The IRS proposed regulations amending the rules for filing electronically that reduces the threshold for filing W-2s. The Taxpayer First Act proposes wide-sweeping changes in an effort to modernize the IRS and improve the efficiency of the taxpayer experience when filing taxes.

This is further evidence of the government’s commitment to e-filing. Electronic filing makes processing returns much easier for the IRS.

Proposed E-Filing Thresholds

As part of the Taxpayer First Act, many businesses will no longer be able to submit paper forms. For the tax year 2020, electronic filing was mandatory if the employer had 250 or more W-2s to complete. Over the next two years, the threshold will be significantly reduced.

• In 2020, the number was the same. Companies filing 250 or more W-2s must e-file.
• In 2021, the number drops to 100 forms.
• In 2022, businesses filing just 10 or more forms must electronically file.

For the tax year 2021, this mandate only applies to W-2s. When these proposed changes are fully implemented, it will require businesses to count all information returns they are filing to establish whether they must eFile returns. Simply put, businesses must total all 1099s, W-2s, ACA, and any other informational reports they are required to file to determine if they exceed the eFile threshold.