In an ever-evolving world, even government agencies must adapt to the changing times. The Internal Revenue Service (IRS) is no exception. To streamline and modernize the tax filing process, the IRS has issued updated regulations for the year 2024, aiming to boost electronic filing (e-filing) while minimizing undue hardship for taxpayers. Let’s explore the latest developments in IRS e-filing regulations and how they impact taxpayers.
The E-Filing Threshold Shift
One of the most significant changes in the 2024 e-filing regulation, officially known as TD 9972, is the shift in the e-filing threshold. In the past, only taxpayers who filed more than 250 returns in a calendar year were required to e-file. However, starting in 2024, a new threshold comes into play. Now, taxpayers filing 10 or more returns in a single calendar year must electronically file their returns. This change is expected to encourage more taxpayers to adopt e-filing and reduce the paper filing burden on the IRS.
The regulation applies to all returns that are required to be filed during the 2024 calendar year. For taxpayers with fiscal year-ends that do not align with the calendar year, the regulation will apply to taxable years ending on or after December 31, 2023. It's crucial for taxpayers to be aware of these changes and adjust their filing methods accordingly.
It's essential to note that the threshold applies to the combined total of all returns filed, not separately to each type of return. This includes various types of returns, such as tax returns, employment tax returns, excise tax returns and informational returns. One significant category affected by this regulation is informational returns, including Forms W-2 and Forms 1099.
Forms W-2 and Forms 1099 are commonly used by employers and businesses to report wages and non-employee compensation, respectively. These forms serve a crucial role in tax compliance and record-keeping. To assist taxpayers in the transition to e-filing these forms, the IRS has developed free online resources. This can be particularly beneficial for small businesses that have traditionally filed these forms on paper. E-filing can streamline the process, reduce errors and help businesses stay compliant with tax regulations.
Hardship Waivers for Exemption
Recognizing that some taxpayers may face undue hardship in complying with the new e-filing requirements, the IRS offers hardship waivers. These waivers provide an exemption from e-filing requirements for individuals or entities who can demonstrate that e-filing would impose a significant burden or create an undue hardship.
It's important to keep in mind that while hardship waivers are available, they are not automatically granted. Taxpayers seeking an exemption must follow the IRS's guidelines and provide clear and compelling reasons why e-filing would be a hardship in their specific circumstances.
Partner with MarksNelson for a Smooth Transition
The IRS's 2024 e-filing regulation represents a significant shift in the way taxpayers submit their returns. While change can sometimes be challenging, the move toward increased electronic filing is ultimately a step toward greater efficiency and modernization in the world of taxation. By embracing e-filing and making use of the IRS's online resources, you can streamline your reporting processes and ensure compliance with the latest regulations.
The future of tax filing is here, and it's essential to have the right support to make the transition as smooth as possible. Whether you're a business owner or an individual taxpayer, finding the right accountant or business advisor is crucial. At MarksNelson, we have a deep understanding of the evolving tax landscape to help you navigate the changing tax regulations and achieve your financial goals. Contact us today for a confidential conversation about how our expertise and right-sized solutions can help steer you towards a prosperous future.