Whatever happened to electronic filing regs from IRS?

Employers waited for IRS to release final regs reducing the electronic filing threshold from 250 to 10 returns for TY 2021. But that never happened.

No regs. No explanations.

Now, in the recently released 2022 W-2 and 1099 instructions, IRS has once again told employers that final regs are tentative.

“If” the electronic filing regs are issued and effective for 2022 tax returns, IRS says it’ll notify employers on its website.

As you may recall, the Taxpayer First Act of 2019 authorized IRS to issue regs requiring electronic filing from more employers. According to proposed regs, released in July 2021, businesses would need to aggregate W-2s, 1099s and other forms to see if they hit the lower threshold.

As we wait for the next step on that, here are some other changes noted in the forms’ instructions.

Other filing changes

You’ll see penalties go up for failing to correctly file W-2s or 1099s. As of Jan. 1, 2023, penalties will be:

• $50 per return if you correctly file within 30 days of the due date (maximum penalty is $588,500 per year or $206,000 per year for small businesses)
• $110 per return if you correctly file more than 30 days after the due date but by August 1 (max penalty: $1,766,000 or $588,500), and
• $290 per return if you file after August 1 (max penalty: $3,532,500 or $1,177,500).

You may have a discrepancy when reconciling Form W-2 and Form W-3 with Form 941. Look for that heads-up from IRS in the W-2 instructions.

The problem revolves around COVID employment tax credits – i.e., certain leave isn’t subject to the employer share of Social Security tax.

IRS still plans to get the new 1099 portal up and running by January 2023. That’s according to the 1099 instructions.

Payroll may want to help walk A/P through its use once it’s functional. After all, IRS has picked the Social Security Administration’s Business Services Online (BSO) as the model for the portal. And Payroll has used BSO for years for filing W-2s.