What is the IRS electronic mandate?

The IRS requires businesses to file certain information returns electronically if they meet a minimum filing threshold.

Under current regulations, if your business files 10 or more information returns in total during a calendar year, you must submit them electronically. This is a significant reduction from the previous threshold of 250 returns.The requirement applies across multiple return types, including forms such as 1099s and W-2s, and businesses must aggregate all return types to determine if they meet the threshold. For example, if you file 2 W-2s and 8 Form 1099s, you are required to file all of them electronically since the total equals 10.

This mandate applies to most businesses, with limited exceptions, and affects how companies manage and submit their tax filings, especially those working with independent contractors.Failure to comply with the electronic filing requirement may result in IRS penalties for each return filed incorrectly.