New IRS Electronic File Mandate Set for 2024

NAHB is reminding all business owners to work with their tax professionals to ensure you are prepared for the new mandatory e-file requirements taking effect next year.  Starting in 2024, taxpayers submitting 10 or more returns, which includes Form 1099, must file most tax return information electronically.  For 2023, taxpayers are only required to file electronically if submitting more than 250 returns.

In February, the Internal Revenue Service (IRS) released final rules for electric filing of returns pursuant to The Taxpayer Fairness Act (TFA) of 2019.   The TFA allowed the IRS to reduce to 10 the threshold number of returns where the IRS may mandate e-filing beginning in 2023, but the IRS delayed those changes until 2024 to allow taxpayers more time to prepare.

The final regulations require taxpayers to aggregate almost all information return types in determining whether they meet the 10-return threshold. Returns affected include partnership returns, corporate income tax returns, unrelated business income tax returns, withholding tax returns, and registration statements, disclosure statements, notifications, actuarial reports and certain information and excise tax returns.

Taxpayers may use tax preparer services or software to file returns, or 1099 returns may be filed at no cost through the IRS’ newly released Information Returns Intake System (IRIS). The IRS has provided an instruction video on use of the IRIS system as well as a general user guide.

Failure to file electronically can result in a penalty of $250 for every paper return filed above the 10-return threshold.