The Taxpayer First Act of 2019 authorized the Department of the Treasury and the IRS to issue regulations that reduce the 250 return requirement for electronic filing of information returns. The IRS has previously signaled that the eFile threshold would be reduced to 100 returns for tax year 2021 and 10 returns for tax year 2022 – but the final regulations have still not been published. In addition to the lower thresholds, calculating the number of information returns that are subject to the threshold requirement will no longer be by individual form type, but aggregated across all information returns issued by your business – generally including Forms 1042, 1094, 1095, 1098, 1099, 5498, 8027, and W-2.

These changes will make many more small filers subject to electronic filing as the IRS continues to evolve tax reporting away from paper returns. While the regulations remain in proposed status, the IRS is sending strong signals that they will be finalized this year and are likely to bypass the 100 return threshold and lower the threshold to 10 returns for tax year 2022. If you have previously filed on paper, you will now need to electronically file for tax year 2022. If your business has never filed electronically before, you will first need to obtain an IRS E-Services account and then a Transmitter Control Code (TCC) for your organization. Or you can simply utilize and we can eFile on your behalf for a small fee. Consider this potential change in your filing method as you plan your 1099 reporting for tax year 2022.