Form Aggregation for Tax Year 2023 - What You Need to Know

The IRS recently released new requirements around electronic filing of all information returns including Forms 1099, 1098, W-2 and more. The recent change includes a new form volume threshold for electronic filing, which is being lowered from 250 forms to 10 forms.

Methodology

In tax year 2023, the electronic filing threshold will no longer be applied by each return type. Instead, the threshold number for information returns that your organization is required to issue is determined in aggregate. You will need to electronically file with the IRS if the sum of the forms you are filing is 10 or more. Under this new aggregation rule, the number of forms would be combined to determine whether the 10-form threshold has been met.

What Forms are Included?

There are several different forms that the new aggregation method applies to. Some of the more commonly filed forms include:

Examples

The new aggregation rules can be confusing when it comes to specific information returns so let’s look at a couple examples:

Suppose Company A needs to file four 1099-INT forms and six 1099-NEC forms. In this scenario, Company A meets the 10-form threshold and therefore must file these returns electronically, as well as any other qualifying information returns because they have exceeded the 10-form threshold.

As another example, company B, needs to file nine W-2’s and nine 1095-B forms and three 1099-NEC forms. Even though these are very different forms and a mix of employee and non-employee returns, Company B would also be required to electronically file because the aggregate total of these forms exceeds the 10 from threshold. Further complicating this example is the returns will need to be filed with two different agencies – the SSA (Social Security Administration) and the IRS (Internal Revenue Service).

With electronic filing, your information is subject to electronic audit reviews, so it is crucial to understand the new filing requirements and deadlines to avoid penalties in tax year 2023 and beyond. For W-2 and 1099 Series forms, failure to file in the required manner can result in penalties of up to $310 per return for 2023 returns filed in 2024.  To stay compliant with these changes, businesses should start preparing now. Visit our 1099 Services Page to see how eFileMyForms can help.