The Internal Revenue Service (IRS) has announced that it will lower the
threshold for filing information returns on paper from 250 to 10, starting from
the 2023 tax year. This means that businesses and organizations that file 10 or
more Forms 1099, 1098, 5498, or W-2G will have to file them electronically,
unless they obtain a hardship waiver from the IRS.
The IRS encourages all filers to use its FIRE (Filing Information Returns
Electronically) system, which is free and secure or a third-party software that
can complete the efiling for you. The IRS also provides various resources and
guidance for electronic filing on its website.
Filers who cannot meet the electronic filing requirement due to undue
hardship can request a waiver by filing Form 8508, Request for Waiver From
Filing Information Returns Electronically. The waiver request must be submitted
at least 45 days before the due date of the information returns. The IRS will
grant or deny the waiver based on the facts and circumstances of each case.
The new threshold does not affect the due dates or the requirements for
furnishing statements to recipients. Filers must still provide copies of the
information returns to the recipients by January 31 of the following year,
unless an exception applies. Filers can also request an extension of time to
file or furnish information returns by filing Form 8809, Application for
Extension of Time To File Information Returns.
The IRS reminds filers that they may be subject to penalties for failing to
file information returns electronically when required, unless they have an
approved waiver or a reasonable cause for the failure. The penalty amount
depends on when the information return is filed and how many returns are
involved. The penalty can range from $50 to $280 per return, with a maximum of
$3.392 million per year.