The IRS is expanding the electronic filing mandate for small and medium-sized businesses, requiring any federal tax or information returns in paper form to be filed electronically.
The new regulations recently published by the IRS reveal the threshold for paper form filing is being reduced from 250 to just 10. The expanded mandate doesn’t come into force until 2024, so affected businesses who file ten or more returns or statements per year now have just under ten months to switch from filing in paper form to electronic.
IRS Portal for Electronic Tax Returns and Statements
To help businesses file their returns and statements electronically, the IRS has opened a new portal online which should facilitate compliance by helping businesses file Form 1099 series information. Called IRIS (Information Returns Intake System), the portal is a free electronic filing service that is secure and accurate, and does not require any special software to use.
Electronic Filing Options for Small Businesses
There are multiple options for electronic filing available for businesses on the IRS website which also provides instructions for use. The Electronic Federal Tax Payment System (EFTPS) is one of the securest methods, with the IRS wittily describing it as ‘security you can count on’.
The IRS also explains how to increase security when filing an electronic tax payment, saying: “When making your electronic federal tax payment, using three pieces of identification safeguards your privacy and secures your information. The use of your Taxpayer Identification Number (EIN or SSN), Personal Identification Number (PIN) and Internet Password, along with a secure Internet browser, increases your security.”
The tax overlords also espouse the accuracy of the electronic system, adding: “Immediate acknowledgement of your payment along with your bank statement will confirm payments were made.”
Penalty for Tax Filing Failure
Currently the penalty for failing to electronically file tax returns or statements that should be filed electronically is $290 per Form W-2 or 1099, up to a cap of over $3.5 million.
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Source : SmallBizTrends