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Tax Tip Tuesday: What Businesses Need to Know about the IRS Electronic Filing Rule Change

A paperless office is a concept based on electronic document management and a web-based documentation database. Working on a tablet computer, a businessman sees electronic document

A significant rule change mandates electronic filing for businesses submitting ten or more information returns to the IRS for the 2023 tax year. It marks a notable shift from the previous threshold of 250 returns, which was applied separately to each type of information return. Now, businesses must e-file returns when the combined total of all information return types reaches ten or more.


Affected Information Returns

According to the IRS, it currently receives close to 4 billion information returns annually. The agency anticipates this figure will surpass 5 billion information returns annually by 2028.


The finalized regulations impose the new e-filing requirements on taxpayers obligated to submit specific returns. These include actuarial reports, certain information returns, corporate income tax returns, disclosure statements, excise tax returns, notifications, partnership returns, registration statements, unrelated business income tax returns, and withholding tax returns.


Here are just some of the forms included:

  • Form 1099 issued to report independent contractor income, interest and dividend income, retirement plan distributions, prizes, and other payments.

  • Form W-2 issued to report employee wages.

  • Form 1098 issued to report mortgage interest paid for the year.

  • Form 8300 issued to report cash payments over $10,000 received in a trade or business.


Electronic Filing Penalties and Exemptions

Companies obligated to e-file information returns but opt to file on paper may face penalties imposed by the IRS. However, filers experiencing undue hardship if required to e-file can request an exemption from this requirement by submitting Form 8508 to the IRS. 


Here to Help

If you have questions about your unique situation or need strategic advice regarding tax planning, we are here to help. We build value-added relationships with each client to understand their business structure to provide solid solutions, and our approach offers direct access to the firm's decision-makers. Our innovative cross-functional services help businesses address the challenges ahead. Contact us to let us know how we can best support you.



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