Today, Employers responsible for Forms 1094-B/1095-B or Forms 1094-C/1095-C that file less than 250 forms are not subject to electronic filing requirements through the AIR System. Many of these smaller employers choose to still submit these forms on paper and avoid the additional expense of electronic filing.
IRS Mishandling: An increasing number of Applicable Large Employers (ALEs) are receiving Letter 1865C from the IRS Austin office requiring that they resubmit their paper filed Forms 1094-C and 1095-C for the 2020 tax year. The reason being is that the previous submission of the Form 1094-C “got separated” from the Forms 1095-C, which mean the IRS does not have the information it needs to process forms for that tax year and is requiring the Employer to resubmit the Forms or face penalties for failing to do so. This can be a simple inconvenience OR a nightmare if the Employer did not retain a copy of the Forms originally submitted.
Mandatory Electronic Filing: On August 16, 2022, the IRS sent a final rule entitled “electronically filed returns” to the Office of Management and Budget (OMB) for review. This final rule originated from a proposed rule published by the IRS in July 2021, which substantially expanded mandatory electronic filing of certain information returns as required by the Taxpayer First Act of 2019. Regarding Forms 1094-B/1095-B and Forms 1094- C/1095-C, the proposed rule made the following changes:
- The electronic filing threshold is to be lowered to 100 returns for due dates during calendar year 2022, and 10 returns for subsequent calendar years.
- When determining these thresholds, employers were required to aggregate most information returns, including Forms W-2.
We are still waiting for publication of draft instructions for Forms 1094-B/1095-B and Forms 1094- C/1095-C, which may address any changes to electronic filing requirements that would apply to 2022 forms filed in 2023.
ETC will continue to monitor for publication of any guidance related to changes in electronic filing requirements of these forms and keep our clients apprised of the latest developments. However, we would encourage employers who have previously submitted these forms by paper to consider taking steps now to implement electronic filing of their 2022 forms.
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