IRS proposed regs modify electronic filing requirement for information returns

The IRS has proposed regulations that would change the rules for determining whether information returns, such as the Form 1099 series and Form 5498, must be filed electronically. Under the proposed regulations, all information returns, regardless of type, must be taken into account to determine whether a person meets the 250-return threshold for the electronic filing requirement. Further, a person required to file information returns electronically would be required to file corrected information returns electronically. The new rules will generally be effective when the proposed regulations are finalized and published in the Federal Register. However, they will not apply to information returns required to be filed before January 1, 2019.

Background

Under IRS Reg. §301.6011-2, a person is not required to file an information return electronically unless the person is required to file 250 or more information returns during the calendar year. A different threshold applies for partnership filers. Under a non-aggregation rule, the 250-return threshold applies separately to each type of information return and each type of corrected information return filed. In other words, the forms are not combined for determining whether the 250-return threshold is met.
When originally published, the non-aggregation rule helped to reduce cost and ease the burden on taxpayers. Today, taxpayers file most information returns electronically because it is more prevalent and accessible, less costly, and often easier than paper filing.

Non-aggregation rule removed

The IRS has concluded that determining the 250-return threshold on a form-by-form basis without aggregation is no longer necessary. The new rules provide that if a person is required to file a total of 250 or more information returns of any type covered by IRS Reg. §301.6011-2(b)during a calendar year, the person must file them electronically. Corrected information returns are not taken into account in determining whether the 250-return threshold is met.
Further, a person must electronically file corrected information returns covered by IRS Reg. §301.6011-2(b) if the information returns originally filed for the calendar year must be filed electronically. If a person must file less than 250 information returns for the calendar year, neither the original returns nor the corrected returns need to be filed electronically.
The proposed regulations will not change existing rules that allow persons to request a waiver of the electronic filing requirement.
Finally, the proposed regulations would amend the penalty for failure to file correct information returns under IRS Reg. §301.6721-1(a)(2)(ii) by removing references to the non-aggregation and the prior corrected return rules.

Comments requested

Written or electronic comments and requests for a public hearing must be received by July 30, 2018. Comments can be mailed to: CC:PA:LPD:PR (REG-102951-16), Room 5205, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions can also be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-102951-16), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, NW., Washington DC, or sent electronically via the Federal eRulemaking portal at http://www.regulations.gov (IRS REG-102951-16).

Source: 83 FR 24948.
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