The final regulations reflect changes made by the Taxpayer First Act that strengthen e-filing requirements.

The IRS and the Treasury Department on Tuesday issued final regulations pertaining to companies filing returns and other documents electronically starting in 2024.

The final regulations impact 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.

The final regulations reflect changes made by the Taxpayer First Act that strengthen e-filing requirements. The law, enacted in 2019, authorizes the Treasury Department to issue regulations to reduce the threshold for when taxpayers are required to e-file returns.

Specifically, 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. The final regulations also create several new regulations to require the e-filing of certain returns and other documents not previously required to be e-filed.
• 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.
• 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 returns. 

The final regulations come just as the IRS unveiled a new online portal last month to help businesses file Form 1099 series information returns electronically. Known as the Information Returns Intake System (IRIS), this free e-filing service is secure and requires no special software. Though available to any size business, IRIS may be especially useful to small businesses that currently send their 1099 forms on paper to the IRS.

In 2021, about 82% of all corporate income tax returns were e-filed, and almost 90% of partnership tax returns were e-filed. The IRS receives nearly 4 billion information returns per year and expects to receive nearly 5 billion by 2028. In 2019, the IRS still received nearly 40 million paper information returns, even though approximately 99% of all information returns for that year were e-filed.

The final regulations generally provide hardship waivers for filers that would experience hardship in complying with the e-filing requirements and administrative exemptions from the e-filing requirements to promote effective and efficient tax administration, the IRS said.