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IRS to Gradually Lower E-Filing Return Threshold Requirement to 10

Chris Gaetano
Published Date:
Jul 27, 2021

The IRS has proposed regulations that, among other things, would gradually reduce the number of returns that a business can prepare before e-filing is required from 250 to 10 for most informational returns. 

The agency noted in its draft that the history of e-filing requirements is a long and storied one, starting in 1983, when it required that information returns under sections 6042(a), 6044(a), and 6049(a), with respect to more than 50 payees for any calendar year, be filed electronically unless doing so would present an undue hardship.

In 1986, the IRS added Forms 1042-S, 1098, 1099 series, 5498, 6248, 8027, W-2G, W-2, W-2P to the e-filing requirement, unless the filer either received a  waiver or was a "low-volume" filer, meaning 250 returns or fewer.

This 250-form threshold slightly changed in 1998, when the IRS clarified that the 250-return threshold applied separately to each information return. 

Finally, in 2021, the IRS has proposed regulations that would reduce the electronic-filing threshold for information returns covered under Section 301.6011-2(b) from 250 to 100, for returns required to be filed during calendar year 2022, and from 100 to 10, for returns required to be filed during calendar years after 2022. 

"If a taxpayer has, for example, 13 employees in calendar year 2022 and is required to file Forms W-2 for those employees during calendar year 2023, that taxpayer would, under these proposed regulations, be required to file those 13 Forms W-2 electronically," said the proposal. 

It also would remove the non-aggregation rule, making it so that total forms filed, rather than the number of each separate form, would determine whether the thresholds are met. 

The IRS believes that lowering the threshold will allow the agency time to ensure that it has sufficient resources and updated programming to seamlessly handle and process the increased volume of electronically filed information returns and the applications required to file those information returns electronically.

Comments on the change are due 60 days after the proposal has been entered into the Federal Register. 

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