The IRS has finalized rules considerably increasing necessary digital submitting of data returns. The rules, which had been proposed in 2021 to implement statutory modifications made by the Taxpayer First Act of 2019 (see our Checkpoint article), set up decrease thresholds for necessary digital submitting of the next returns affecting worker profit plans:

• Kind 1094 Sequence; Varieties 1095-B and 1095-C; Kind 1099 Sequence; and Kind 5498 Sequence. For returns in these collection required to be filed after December 31, 2023, the brink for required digital submitting is ten returns, decided by aggregating most data returns—together with these types and Varieties W-2. Additionally, a partnership with greater than 100 companions should file these returns electronically whatever the variety of returns. Any corrected return should be filed in the identical format (digital or paper) as the unique return to which the correction corresponds. [EBIA Comment: The proposed regulations included a transition year (2022) in which the electronic filing threshold for these returns would have been 100 returns, but there is no transition period in the final regulations.]

• Varieties 5330 and 8955-SSA. The Kind 5330 (associated to sure worker profit plan excise taxes) for any taxable yr ending on or after December 31, 2023, should be filed electronically if the filer is required to file no less than ten returns of any kind throughout the calendar yr wherein the Kind 5330 is due. The Kind 8955-SSA (figuring out separated individuals with deferred vested advantages) for any plan yr that begins on or after January 1, 2024, should be filed electronically if the filer is required to file no less than ten returns of any kind throughout the calendar yr that features the primary day of the plan yr.

• Kind 5500 Sequence. Filers of Kind 5500 underneath the IRS’s guidelines for retirement plans should file electronically for plan years that start on or after January 1, 2024, if they’re required to file no less than ten returns of any kind throughout the calendar yr that features the primary day of the plan yr.

The rules usually present that the IRS could grant a waiver from the digital submitting requirement if the filer can exhibit undue hardship, and will present exemptions—for instance, for non secular causes. Additionally, digital submitting shouldn’t be required if the IRS’s techniques don’t assist it. The preamble notes that, as a result of Varieties 5500 and 5500-SF should be filed electronically utilizing the DOL’s EFAST2 system, no digital submitting waivers might be granted for these types. [EBIA Comment: Form 5500-EZ is not required to be filed using EFAST2.]

EBIA Remark: As anticipated, these rules vastly increase the digital submitting requirement, eliminating paper filings for all however the smallest employers. Whereas the decrease thresholds don’t come as a shock, these which were submitting on paper now want to maneuver ahead with their transition to digital submitting, paying shut consideration to the aggregation guidelines and efficient dates. For extra data, see EBIA’s Well being Care Reform guide at Sections XXXVI.C (“Info Reporting of Minimal Important Protection (Insurers and Employers That Self-Insure)”) and XXXVI.D (“Info Reporting of Employer-Sponsored Protection (Relevant Massive Employers)”). See additionally EBIA’s Kind 1094/1095 Workbook at Part X.C (“Submitting Strategies: Paper or Digital”); EBIA’s 401(okay) plans guide at Sections XIV.R (“Reporting Distributions on Kind 1099-R”) and XXXI.M (“IRS Filings Associated to Kind 5500”); and EBIA’s Client-Pushed Well being Care guide at Part XVII.A (“HSA Trustee/Custodian Reporting Obligations”).

Contributing Editors: EBIA Workers.