The IRS released a final rule on February 23, 2023, expanding the requirement to file certain information returns electronically. This includes the Affordable Care Act’s (ACA) reporting requirements under Sections 6055 and 6056 of the Internal Revenue Code.
The Taxpayer First Act of 2019 is affected by the final rule’s implementation, lowering the 250-return threshold for mandatory electronic reporting to 10 returns. The final rule will eliminate paper filings for most employee benefit plan returns, and only small employers will be able to report to the IRS on paper forms beginning in 2024.
Affected employee benefit plan returns:
- ACA Reporting (Forms 1094-B/1095-B and Forms 1094-C/1095-C). Employers are required to aggregate information returns, like the W-2 and 1099 Forms, to decide if they meet the 10-return threshold. ACA returns must be filed electronically if the employer files more than 10 returns, beginning with returns that are required to be filed during 2024.
- Form 5330 (Return of Excise Taxes Related to Employee Benefit Plans). Employers that file at least 10 returns of any type during the calendar year that Form 5330 is due must file electronically. This threshold affects any Form 5330 filed for taxable years ending on December 31, 2023, and after.
- Form 8955-SSA (Annual Registration Statement Identifying Separated Participants with Deferred Vested Benefits). If an employer is required to file at least 10 returns of any type during the calendar year that includes the first day of the plan year, the retirement plan return must be filed electronically. This applies to Forms 8955-SSA which must be filed for plan years beginning on or after January 1, 2024.
Employers who file paper returns need to determine how they will transition to electronic filing in order to comply with the final rule.