IRS Releases Proposed Regulations to Expand Mandatory Electronic Filing of Information Returns

On May 31, 2018, the IRS released proposed regulations to significantly expand mandatory electronic filing of most ACA information returns. As background, employers filing 250 or more information returns during a single calendar year are required to file electronically, but currently, the 250 return threshold applies separately to each type of information return. For example, if an employer files 200 Forms W-2 and 100 Forms 1095-C for 2018, the employer isn’t required to file either form electronically because each filing is separately considered and neither reaches the 250 filing threshold.

The proposed regulations would require aggregation of most information returns when determining the 250 return threshold instead calculation of each information return separately by form type. Forms that would have to be aggregated include Forms 1095-B and 1095-C, Forms 1099, Forms 1099-R issued by qualified retirement plans and Forms W-2. In addition, any corrected returns would need to be filed electronically under the proposed rules, even if fewer than 250 corrected forms are filed during the year.

If these proposed rules are finalized, the new aggregation rules are likely to affect most employers, and only the smallest applicable large employers would be permitted to file paper Forms 1095-C. However, the IRS noted that its waiver process would continue to be available for certain filers that lack access to electronic filing at a reasonable cost.

The proposed regulations would become effective for information returns due after Dec. 31, 2018. The IRS is accepting comments on the proposed rule until July 30, 2018. Thus, applicable large employers that could be affected may want to make arrangements to file information returns electronically if they aren’t already doing so.

Filing Requirements for Information Returns Required Electronically, Proposed Rules