The IRS has amended regulations regarding electronic filing requirements for certain information returns, including Forms W-2. This change, outlined in Treasury Decision 9972 and published on February 23, 2023, has significant implications for the upcoming 2024 filing year, impacting the way employers handle Forms W-2, W-2AS, W-2GU, W-2VI, and Form 499R-2/W-2PR.
Key Changes
The primary shift in the regulations involves lowering the threshold for mandatory electronic filing from 250 to just 10 information returns. This means that employers, including those who file Forms W-2, must now assess the total number of information returns they are required to file in a calendar year. If this sum equals or exceeds 10 returns, the IRS mandates that all these forms must be filed electronically.
Applicability
The new threshold becomes effective for information returns required to be filed in calendar years beginning with 2024. However, it is crucial to note that the rule applies to the tax year 2023 Forms W-2 since they are due to be filed by January 31, 2024.
Forms Included
To determine whether the electronic filing threshold is met, employers must add together the number of specific information return forms, including Form 1042-S, the Form 1094 series, Form 1095-B, Form 1095-C, Form 1097-BTC, Form 1098, Form 1098-C, Form 1098-E, Form 1098-Q, Form 1098-T, the Form 1099 series, Form 3921, Form 3922, the Form 5498 series, Form 8027, and Form W-2G.
Exclusions
Corrected information returns are treated separately and are not included in calculating the number of information returns for the electronic filing threshold. Employers can refer to “About Form W-2c” for more details about the rules for correction Forms W-2c.
Implications for Employers
With this significant reduction in the electronic filing threshold, employers need to assess their filing practices promptly. Those who, in the past, may not have been required to file electronically due to the higher threshold may now find themselves subject to this requirement. Failure to comply could result in fines, emphasizing the urgency for businesses to adapt to the new regulations or seek appropriate exemptions.
As the IRS adjusts electronic filing requirements, employers must stay informed and take necessary steps to ensure compliance. With the lower threshold now in effect, businesses should evaluate their filing obligations for the 2023 tax year promptly. This proactive approach will not only help avoid potential fines but also streamline the transition to the updated regulations, ensuring a smooth and compliant filing process for the years to come.