IRS Finalizes Rules to Lower Electronic Filing Threshold for 2024

The IRS finalized regulations to reduce the threshold for filing information returns (e.g., Forms W-2, 1099) electronically from 250 to 10 for returns to be filed on or after January 1, 2024. Beginning in 2024, information returns will be aggregated to calculate if the 10-return threshold is reached.

The final regulations are scheduled to be published in the Federal Register on February 23. The IRS proposed these regulations on July 23, 2021 (86 F.R. 39910, 7-23-21).

The regulations reflect changes made by the Taxpayer First Act of 2019 (TFA), which has a goal to increase electronic filing. The final regulations also withdraw regulations the IRS proposed in 2018 to amend the rules for determining whether information returns must be filed electronically (83 F.R. 24948, 5-31-18).

2023 Threshold Is Still 250

Because the final regulations will not apply until calendar year 2024, the electronic filing threshold for returns required to be filed in calendar year 2023 remains at 250.

Aggregation of Returns

Currently, the electronic filing threshold applies individually to each type of information return. Under the final regulations, with a few exceptions, all information returns required to be filed during the calendar year are counted in the aggregate. One exception to the rule is that corrected information returns are not counted in determining whether the 10-return threshold has been met.

Corrected Returns

The final regulations require that corrected information returns be filed in the same manner as the original form (either electronically or on paper). The IRS determined that, to increase the IRS’s timeliness and accuracy in processing information returns, if persons are required to file original information returns electronically, they must file any corresponding corrected information returns electronically.

To learn more about federal and state laws, regulations, and information to keep your company's payroll operations in compliance, check out Payroll Source Plus!

Jyme Mariani, Esq., is Managing Editor of Payroll Currently and Senior Manager of Payroll Information Resources for the APA.