IRS Releases Final Rule on E-Filing Requirements Beginning in 2024; Includes Aggregate Ten-Return Threshold

Published February 23, 2023

The Department of the Treasury and the Internal Revenue Service (IRS) have issued final regulations reflecting changes made by the Taxpayer First Act to increase e-filing of information/tax returns. These regulations will require certain filers to e-file beginning in 2024. 

Filers of 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 affected by the final regulations. Information return examples include:
  •  ACA reporting forms 1094/1095 
  • Wages and tax statement form W-2 
  • Form 1099-R distributions 
  • Form 5500 annual return of the employee benefit plan

These regulations amend the "Regulations on Pension Excise Taxes" (26 CFR part 54) which requires persons to report information for certain excise taxes related to employee benefit plans. This section was added:
  • Section 54.6011-3 - Required use of electronic form for the filing requirements for the return for certain excise taxes related to employee benefit plans. The first paragraph states:
  • Excise tax returns required in electronic form. Any employer or individual required to file an excise tax return on Form 5330, "Return of Excise Taxes Related to Employee Benefit Plans," must file the excise tax return electronically if the filer is required by the Internal Revenue Code or regulations to file at least 10 returns of any type during the calendar year that the Form 5330 is due.

The final regulations:

  • Reduce the 250-return threshold enacted in prior regulations to generally require e-filing by filers of 10 or more returns in a calendar year. 
  • Require filers to aggregate almost all information return types covered by the regulation to determine whether a filer meets the 10-return threshold and is required to e-file their information returns. Earlier regulations applied the 250-return threshold separately to each type of information return covered by the regulations.
  • Eliminate the e-filing exception for income tax returns of corporations that report total assets under $10 million at the end of their taxable year.
  • Create several new regulations to require e-filing of certain returns and other documents not previously required to be e-filed.
  • Require partnerships with more than 100 partners to e-file information returns, and they require partnerships required to file at least 10 returns of any type during the calendar year to e-file their partnership return. 

The final regulations are effective February 23, 2023 and applicable to returns or documents required to be filed during calendar year 2024.