Preparing Your Business for the 2024 Tax Season

The Internal Revenue Service (IRS) has recently announced significant changes to tax filing requirements that will impact businesses of all sizes. With the release of TD 9972 on February 21, 2023, the IRS has set new rules for electronic filing, which will come into effect in the 2024 tax season. As a result, businesses need to be aware of these changes and be prepared to adapt their tax filing processes accordingly.

This blog post will discuss the key points of these new regulations, the implications for your business, and steps you can take to ensure compliance with the updated IRS requirements.

Understanding the New Regulations

The new regulations stem from Section 2301 of the Taxpayer First Act (TFA), which was enacted on July 1, 2019. This legislation aimed to reduce the number of paper returns filed, resulting in a more streamlined and efficient process for both the IRS and taxpayers.

Previously, organizations that filed more than 250 returns in a calendar year were required to file electronically. However, the new rules have substantially lowered this threshold. Starting in 2024, organizations filing 10 or more returns of any kind will be required to file almost all required returns electronically.

These requirements apply to a wide range of returns, including:

• Forms 1099-series (e.g., 1099-MISC, 1099-NEC, and 1099-INT)
• Forms W-2 (Wage and Tax Statement)
• Affordable Care Act Forms 1094 and 1095-C (Employer-Provided Health Insurance Offer and Coverage)
• Employment tax returns

Implications for Your Business

These new regulations will have a significant impact on many businesses, especially small and medium-sized enterprises (SMEs) that may have previously relied on paper-based filings. The shift to electronic filing means that companies will need to adjust their internal processes, invest in new software or tools, and train employees in the new filing procedures.

For companies that already utilize electronic filing for some returns, this change may not be as drastic. However, it is still essential to ensure that all required returns are filed electronically, as failure to comply with these new regulations can result in penalties and other negative consequences.

Preparing Your Business for the New E-Filing Requirements

• Assess your current filing practices: First, determine how many returns your organization typically files in a calendar year and identify which types of returns are involved. This will help you understand the extent of the changes you need to make in order to comply with the new regulations.
• Review software options: If your organization is not already using an electronic filing system, or if your current system does not support all the required forms, you will need to invest in new software. Research and compare various tax filing software options to find the one that best meets your needs and budget.
• Implement new processes: Once you have chosen a software solution, work with your team to develop new processes and procedures for filing electronically. This may include changes in how information is collected, input, and reviewed, as well as new workflows for submitting and tracking returns.
• Train your team: Ensure that all employees involved in tax filing are trained in the new software and processes. This may involve formal training sessions or more informal, on-the-job guidance. Keep in mind that employees may need ongoing support and training as they become accustomed to the new system.
• Stay informed: The IRS may issue additional guidance or updates regarding electronic filing requirements. Make sure to stay informed of any changes to ensure your business remains in compliance.

The new IRS e-filing regulations represent a significant shift in the tax filing landscape for many businesses. As the 2024 tax season approaches, it is crucial for companies to be proactive in preparing for these changes. By assessing your current filing practices, reviewing software options, implementing new processes, and training your team, you can ensure a smooth transition to electronic filing and maintain compliance with the updated IRS requirements.

In addition to the practical steps outlined above, it is also essential to foster a culture of adaptability within your organization. As regulations and requirements continue to evolve, your business must be prepared to pivot and adjust accordingly. By embracing change and staying informed, you can minimize disruptions and maintain the financial health of your company.

The new IRS e-filing requirements are a reminder that businesses must be prepared to adapt to an ever-changing regulatory environment. By taking the necessary steps to understand and implement these new regulations, you can position your company for success in the 2024 tax season and beyond.

Stay informed, stay compliant, and embrace the opportunities that come with a more efficient and streamlined tax filing process.