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    W2 1099 E-File Mandate Change

    The Treasury Department has issued final regulations (Treasury Decision 9972) regarding the lower threshold for the e-file mandate for Forms W2 and 1099s. The lower threshold of 10 returns is now effective for the 2023 tax year. This is a significant reduction from the threshold of 250 that has applied for earlier tax years.

    This lower threshold was originally scheduled to become effective in an earlier tax year, but the Treasury Department delayed the effective date. (Several of our earlier posts, most recently on November 4, 2021, discuss the previous delays in the effective date.)

    The new regulations are effective for Forms W2 and 1099 that are required to be filed on or after January 1, 2024. As a result, Forms W2 and 1099 for the 2023 tax year (and subsequent tax years) will be subject to the lower e-file mandate threshold.

    Clients who are required to file 10 or more applicable forms (which includes the sum of all Forms W2 plus any type of Form 1099 required to be filed by the client) must e-file those forms. (Since this threshold is applied at the client level, the number of forms prepared by practitioners for other clients is not considered when applying this threshold for each separate client.)

    Since clients will be required to e-file these forms, beginning in January 2024, practitioners should prepare to assist their clients in meeting this requirement by registering to electronically file Forms W2 and Forms 1099 on behalf of their clients, if they have not already done so. Information about registering and electronically filing Forms W2 is available at: https://www.ssa.gov/employer/. For Forms 1099, information is available at: IRS opens free portal to file information returns; new electronic option can reduce millions of paper Forms 1099 estimated to be filed by businesses in 2023 | Internal Revenue Service.

    The registration process can take several weeks, so practitioners need to begin the process early enough to make sure that they are registered in time to begin e-filing in January of 2024.

    June 13, 2023 Update: Practitioners can register to e-file Forms 1099 using either the free portal available through the link above or by using the Filing Information Returns Electroncially (FIRE) system, available at: https://www.irs.gov/e-file-providers/filing-information-returns-electronically-fire

    June 27, 2023 Update:  See our post on June 27, 2023 for a discussion of the difference between the free portal and the FIRE system.






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