IRS Significantly Expands Mandatory Electronic Filing Requirement

On Feb. 23, 2023, the IRS released a final rule that substantially expands the requirement to file certain information returns electronically, including the Affordable Care Act’s (ACA) reporting requirements under Sections 6055 and 6056 of the Internal Revenue Code.

The final rule implements a law change made by the Taxpayer First Act of 2019, which lowers the 250-return threshold for mandatory electronic reporting to 10 returns. This change applies to many IRS information returns, such as Forms W-2,1099, 5330 and 8955-SSA.

For ACA reporting (Forms 1094-B/1095-B and Forms 1094-C/1095-C), employers that file at least 10 returns during the calendar year must file their ACA returns electronically, beginning with returns required to be filed during 2024. The final rule requires employers to aggregate most information returns, such as Forms W-2 and 1099, to determine if they meet the 10-return threshold for mandatory electronic filing.

Due to this change, almost all employers subject to ACA reporting will be required to file their returns electronically beginning in 2024. Employers that have been filing paper returns should begin considering how they will transition to electronic filing.