Under recent final regulations issued by the Department of Treasury and the Internal Revenue Service, certain tax forms, including Forms 1094 and 1095 required under the ACA, as well as Forms W-2 and 1099, must be electronically filed beginning in 2024 if the employer or plan is filing 10 or more covered information returns in the aggregate. As a result, many employers and plans that previously were permitted to file paper forms now will be required to file covered forms electronically. The electronic filing requirements generally apply to returns filed on or after January 1, 2024. For forms whose due date is based on a plan year (for example, the Form 5500 annual report, Form 8955-SSA, identifying deferred vested participants, and Form 5330, used to report excise taxes), the electronic filing requirement applies to returns relating to plan years starting on or after January 1, 2024.
In February 2023, the Treasury and the IRS issued final regulations reflecting changes made by the Taxpayer First Act of 2019 to the filing requirements for several different documents. The final regulations affect most organizations required to file returns to the IRS, including filers of employment tax returns and information returns such as the Form 1099 series, Form W-2, Forms 1094 and 1095 under the Affordable Care Act, Form 5330, Form 8955-SSA, and Form 5500 (already required to be filed electronically under Department of Labor rules).
Previously, electronic filing was required only when filing 250 or more of the same form. The Act changed this threshold, now requiring taxpayers to electronically file if they file 10 or more covered information returns of any type in a calendar year. The final rules specify that when calculating the number of returns with regards to the 10-return threshold, the combined number of all the various types of information returns covered by the regulation must be considered, including the Form 1094 series, Form 1095-B, Form 1095-C, Form W-2, and Form 1099. As a result, most employers and plans will need to file many forms, including Forms 1094 and 1095, Form W-2 and Forms in the 1099 series, including 1099-R (Distributions from Pensions) electronically.
However, the final regulations provide that, when filing a corrected return on or after January 1, 2024, the taxpayer must file the corrected form in the same manner that it filed the original form. Therefore, if an employer filed the information return on paper prior to 2024, the employer must file the corresponding corrected return on paper after 2024.
The final regulations permit the IRS to grant waivers from electronic filing requirements in cases of undue hardship, including where the taxpayer shows the cost of filing electronically exceeds the cost of filing a paper return.
The IRS has provided a free online portal, the Information Returns Intake System (IRIS) to help filers electronically file Form 1099 series. Additionally, ACA reporting forms are electronically filed through the Affordable Care Act Information Returns System (AIR System). Employers and plans may want to contact their payroll or ACA reporting vendors to confirm that they are prepared to comply with them.
Please contact Slevin & Hart for more information on how this guidance affects your plan.
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