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Federal: IRS Finalizes Rule Reducing Electronic Filing Threshold for 2024

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Internal Revenue Code § 6011(e) requires electronic filing of various form types when there are 250 or more returns. The 250 returns threshold applies separately to each form type. The Taxpayers First Act of 2019 authorized the IRS to issue regulations to reduce the threshold incrementally. The IRS proposed a rule addressing the threshold in July 2021. The IRS published the final rule on February 23, 2023, providing the following changes:

  • New threshold for electronic filing will be reduced from 250 or more to 10 or more forms;

  • The new threshold applies to all form types combined, not separate; and

  • Forms filed electronically require any corrections to be filed similarly.

The rules specify the inclusion of the following forms when aggregating the number of forms:

  • Form 1094-B: Transmittal of Health Coverage Information Returns (ACA)

  • Form 1095-B: Health Coverage (ACA)

  • Form 1094-C: Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns (ACA)

  • Form 1095-C: Employer-Provided Health Insurance Offer and Coverage (ACA)

  • Form 1099 Series

  • Form W-2: Wage and Tax Statement

Example: A small employer with six employees sponsors a self-insured group health plan in 2023. The six employees are offered and enrolled in the employer-sponsored plan and are entitled to Form 1095-B. The same six employees also receive Form W-2. The employer has a total of 12 forms (six Forms 1095-B and six Forms W-2) and is required to file both types of forms electronically by the applicable due dates in 2024.

Additional form types, including Form 5500, are included in the final rule. Some form types have broader aggregation rules than others.

The final rule applies to returns due on or after January 1, 2024. For example, an Affordable Care Act (ACA) return for the 2023 tax year is due in March 2024. Employers with 10 or more Forms 1095-B/C must file electronically.

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