The Department of the Treasury and the Internal Revenue Service have recently issued final regulations amending the rules for filing returns and other documents electronically. These regulations will require certain filers to file electronically beginning in 2024 for the tax year 2023. These newly finalized regulations around e-filing reduce the threshold to 10 or more returns and require filers to aggregate almost all information returns. This will impact essentially all employers.
What do these new IRS e-filing regulations mean for my business?
This means that businesses will need to combine the number of W-2s, 1099s, 1095-Cs, etc. to come in under the threshold of 10 returns if they wish to file any of these on paper. In the past, if you came in under the threshold for each return type, such as 249 W-2 forms to be filed, you could file those returns on paper; or, if you have 1,000 W-2s but only 249 1095-Cs, you could file the 1095-Cs on paper. Both situations will now require electronic filing for all information returns.
Most employers have utilized electronic filing for Social Security Administration (SSA) W-2 form submission for several years and most payroll software systems can generally create the necessary electronic files. This is also true for electronically filing 1099s. However, the electronic filing requirements around ACA Form 1095-C are much more complex. While payroll and HR systems have been designed to print Form 1095-C, few can support electronic filing through the AIR (Affordable Care Act Information Returns) system. For employers which have historically filed fewer than 250 1095-Cs annually, all will now be required to submit these forms electronically. This will be a major issue that these employers will have to resolve prior to filing 2023 ACA information returns.
The new finalized e-filing regulations do not address a previously proposed ruling on aggregating form counts across affiliated companies, also known as ALEs (Applicable Large Employers). In July of 2021, the IRS proposed a ruling that would require ALEs to aggregate their form counts across ALE members (aka Federal Employer ID/EINs) when determining whether electronic filing is required for each individual member. However, the 10-form count rule now largely eliminates the need for this ruling as most individual ALE members will likely have more than the 10 required forms which trigger electronic filing requirements even without aggregating form counts across ALE members.
How does this impact Dynamics 365 Business Central HRP for BC users and the filing of W-2s and 1095-C forms specifically?
W-2s: HRP for BC (aka Payroll NOW) already supports the creation of an electronic file for submission of Form W-2 to the SSA. Employers with more than 10 combined forms will now be required to utilize this electronic file for SSA submissions. Additionally, certain HRP for BC subscriptions include payroll tax filing. For these customers, electronic filing of Form W-2 will be completed annually as part of that solution (note that additional fees may apply).
1095-Cs: HRP for BC customers that have historically filed Form 1095-C in paper form to the IRS must now submit these forms electronically. While many HRP for BC subscriptions include ACA services, not all do. The Integrity Data add-on ACA service, now available as a monthly subscription, includes electronic filing capabilities for Form 1095-C. If your organization does not have an ACA electronic filing solution, please reach out to our Customer Success Team to learn more about this service.
1099s: Business Central supports electronic filing of Form 1099. See this Microsoft document for more information: Set up and use the IRS 1099 Form [US] – Business Central | Microsoft Learn.
How does this impact Dynamics GP Payroll users and the filing of W-2s and 1095-C forms specifically?
W-2s: Dynamics GP already supports the creation of an electronic file for submission of Form W-2 to the SSA. Employers with more than 10 combined forms will now be required to utilize this electronic file for SSA submissions.
1095-Cs: Dynamics GP customers that have historically filed Form 1095-C in paper form to the IRS must now submit these forms electronically. Dynamics GP does NOT support electronic filing of Form 1095-C. However, the Integrity Data add-on ACA service, now available as a monthly subscription, includes electronic filing capabilities for Form 1095-C. If your organization does not have an ACA electronic filing solution, please reach out to our Customer Success Team to learn more about this service.
1099s: Dynamics GP does not support electronic filing of Form 1099-MISC. See this Microsoft document for more information: Submit 1099-MISC forms electronically – Dynamics GP | Microsoft Learn. ISV solutions exist to assist with electronic filing of Form 1099.
What should I do next?
Integrity Data customers, if you are not taking advantage of our ACA services (which include e-filing), or aren’t sure if your current subscription includes ACA services, please contact our team to ensure you have everything set up in order to e-file for this year.
Not an Integrity Data customer, but need help making sure you can e-file all the required forms? Contact us to set up a discovery call to see if we can help.
For more information from the IRS on e-filing regulations, visit:
Need help e-filing your ACA forms?
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