IRS Proposed New Electronic Filing Requirements for ACA & More

E-Filing Requirements

On July 23, 2021, the IRS entered the proposed regulation into the federal registry that will make changes to the previously proposed amendments (i.e., e-filing requirements) made by the Taxpayer First Act of 2019 (TFA). The TFA authorized the IRS to gradually reduce to 10 tax returns.

The current threshold for requirement of electronic filing of certain taxpayer forms is 250. This new proposed regulation would lower the threshold to 100 returns for tax year 2022, meaning returns due for 2021 year but filed in 2022 will be required to file these forms electronically. Returns of 10 or more filed in 2023 for 2022 year will be required to us electronic filing.

The proposed regulations would aggregate all of an employer’s information returns (e.g., Forms W-2, 1099, etc.) to determine if the threshold is met instead of counting each type of form separately as in the current regulation. Also, the proposed regulations would require that any corrected information returns be filed in the same manner as the original form (either electronically or on paper).

Among a host of forms affected by this regulation are the ACA Individual Mandate and Employer Shared Responsibility Mandate (1095 B&C, 1094B&C forms).

This new requirement to aggregate returns when calculating electronic filing thresholds, combined with the lower thresholds themselves, will likely eliminate paper filings for all but the smallest employers.

The regulation’s impact would be especially acute for smaller applicable large employers (ALEs) who have been able to file Forms 1094-C and 1095-C on paper when reporting information for employer shared responsibility. Since ALEs by definition have at least 50 full-time-equivalent employees, they are likely to pass the 100-return threshold when taking into account Forms W-2 and 1095-C. Given the proposed 2022 effective date, ALEs should monitor this development carefully and prepare for mandatory electronic filing as soon as March 31, 2022¹.

BASIC is monitoring this regulation closely and is prepared to meet this mandatory requirement for 2022 ACA forms.

Comments Due September 21

Any comments on the proposed regulations may be submitted electronically, identified by IRS REG-102951-16, through the eRulemaking portal.

Comments can be mailed to:

CC:PA:LPD:PR (REG-102951-16), Room 5203, Internal Revenue Service
P.O. Box 7604, Ben Franklin Station
Washington, DC 20044

Comments must be received by September 21. This regulation will then be finalized.

¹ 2021 Thomson Reuters/EBIA