain filers to e-file beginning in 2024 for the 2023 tax year. The complete regulations are found on the IRS website. This new e-file requirement reduces the 250-return threshold to require electronic filing by filers of 10 or more returns in a calendar year. This includes information returns W-2, Form 1099 series (i.e. 1099-NEC, 1099-MISC, 1099-S, 1099-INT, etc.), 1095 series (Affordable Care Act), Form 1098 series, Form 8027 (restaurant tips), Form 4720 (excise tax), Form 945 (withholding on retirement, etc.), and Form 1042 (foreign person’s US income subject to withholding).
In determining whether a business meets the 10-return threshold, filers are required to aggregate almost all information return types covered by the regulation which includes partnership returns, corporate income tax returns, unrelated business income tax returns, withholding tax returns, certain information returns (ex. W-2, 1099), and certain excise tax returns. Previously, the 250-return threshold applied separately to each information return type, but that is no longer the case with the new regulations.
For example, if your business prepares four W-2 forms, four 1099-NEC forms, two 1099-MISC forms, and one corporate return Form 1120, you have reached the 10 return threshold and must e-file all these returns. If you do not e-file when required, you will be subject to IRS penalties for paper filing the returns.
Following are options for W-2 and 1099 electronic reporting since those are the most common forms that will be subject to this new e-filing requirement. If you have questions about e-filing any other forms, please contact the partner or manager in charge of your account.
W-2 REPORTING
If you have been paper filing W-2’s, check with your accounting software company regarding options to e-file the forms with the Social Security Administration (SSA) through your software. You can file W-2s directly with SSA in their Business Services Online (BSO) platform. You can also visit the IRS website to find third-party approved vendors for W-2 e-filing. If you would like to discuss Axley & Rode LLP e-filing your W-2 returns, please contact the partner or manager in charge of your account.
1099 REPORTING USING IRS FREE ONLINE IRIS PORTAL
Businesses can use the new IRS free online portal called the Information Returns Intake System (IRIS) to e-file Forms 1099 for tax year 2023. Still, action needs to be taken soon to set up an IRIS account since it can take the IRS up to 45 days to process the application. IRIS is replacing the IRS FIRE system that was previously used to e-file Forms 1099. Please refer to the IRS website for complete information (About Information Returns Application and IRIS Application for TCC).
The IRS IRIS Portal User Guide Publication 5717.
- If you have an existing FIRE Transmittal Control Code (TCC) andsubmitted that application before September 26, 2021, you must complete and submit the IR-TCC application for the new IRIS system. The IR-TCC application can be done any time until August 1, 2023, but it does take up to 45 days for the IRS to process the application. Your prior FIRE TCC will remain active for use until August 1, 2023. Any FIRE TCC without a completed IR-TCC application will not be available for e-file after August 1, 2023.
- If you do not already have a FIRE TCC and would like to use the free IRIS platform, you can apply for an IRIS IR-TCC online with the IRS.
- Axley & Rode LLP cannot complete the IR-TCC application on a client’s behalf.
- An ID.me account for identity verification will be required for IRIS and will be part of the application process.
1099 REPORTING - OTHER E-FILING OPTIONS
If you do not want to use the IRS IRIS system to file 1099 forms electronically, there are other 3rd party options, including QuickBooks and many other e-file providers who provide 94x series e-filing services that include 1099 e-file capabilities. This IRS link contains the 2023 94x approved IRS e-file providers if you want to research these for 1099 reporting options and costs.
If you would like to discuss Axley & Rode LLP e-filing your 1099 series returns, please contact the partner or manager in charge of your account.
