The final regulations incorporate Taxpayer First Act amendments that strengthen e-filing requirements.

The IRS and the Treasury Department issued final regulations on 23rd February 2023 requiring businesses to file returns and other documents electronically beginning in 2024.

Participants who file partnership returns, corporate income tax returns, unrelated business income tax returns, withholding tax returns, certain information returns, registration statements, disclosure statements, notifications, actuarial reports, and certain excise tax returns are impacted by the final regulations.

The final regulations incorporate Taxpayer First Act amendments that strengthen e-filing requirements. The 2019 law authorizes the Treasury Department to issue regulations lowering the threshold for when taxpayers must e-file returns.

The final regulations, in particular:

• Reduce the 250-return threshold established by earlier regulations to generally require filers of 10 or more returns in a calendar year to file electronically. The final regulations also establish several new regulations that mandate the electronic filing of a number of returns and other documents that were not previously required to be filed electronically.
• Require filers to aggregate nearly all information return types covered by the regulation in order to determine whether a filer meets the 10-return threshold and must e-file their information returns. To each type of information return covered by the regulations, the 250-return threshold was previously applied separately.
• Eliminate the e-filing exemption for income tax returns filed by corporations with total assets of less than $10 million at the end of their fiscal year.
• Partnerships with more than 100 partners are required to e-file information returns, and partnerships that file at least 10 returns of any type during the calendar year are required to e-file their partnership returns.

The final regulations come just months after the IRS unveiled a new online portal in January to help businesses electronically file Form 1099 series information returns. This free e-filing service, known as the Information Returns Intake System (IRIS), is secure and does not require any special software. IRIS is accessible to businesses of any size, but small companies that currently send their 1099 forms to the IRS on paper may find it particularly helpful.

In 2021, approximately 82% of all corporate income tax returns and nearly 90% of partnership tax returns were e-filed. The IRS currently receives nearly 4 billion information returns per year, with a goal of receiving nearly 5 billion by 2028. Despite the fact that nearly 99% of all information returns for that year were e-filed, the IRS received nearly 40 million paper information returns in 2019.

The final regulations generally provide hardship waivers for filers who would face hardship in complying with the e-filing requirements, as well as administrative exemptions from the e-filing requirements, according to the IRS.

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