Significant Changes to Electronic Filing Requirements for 2023 Tax and Information Returns   (Major impact for 1099’s)

The Internal Revenue Service issued new regulations significantly expanding mandatory electronic filing of tax and information returns that require almost all returns filed on or after January 1, 2024, to be submitted to the IRS electronically instead of on paper.

Under the new rules, filers of 10 or more returns of any type for a calendar year generally will need to file electronically with the IRS. Previously, electronic filing was required if the filing was more than 250 returns of the same type for a calendar year.

The discussion below focuses on Form 1099, but the new rules broadly apply to other types of returns as well.

First, a reminder of the general 1099 requirements: if in the conduct of your trade or business, you pay an unincorporated entity or individual $600 or more for services, rent, etc., you must issue them a 1099.  Previously many of these 1099’s would be filed with the recipient and IRS on paper.

For returns filed on or after January 1, 2024, filers of 10 or more returns of almost any type, for a calendar year generally will need to file electronically with the IRS, they must be filed electronically with the Information Returns Intake System (IRIS).   Some companies have historically completed the 1099 process themselves, but these new electronic filing requirements and software needed may make that difficult.

Affected employers may need some lead time to implement new policies and procedures to comply with the new rules. Simply doing the “same as last year” will not work for many businesses.

The new electronic filing rules are complicated, LVBW can help you understand and comply with the new rules, which could include facilitating electronic filing.  The 1099 filing deadline comes quickly in January, 2024.  Please contact us as soon as possible to discuss your 1099 filing situation.