[Federal Register Volume 88, Number 36 (Thursday, February 23, 2023)]
[Rules and Regulations]
[Pages 11754-11778]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-03710]



[[Page 11753]]

Vol. 88

Thursday,

No. 36

February 23, 2023

Part VIII





Department of the Treasury





-----------------------------------------------------------------------





Internal Revenue Service





-----------------------------------------------------------------------





26 CFR Parts 1, 53, 54, et al.





Electronic-Filing Requirements for Specified Returns and Other 
Documents; Final Rule

  Federal Register / Vol. 88, No. 36 / Thursday, February 23, 2023 / 
Rules and Regulations  

[[Page 11754]]


-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1, 53, 54, and 301

[TD 9972]
RIN 1545-BN36


Electronic-Filing Requirements for Specified Returns and Other 
Documents

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulation.

-----------------------------------------------------------------------

SUMMARY: This document contains final regulations amending the rules 
for filing electronically and affects persons required to file 
partnership returns, corporate income tax returns, unrelated business 
income tax returns, withholding tax returns, certain information 
returns, registration statements, disclosure statements, notifications, 
actuarial reports, and certain excise tax returns. The final 
regulations reflect changes made by the Taxpayer First Act (TFA) and 
are consistent with the TFA's emphasis on increasing electronic filing.

DATES: 
    Effective date: These regulations are effective on February 23, 
2023.
    Applicability dates: For dates of applicability, see Sec. Sec.  
1.1461-1(j), 1.1474-1(j), 1.6033-4(b), 1.6037-2(b), 1.6045-2(i), 
1.6045-4(s), 1.6050I-1(h), 1.6050I-2(f), 1.6050M-1(f), 53.6011-1(e), 
54.6011-3(f), 301.1474-1(e), 301.6011-2(g), 301.6011-3(f), 301.6011-
5(f), 301.6011-10(c), 301.6011-11(e), 301.6011-12(f), 301.6011-13(f), 
301.6011-14(f), 301.6011-15(f), 301.6012-2(f), 301.6033-4(d), 301.6037-
2(f), 301.6057-3(f), 301.6058-2(f), 301.6059-2(e), and 301.6721-1(h).

FOR FURTHER INFORMATION CONTACT: Casey R. Conrad of the Office of the 
Associate Chief Counsel (Procedure and Administration), (202) 317-6844 
(not a toll-free number). The phone number above may also be reached by 
individuals who are deaf or hard of hearing or who have speech 
disabilities through the Federal Relay Service toll-free at (800) 877-
8339.

SUPPLEMENTARY INFORMATION: 

Background

    This document contains amendments to the Regulations on Income 
Taxes (26 CFR part 1) under sections 1461 and 1474 of the Internal 
Revenue Code (Code), which provide that persons required to deduct and 
withhold tax are liable for such tax; under sections 6045 and 6050M of 
the Code, which require persons to file and furnish certain information 
with respect to transactions and contracts; and under section 6050I of 
the Code, which requires persons to report information about financial 
transactions to the IRS; to the Regulations on Pension Excise Taxes (26 
CFR part 54) under section 6011 of the Code, which requires persons to 
report information for certain excise taxes related to employee benefit 
plans; to the Regulations on Foundation and Similar Excise Taxes (26 
CFR part 53) under section 6011 of the Code to remove the option--
available to a person required to report certain excise taxes on Form 
4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the 
Internal Revenue Code--to designate a Form 4720 filed by a private 
foundation or trust as that person's return if the foundation is 
reporting the same transaction; and to the Regulations on Procedure and 
Administration (26 CFR part 301) under sections 1474, 6011, 6012, 6033, 
6057, 6058, and 6059 of the Code for determining whether returns must 
be filed using magnetic media (references to ``electronic form'' are 
used in place of ``magnetic media'').
    On July 1, 2019, the President signed into law the TFA, Public Law 
116-25, 133 Stat. 981 (2019). Section 2301 of the TFA amended section 
6011(e) by adding new paragraph 5 that authorizes the Secretary of the 
Treasury or her delegate (Secretary) to prescribe regulations that 
decrease, in accordance with the TFA, the number of returns a taxpayer 
may file without being required to file electronically. Section 3101 of 
the TFA amended section 6011 to require any charitable or other 
organization required to file an annual return that relates to any tax 
imposed by section 511 on unrelated business taxable income to file 
those returns in electronic form. Section 3101 of the TFA also amended 
section 6033 to require any organization required to file a return 
under section 6033 to file those returns in electronic form.
    On July 23, 2021, the Department of the Treasury (Treasury 
Department) and the IRS published a notice of proposed rulemaking 
(NPRM) (REG-102951-16) in the Federal Register (86 FR 39910), providing 
guidance on the electronic-filing rules for partnership returns, 
corporate income tax returns, unrelated business income tax returns, 
withholding tax returns, certain information returns, registration 
statements, disclosure statements, notifications, actuarial reports, 
and certain excise tax returns. The 2021 proposed regulations also 
withdrew the proposed regulations published in the Federal Register on 
May 31, 2018, amending the rules for determining whether information 
returns must be filed electronically. The 2018 and 2021 proposed 
regulations are included in the rulemaking docket for this Treasury 
Decision on www.regulations.gov.

Summary of Comments and Explanation of Revisions

    The Treasury Department and the IRS received 22 comments in 
response to the proposed regulations. All comments were considered and 
are available at www.regulations.gov or upon request. A public hearing 
was held on September 22, 2021. Three commenters testified at the 
public hearing. The comments that are within the scope of the 
regulations are summarized and discussed in this preamble.
    After consideration of the comments, the Treasury Department and 
the IRS adopt the proposed regulations as revised by this Treasury 
Decision. To the extent not inconsistent with the Summary of Comments 
and Explanation of Revisions section of this preamble, the Explanation 
of Provisions section of the preamble to the proposed regulations is 
incorporated in this document.

I. The Applicability Date of the Final Regulations

A. Applicable for Returns Required To Be Filed in 2024

    In general, the proposed regulations provide that the amended 
electronic-filing rules would be applicable to returns required to be 
filed during calendar years beginning after the date of publication of 
the Treasury Decision in the Federal Register. The proposed regulations 
provide for other applicability dates depending on the filing 
requirements for specific tax forms. For example, the proposed 
regulations provide that the changes to the electronic-filing rules 
would apply to returns required to be filed under Sec.  301.6058-2 for 
plan years that begin on or after January 1, 2022, but only for filings 
with a filing deadline (not taking into account extensions) after July 
31, 2022.
    The majority of commenters recommended delaying the applicability 
of the proposed changes by at least one calendar year to provide time 
for their customers to adjust inventories; for software companies to 
adjust their programming; for paper filers and the IRS to adjust their 
processes; and for the IRS to communicate the changes to the public. 
One commenter, a manufacturer and supplier of tax forms, expressed 
concern that the timing of the proposed changes would impose financial

[[Page 11755]]

burdens on their customers, buyers, and resellers of tax forms, because 
planning and purchasing inventory had already begun when the proposed 
regulations were published. That commenter also was concerned that 
those filers needing a Transmitter Control Code (TCC), required for 
electronically filing most information returns, would not be able to 
obtain one for the 2022 filing season, because applications for a TCC 
were due by November 1, 2021. Another commenter, a seller of paper 
forms, similarly noted that demand for paper tax forms generally begins 
long before the filing season starts, and that tax professionals and 
suppliers had already begun ordering and shipping paper tax forms for 
the 2022 filing season before the proposed regulations were published. 
The commenters also asserted that changes in the electronic-filing 
rules made near the start of filing season have a substantial impact on 
tax-software companies that must adjust their systems to comply with 
the changes.
    Other commenters supported the IRS's efforts to modernize the 
return-filing process to require withholding agents to electronically 
file Form 1042, Annual Withholding Tax Return for U.S. Source Income of 
Foreign Persons, and shared the IRS's desire to improve the timeliness 
and accuracy of refunds and credits claimed by foreign persons with 
amounts withheld. But they suggested that the IRS delay the 
applicability date of the proposed changes by at least one calendar 
year to provide time for the IRS and withholding agents to prepare for 
the electronic filing of Forms 1042. They requested that the IRS 
provide electronic-filing specifications for Forms 1042 as soon as 
possible, and once provided, allow additional time to create and test 
the required software.
    The Treasury Department and the IRS understand the concerns raised 
by commenters with respect to applicability dates of the regulations 
contained in this Treasury Decision. The Treasury Department and the 
IRS believe that making the new provisions for electronic filing 
applicable to returns and other documents required to be filed during 
calendar year 2024 will give affected persons ample time to prepare. 
Accordingly, final regulations Sec. Sec.  1.1461-1(j), 1.1474-1(j), 
1.6037-2(b), 1.6045-2(i), 1.6045-4(s), 1.6050I-1(h), 1.6050I-2(f), 
1.6050M-1(f)(4), 54.6011-3(f), 301.1474-1(e), 301.6011-2(g)(1), 
301.6011-3(f), 301.6011-5(f), 301.6011-11(e), 301.6011-12(f), 301.6011-
13(f), 301.6011-14(f), 301.6011-15(f), 301.6012-2(f), 301.6037-2(f), 
and 301.6721-1(h) provide that the new provisions for electronic filing 
will apply for returns and other documents required to be filed during 
calendar year 2024. Sections 301.6057-3(f), 301.6058-2(f), 301.6059-
2(e) provide that the new provisions for electronic filing will apply 
for plan years that begin on or after January 1, 2024. To avoid partial 
retroactive effect with respect to certain non-calendar-year taxpayers, 
final regulations Sec. Sec.  301.6011-12(f), 301.6011-13(f), and 
301.6012-2(f) specify that these provisions apply to returns required 
to be filed for taxable years ending on or after December 31, 2023. In 
light of the applicability dates, the language ``but only for filings 
with a filing deadline (not taking into account extensions) after July 
31, 2022'' that was included in proposed Sec. Sec.  301.6057-3(f), 
301.6058-2(f), and 301.6059-2(e) has been removed from the final 
regulations.

B. Applicability Date for Forms Under Section 3101 of the TFA

    Section 3101 of the TFA amended section 6011 of the Code to require 
any organization required to file an annual return that relates to any 
tax imposed by section 511 on unrelated business taxable income to file 
the return in electronic form. Section 3101 of the TFA also amended 
section 6033 to require any organization required to file a return 
under section 6033 to file the return in electronic form. Unlike 
section 2301 of the TFA, the provisions in section 3101 of the TFA are 
self-executing and generally apply to taxable years beginning after 
July 1, 2019, in accordance with section 3101(d) of the TFA. The 
applicability date of final regulations Sec. Sec.  1.6033-4(b), 
53.6011-1(e), 301.6011-10(c), and 301.6033-4(d) (returns required to be 
filed during calendar years beginning after the date of publication of 
the Treasury Decision in the Federal Register) does not affect the 
requirements under section 3101 of the TFA.

II. The Electronic-Filing Rules for Information Returns

A. The Electronic-Filing Threshold

    Proposed Sec.  301.6011-2(b) and (c) provide that if a person is 
required to file, during calendar year 2022, a total of at least 100 
information returns covered by Sec.  301.6011-2(b)(1) and (2), and 
during calendar years 2023 and after, a total of at least 10 such 
returns, the person is required to file those information returns 
electronically (electronic-filing threshold for information returns). 
Because these final regulations are not applicable until calendar year 
2024, the proposed electronic-filing thresholds of 100 for returns 
required to be filed in calendar year 2022, and 10 returns for returns 
required to be filed in calendar year 2023 are not adopted. The 
electronic-filing threshold for returns required to be filed in 
calendar years 2022 and 2023 remains at 250. The final regulations 
adopt, however, the proposed electronic-filing threshold of 10 for 
returns required to be filed on or after January 1, 2024, as authorized 
by Congress's enactment of section 2301 of the TFA.
    Two commenters disagreed with the proposed reduction to 10 returns 
for small businesses. Both questioned the need for an electronic-filing 
rule at all and suggested that businesses should be afforded 
flexibility in how they file their returns, rather than be required to 
file returns electronically when they have filed paper returns for 
years. The first commenter supported the proposed reduction of the 
electronic-filing threshold for information returns from 250 to 100 
returns but disagreed with the proposed reduction to 10 returns because 
it was ``unnecessary and lacks empathy for the challenges facing small 
businesses.'' The second believed that any reduction to the electronic-
filing threshold should be a small, gradual reduction and added that 
some small businesses have little to no understanding of the internet 
and requiring these filers to electronically file their returns would 
be challenging.
    The Treasury Department and the IRS disagree with the commenters' 
suggestions because electronic filing has become more common, 
accessible, and economical, as evidenced by the prevalence of tax-
return preparers and third-party service providers who offer return-
preparation and electronic-filing services; by the availability of tax-
return-preparation software; and by the numbers of returns already 
being filed electronically on a voluntary basis. Although the Treasury 
Department and the IRS understand that these changes to the electronic-
filing requirements may constitute a burden in the short term for some 
filers, the final regulations do not adopt these comments. To address 
any undue hardship that these changes to the electronic-filing rules 
may have on certain small businesses that are paper information-return 
filers, the IRS will continue to grant hardship waivers fairly and 
consistently and to grant reasonable-cause relief from penalties for 
failure to file returns electronically in appropriate cases. 
Additionally, the Treasury Department and the IRS expect the 
administrative costs to electronically file returns to be further 
reduced for taxable year 2022 and later years with the launch of the 
Information Returns

[[Page 11756]]

Intake System (IRIS) Taxpayer Portal, an internet platform for Form 
1099 filings.

B. Filing Corrected Information Returns in Same Manner as Originals

    Proposed Sec.  301.6011-2(c)(4)(ii) provides a rule for the manner 
of filing corrected returns. Proposed Sec.  301.6011-2(c)(4)(ii)(A) 
provides that if a person is required to file original information 
returns electronically, that person must file any corresponding 
corrected information returns electronically. Proposed Sec.  301.6011-
2(c)(4)(ii)(B) provides that, if a person is permitted to file 
information returns on paper and does file those information returns on 
paper, that person must also file any corresponding corrected 
information returns on paper.
    One commenter generally supported the corrected-return rule, but 
expressed concern that the rule could occasionally be an inconvenience 
to some people or that an intervening event could occur that would 
require filers to change their method of filing. Two other commenters 
noted that the corrected-return rule would add an additional burden on 
filers because many software options provide electronic filing of 
original returns but not corrected ones. One of these commenters 
recommended that the Treasury Department and the IRS delay requiring 
filers to correct their electronically-filed returns electronically 
until the IRS has a platform in place (for example, the internet 
platform for Form 1099 filings required by section 2102 of the TFA) 
that will accept corrected information returns online. Another 
commenter opined that the IRS should not require corrected returns to 
be filed in a particular manner, but should instead ``encourage the 
most efficient way to serve the majority better.''
    The final regulations do not adopt these comments. The Treasury 
Department and the IRS have determined that, because of the disparate 
procedures for processing paper and electronic information returns, the 
corrected-return rule will increase the IRS's timeliness and accuracy 
in processing information returns, which will improve tax 
administration with respect to corrected returns. The Treasury 
Department and the IRS expect that the number of software options 
providing electronic filing for corrected returns will increase to meet 
that expected increase in demand. The IRS will work with the tax-
software community to encourage them to develop software options for 
corrections. If an intervening event or the cost to purchase 
electronic-filing software for corrected information returns would 
cause a filer undue hardship, the filer may request a waiver from the 
electronic-filing requirement for the corrected information returns. As 
discussed in this preamble, the changes to the information return 
electronic-filing rules, including the corrected-return rule, in this 
Treasury Decision will apply for returns required to be filed after 
December 31, 2023, which is after the launch of the Form 1099 filing 
platform. See section I.A. Applicable for Returns Required to be Filed 
in 2024.

C. TCC Issues for Non-United States (U.S.) Filers

    The proposed regulations would increase the number of non-U.S. 
filers required to electronically file their information returns. On 
July 26, 2021, the IRS announced changes to the procedures for filers 
to authenticate their identities to create an account to apply for a 
TCC, which is required to electronically file most information returns. 
See FIRE System Update: Improving the Process and Security for 
Information Return (IR) Application for Transmitter Control Code (TCC), 
IRS (Oct. 1, 2021), https://www.irs.gov/tax-professionals/fire-system-update-improving-the-process-and-security-for-information-return-ir-application-for-transmitter-control-code-tcc (last visited January 13, 
2023).
    Several commenters expressed concern with the changes to the 
authentication identity-proofing procedures. One commenter mentioned 
that a significant number of qualified intermediaries and foreign 
filers would not be able to electronically file information returns, 
such as Forms 1042-S, Foreign Person's U.S. Source Income Subject to 
Withholding, and 1099, because the new authentication procedures 
require users to have U.S.-based information, such as a U.S. Taxpayer 
Identification Number, U.S. telephone number, or U.S. financial 
account, to authenticate their identity before obtaining a TCC. Two 
other commenters expressed similar concerns with respect to all non-
U.S. filers, specifically noting that due to client confidentiality and 
related issues, it is not feasible to require non-U.S. filers to engage 
third parties to file returns on their behalf. Two of the commenters 
recommended the IRS exclude qualified intermediaries and other non-U.S. 
filers from the secure authentication identity-proofing procedures to 
ensure they can continue to submit their information returns 
electronically. The other commenters recommended that the IRS, without 
compromising the security objectives, make accommodations for foreign 
filers so they can continue to file their information returns 
electronically.
    The Treasury Department and the IRS are aware of this 
authentication issue for non-U.S. filers, but the final regulations do 
not adopt the suggestion to provide a blanket electronic-filing 
exemption for non-U.S. filers. The IRS's preferred approach, in light 
of the TFA's emphasis to increase electronic filing, is to develop 
alternative authentication requirements for identity proofing in 
accordance with standards set forth by the U.S. Department of Commerce, 
National Institute of Standards and Technology (NIST). The IRS is thus 
actively working to develop updated authentication procedures for non-
U.S. filers that comply with the NIST standards and will inform the 
public in subsequent guidance or public pronouncement when these 
procedures become available.

D. Form 1042-S Issues

    Proposed Sec.  301.6011-2(b)(1) includes Form 1042-S in the list of 
information returns covered by the electronic-filing rules set forth in 
that regulation. Form 1042-S has been included in the regulation since 
1986. The proposed regulation, however, counts all the information 
returns in the aggregate to determine if the filer must electronically 
file. In addition, the proposed regulation decreases the number of 
information returns that can be filed on paper from 250 to 10, for 
returns required to be filed in calendar year 2023 and after. Two 
commenters requested that the Treasury Department and the IRS remove 
Form 1042-S entirely from the list of returns included in the proposed 
regulations because of the changes to Form 1042-S since 2013. For 
example, the 2013 Form 1042-S code for ``other income'' was income code 
50, but the ``other income'' code was later changed to income code 23. 
The two commenters opined that changes to these codes could confuse 
filers and recipients of the form, and that updating the software to 
address these changes could present challenges to software providers. 
One of the commenters stated that the proposed regulations would 
disproportionately affect occasional and low-volume filers of the Form 
1042-S who may not have sufficient resources to comply with the 
proposed regulations. Both commenters opined that, if Form 1042-S is 
removed from the aggregation rule, the IRS would not need as many 
resources to deal with improper filing errors and requests for a waiver 
from electronic filing for Forms 1042-S.
    The final regulations do not adopt these comments. Although Form 
1042-S underwent several changes for taxable

[[Page 11757]]

year 2014 to accommodate reporting of payments and amounts withheld 
under the provisions of the Foreign Account Tax Compliance Act, the 
form has not undergone a large number of changes since then. For 
example, the 2022 Form 1042-S added to the form four new codes, but 
each was assigned a completely new number that was not previously 
listed on the 2021 Form 1042-S. Absent extraordinary circumstances, 
such as relevant statutory changes, no substantial changes to the 
income codes on Form 1042-S are expected at this time. To the extent, 
however, that taxpayers receiving Forms 1042-S have questions about how 
to report the information, the IRS updates the Instructions for Form 
1042-S and the instructions for income tax returns each year so that 
taxpayers will have the most up-to-date information. Finally, the 
Treasury Department and the IRS have determined that the benefits to be 
gained in the form of faster and more accurate return processing 
outweigh any concerns about IRS resources needed in processing 
electronic-filing waiver requests.

III. Waiver and Exemptions

    As described in the preamble to the proposed regulations, many of 
the regulations imposing electronic-filing requirements also provide a 
waiver from electronic filing to any person who establishes undue 
hardship. The Treasury Department and the IRS specifically requested 
comments on how the hardship-waiver procedures should be administered, 
including suggestions for revising the procedures for requesting, and 
criteria for granting, a hardship waiver, and received several comments 
in response.

A. Cost Concerns

    One commenter generally supported the proposed rules, noting that 
electronic filing not only significantly reduces paper waste but also 
is faster and more reliable than paper filings, which can get lost in 
the mail. Another commenter agreed that all persons should ``get on 
board with the digital age of tax record keeping and filing,'' but 
commented that new small businesses with little resources and 
businesses that have paper filed for years may not want to file 
electronically or may not know how. Both commenters expressed concern 
over the cost of electronic filing, suggesting that the IRS waive all 
or part of the cost for low-income taxpayers and others experiencing 
financial hardship.
    The final regulations do not adopt these comments. The preamble to 
the proposed regulations describes the recent reduction in costs to 
electronically file and the significant benefits of moving to 
electronic filing. To address any undue hardship on certain small 
businesses arising from these changes to the electronic-filing rules, 
the Treasury Department and the IRS will continue to administer the 
hardship-waiver program fairly and consistently and to grant 
reasonable-cause relief from penalties for failure to file returns 
electronically in appropriate cases.

B. General Waiver and Exemption Procedures

    Three commenters expressed concern that, unless the IRS provides 
administrative exemptions or hardship waivers, the proposed regulations 
under section 6011(e) would impose burdens upon discrete populations 
including, for example, members of certain religious communities; 
remote populations; and elderly individuals without adequate 
technological literacy.
    With respect to religious communities, the commenters noted that 
members of certain religious communities, in accordance with their 
religious practices, generally do not use technology and have tenets 
and teachings that prohibit community members from having internet 
access or the technology required to electronically file tax returns. 
The commenters thus expressed concern that the reduction of the 
electronic-filing threshold to 10 returns with respect to information 
returns, partnership returns, corporate income tax returns, and 
electing small business income tax returns would now require many small 
business owners who are members of these religious communities to file 
these returns electronically, in violation of their religious 
practices. The commenters recommended two alternative changes to the 
waiver procedures: that the Treasury Department and the IRS expand the 
current waiver request form, Form 8508, Request for Waiver From Filing 
Information Returns Electronically, to include either a one-time or an 
annual application for exemption from electronic-filing requirements, 
based on religious beliefs, for any form the filer is required to file 
electronically; or that a new form be created, similar to Form 8948, 
Preparer Explanation for Not Filing Electronically, that could be 
attached to the paper-filed return to explain that the filer was filing 
on paper because of religious beliefs.
    The Treasury Department and the IRS agree that filers for whom 
using the technology required to file in electronic form conflicts with 
their religious beliefs should be granted administrative exemptions 
from the electronic-filing requirements for information returns under 
Sec.  301.6011-2; partnership returns under Sec.  301.6011-3; corporate 
income tax returns under Sec.  301.6011-5; electing small business 
income tax returns under Sec.  301.6037-2; and other returns and 
statements that the IRS determines appropriate. To that end, final 
regulations Sec. Sec.  301.6011-2(c)(6)(ii); 301.6011-3(b)(2); 
301.6011-5(b)(2); and 301.6037-2(b)(2) provide that an exemption will 
be allowed for filers for whom using the technology required to file in 
electronic form conflicts with their religious beliefs. Additionally, 
except as described in section III.C. of this preamble, the final 
regulations authorize the Commissioner to provide exemptions from the 
electronic-filing requirements to promote effective and efficient tax 
administration. Finally, these final regulations clarify that a 
submission claiming an exemption should be made in accordance with 
applicable IRS revenue procedures, publications, forms, instructions, 
or other guidance, including posting to the IRS.gov website. In 
general, exemptions will be made available on a form-by-form basis 
rather than on a per-filer basis to allow the IRS to appropriately 
address differences in filing requirements and filer populations.
    With respect to remote populations, one of the commenters expressed 
concern that many Native tribes, such as Native Alaskan tribes, lack 
access to internet and computers and that the reduction of the 
electronic-filing threshold for information returns would impact some 
of these Native Alaskans, for example, a commercial fishing captain. 
This commenter also stated that a disproportionate number of Americans 
in business age 65 or older may lack the ability or accessibility to 
electronically file tax returns and that the cost for these older 
taxpayers to pay a third party to electronically file could force them 
out of business. The commenter asked whether factors other than 
financial cost, such as a filer's lack of access to digital technology 
or a filer's age, are factored into the IRS's decision on whether to 
grant a waiver request. The commenter further expressed concern that 
granting a hardship waiver is discretionary and that the procedures do 
not include an objective threshold or standard on how much the cost to 
electronically file must exceed the cost to paper file for the IRS to 
grant an electronic-filing waiver. The commenter thus recommended that 
the Treasury Department and the IRS expand or

[[Page 11758]]

clarify that the hardship-waiver procedures to include Native tribes 
and other persons with difficulty accessing or using technology.
    The Treasury Department and the IRS expect rural filers without 
access to internet and older filers that lack digital literacy to make 
good faith efforts to comply with the electronic-filing requirements of 
these regulations, which may require obtaining additional assistance to 
electronically file. To the extent the burden of obtaining the 
necessary assistance to file returns would cause undue hardship, the 
filers may submit a hardship-waiver request from the electronic-filing 
requirements.
    Under section 6011(e)(2)(B) of the Code, the IRS must consider 
(among other relevant factors) the taxpayer's ability to comply at a 
reasonable cost with the requirements of such regulations. To determine 
whether a taxpayer can comply with the electronic-filing requirements 
at a reasonable cost, the IRS requires the taxpayer to provide two 
estimates of the cost that the taxpayer would incur to convert to 
electronic filing. Financial cost, however, is not the only factor that 
the IRS may consider. Under current procedures, for example, the IRS 
will consider granting a waiver from the electronic-filing requirements 
for information returns covered under Sec.  301.6011-2(b) if a fire, 
casualty, or natural disaster affected the operation of the business. 
The proposed hardship-waiver language, for example in proposed Sec.  
301.6011-2(c)(6)(i), provides that ``[t]he principal factor in 
determining hardship will be the amount, if any, by which the cost of 
filing the return electronically in accordance with this section 
exceeds the cost of filing the return on paper.'' Because the IRS takes 
other factors into consideration when analyzing a request for a waiver 
from electronic-filing requirements, the final regulations are modified 
to read, ``One principal factor in determining hardship will be the 
amount, if any, by which the cost of filing the return electronically 
in accordance with this section exceeds the cost of filing the return 
on paper.'' The Treasury Department and the IRS anticipate that 
additional details on the specific hardship-waiver procedures for each 
form affected by this Treasury Decision will be included in future 
public releases of IRS forms and instructions. After considering public 
comments, the IRS revised the Form 8508 in January 2023 to clarify the 
circumstances the IRS may accept to justify a waiver from the e-filing 
requirement for the information returns listed on the Form, including 
hardships other than financial hardship. The Treasury Department and 
the IRS have thus determined that the IRS's current hardship-waiver 
procedures provide appropriate relief to rural and older taxpayers from 
any undue burdens arising from these changes to the electronic-filing 
rules. Reasonable cause relief from penalties may also be available for 
these filers.
    The final regulations also clarify that, if the IRS's systems do 
not support electronic filing for a specific return required to be 
filed electronically with the IRS, a taxpayer will not be required to 
file the return electronically. Several of the final regulations 
require the electronic filing of returns that were previously filed on 
paper only. If the IRS's systems do not have the capacity to accept a 
particular type of return electronically when the electronic-filing 
requirements become applicable, this provision clarifies that a 
taxpayer will not be required to file that type of return 
electronically. In such situations, a taxpayer will not be required to 
submit a request for a hardship waiver to file that type of return on 
paper.
    Finally, one of the commenters expressed concern with the statement 
in the proposed regulations that ``a request for a hardship waiver must 
be made in accordance with postings, guidance, forms or instructions, 
including those on the IRS.gov website'' because these discrete 
populations, without access to the website, might not have the latest 
guidance posted to the website, and so might be filing a hardship-
waiver request based on outdated guidance from paper forms and 
instructions. The commenter thus recommended that the IRS be lenient in 
imposing penalties on taxpayers of faiths who avoid technology, filers 
that lack access to technology, and older Americans who in good faith 
request a hardship waiver in compliance with outdated guidance.
    The Treasury Department and the IRS have determined that to the 
extent that a taxpayer can show reasonable cause for failure to file 
electronically, including valid impediments to making a proper waiver 
request, the penalty for failure to file will not apply.

C. Exceptions to General Waiver and Exemption Procedures

    The final regulations do not provide for waivers and exemptions in 
all circumstances or for all tax forms required to be electronically 
filed.
1. Returns Required Under Section 3101 of the TFA
    Section 3101 of the TFA sets forth two requirements for mandatory 
electronic filing by tax-exempt organizations: under new section 
6011(h), organizations with returns relating to any tax imposed under 
section 511 on unrelated business taxable income ``shall file such 
return in electronic form,'' and under new section 6033(n), 
organizations with returns required to be filed under section 6033 
``shall file such return in electronic form.'' Thus, the TFA amendments 
expand the class of forms that tax-exempt entities are currently 
required to file electronically, such as the Form 990-N, Electronic 
Notice (e-Postcard), and Form 8871, Political Organization Notice of 
Section 527 Status.
    Section 3101 of the TFA states that organizations required to file 
a return under sections 6011(h) or 6033(n) ``shall'' file such return 
in electronic form and does not provide for any waiver or alternative 
method to meet the electronic-filing requirements. The legislative 
history to section 3101 of the TFA explains that mandatory electronic 
filing by all tax-exempt organizations required to file returns will 
improve efficiency, reduce costs, and generally improve oversight of 
tax-exempt organizations. H. Rep. No. 116-39, at 97-98 (2019). Section 
3101 of the TFA also amended section 6104(b) to provide that ``[a]ny 
annual return required to be filed electronically under section 6033(n) 
shall be made available by the Secretary to the public as soon as 
practicable in a machine-readable format.'' The legislative history 
explains that it is important to increase the transparency of, and 
enhance public access to, information about tax-exempt organizations, 
particularly charitable organizations. Id. The legislative history 
further explains that this will expedite the publication of the 
information required to be disclosed by the IRS and will enhance its 
usability by stakeholders attempting to exercise oversight of tax-
exempt organizations. Id. Such stakeholders include not only members of 
the public who may support or donate to an organization, but also state 
and local officials charged with oversight responsibilities and 
responsibility for prosecuting fraudulent charities.
    In contrast to forms affected by section 2301 of the TFA, there is 
no requirement that an alternate paper filing process be provided for 
certain filers of forms affected by section 3101 of the TFA (such as 
for filers filing fewer than 10 returns). Further, in contrast to forms 
affected by section 2301 of the TFA, information returns affected by 
section 3101 of the TFA are required to be released to the public in 
machine-readable format under section 6104(b), a process that would be 
hampered if the

[[Page 11759]]

IRS were required to accept paper returns and frustrate the intent of 
Congress to expedite the publication of those returns. Proposed 
Sec. Sec.  301.6011-10 and 301.6033-4, consistent with the statutory 
mandate to require all forms affected by section 3101 of the TFA to be 
electronically filed, did not provide for any waiver or exemption from 
the electronic filing requirements.
    While public comments generally requesting waivers or exemptions 
from the electronic filing requirements under certain circumstances 
were received, Sec. Sec.  301.6011-10 and 301.6033-4 are finalized 
without waiver or exemption provisions because providing a waiver or 
exemption provision would be contrary to the plain language of section 
3101 of the TFA and inconsistent with the legislative history to that 
section. Notwithstanding that, the Religious Freedom Restoration Act of 
1993, Public Law 103-141 (107 Stat. 1488), may provide an exemption for 
any filer for whom using the technology required to file electronically 
conflicts with their religious beliefs.
2. Qualified Plan Returns Filed Through EFAST2
    On July 21, 2006, the Department of Labor (DOL) published a final 
rule in the Federal Register (71 FR 41359), requiring electronic filing 
of the Form 5500, Annual Return/Report of Employee Benefit Plan, and 
Form 5500-SF, Short Form Annual Return/Report of Small Employee Benefit 
Plan, for plans covered by Title I of the Employee Retirement Income 
Security Act, Public Law 93-406 (88 Stat. 854), as amended (ERISA) for 
plan years beginning on or after January 1, 2008. On November 16, 2007, 
the DOL published a final rule in the Federal Register (72 FR 64710), 
postponing the effective date of the electronic filing mandate so that 
the mandate applies to plan years beginning on or after January 1, 
2009. See 29 CFR 2520.104a-2.
    Filers of the Form 5500 and Form 5500-SF are required to file 
electronically through DOL's computerized ERISA Filing Acceptance 
System (EFAST2). Rev. Proc. 2015-47, 2015-39 IRB 419, sets forth 
procedures to request a waiver of the electronic-filing requirement due 
to economic hardship for plan administrators of retirement plans (or, 
in certain situations, employers maintaining retirement plans) that are 
required to file electronically certain employee benefit plan returns. 
Section 3 of Rev. Proc. 2015-47 provides that, because filers of Form 
5500 and Form 5500-SF are required to file those returns electronically 
through DOL's EFAST2, a waiver of the electronic-filing requirement for 
those forms will not be granted. Because an actuarial report required 
under section 6059 is filed with Form 5500 or Form 5500-SF as a 
schedule and is also required to be filed electronically through DOL's 
EFAST2, a waiver of the electronic-filing requirement for the actuarial 
report also will not be granted. Sections 301.6058-2 and 301.6059-2 of 
the final regulations continue to provide that the Commissioner may 
waive the electronic-filing requirements under sections 6058 and 6059 
in cases of undue economic hardship, and that a request for a waiver 
must be made in accordance with applicable IRS revenue procedures, 
publications, forms, instructions, or other guidance, including 
postings to the IRS.gov website. However, pursuant to section 3 of Rev. 
Proc. 2015-47, waivers of the electronic-filing requirement for Forms 
5500 and 5500-SF (and related actuarial reports) will continue to not 
be granted. In addition, Sec. Sec.  301.6058-2 and 301.6059-2 of the 
final regulations do not provide for any exemptions to the electronic-
filing requirement for Forms 5500 and 5500-SF (and related actuarial 
reports) because, unlike other filings described in this Treasury 
Decision, Forms 5500 and 5500-SF (and related actuarial reports) are 
required to be filed electronically through DOL's EFAST2.
3. Form 8300
    If filed electronically, Forms 8300, Report of Cash Payments Over 
$10,000 Received in a Trade or Business, are not filed electronically 
with the IRS; rather they are filed electronically through the 
Financial Crimes Enforcement Network's (FinCEN) BSA E-Filing System. 
The Treasury Department, FinCEN, and the IRS have determined that most 
Form 8300 filers who might have difficulty filing electronically and 
might therefore need a waiver, would likely not be required to file 
electronically in the first place because they would not meet the 
electronic-filing threshold in Sec.  301.6011-2(c), even after that 
threshold is reduced to 10 returns. See section II.A. Accordingly, the 
Treasury Department, FinCEN, and the IRS have determined that there is 
no need for a separate waiver process for Form 8300 filers. Instead, 
Form 8300 filers who request and receive a waiver under Sec.  301.6011-
2(c) for any return required to be filed under Sec.  301.6011-2(b)(1) 
or (2) will automatically be deemed to have received an electronic-
filing waiver for any Forms 8300 the filer is required to file for the 
duration of the calendar year.

IV. Form 1042 Substantiation Requirements To Claim Credit on Line 67

    Proposed Sec. Sec.  301.1474-1(a) and 301.6011-15(a) would require 
certain filers to electronically file Forms 1042. Forms 1042 have 
previously been filed only on paper. For Form 1042 filers that claim a 
credit on line 67 for taxes withheld by other withholding agents, the 
filers substantiate this credit by attaching, to the Form 1042, paper 
copies of the Forms 1042-S they received from those other withholding 
agents.
    In light of the electronic-filing requirements for Form 1042, two 
commenters requested the IRS remove the requirement to provide paper 
copies of Forms 1042-S to support the claim made on line 67 of the Form 
1042, suggesting that the IRS would already have electronic copies of 
the Forms 1042-S filed by the other withholding agents, making the 
requirement duplicative.
    The final regulations do not adopt these comments as they are 
outside the scope of these regulations, which do not impose the 
requirement to provide paper copies. Nonetheless, the IRS is actively 
working to develop programming that would allow filers to 
electronically attach or submit Forms 1042-S with their Forms 1042 to 
substantiate their claimed credit on Line 67. The IRS expects to have 
programming in place consistent with the applicability dates in these 
final regulations.

V. Regulatory Flexibility Act Certification

    One commenter expressed concern that, although the proposed 
regulations certify that they will not have a significant economic 
impact on a substantial number of small entities for purposes of the 
Regulatory Flexibility Act, the regulations will in fact have a 
``significant economic impact'' on small entities.
    The Treasury Department and the IRS maintain their certification 
that the final rules will not have a significant economic impact on a 
substantial number of small entities for the reasons discussed in 
subsection II, Regulatory Flexibility Act, of the following Special 
Analyses section of this preamble.

VI. Clarification on a Failure To File Electronically When Required

    The proposed regulations provide that if a filer fails to file a 
return or report electronically when required to do so by the 
regulations, the filer is ``deemed'' to have failed to file the return 
or report.

[[Page 11760]]

The word ``deemed'' is superfluous because a taxpayer who fails to file 
electronically when required to do so by these regulations has failed 
to file. Therefore, for sake of clarification, the Treasury Department 
and the IRS have made minor edits to remove the word deemed from final 
regulations Sec. Sec.  54.6011-3(c), 301.1474-1(c), 301.6011-10(b), 
301.6011-12(c), 301.6011-13(c), 301.6011-14(c), 301.6011-15(c), 
301.6012-2(c), 301.6033-4(b), and 301.6721-1(a)(2)(ii).

VII. Clarification on 10-Return Calculation for Material Advisor 
Disclosure Statements

    Under section 6111 and Sec.  301.6111-3(a) and (e), each material 
advisor is required to file a Form 8918, Material Advisor Disclosure 
Statement, with respect to any reportable transaction by the last day 
of the month that follows the end of the calendar quarter in which the 
advisor became a material advisor with respect to the reportable 
transaction or in which the circumstances necessitating an amended 
disclosure statement occur. Thus, a material advisor may not know the 
number of Forms 8918 it will be required to file during a calendar year 
until after the end of the third quarter of the calendar year. On the 
other hand, other returns--for example, Forms 1099, income tax returns, 
employment tax returns, and excise tax returns-have fixed due dates by 
which those returns must be filed each calendar year. A filer of those 
returns will therefore know at the beginning of the calendar year 
whether the filer is required to file at least 10 returns of those 
types. Thus, the Treasury Department and the IRS clarify in these final 
regulations that a material advisor will be required to file its Forms 
8918 electronically or in other machine-readable form in accordance 
with revenue procedures, publications, forms, instructions, or other 
guidance, including postings on the IRS.gov website, during the 
calendar year only if the material advisor is required to file at least 
10 returns of any type, other than Forms 8918. This clarification will 
help ensure material advisors understand early in the calendar year 
whether any Forms 8918 must be filed electronically or in other 
machine-readable form without complications of being unable to 
determine at the beginning of a calendar year the number of Forms 8918 
that may need to be filed during the calendar year.

Special Analyses

I. Regulatory Planning and Review--Economic Analysis

    Executive Orders 12866 and 13563 direct agencies to assess costs 
and benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including (i) potential economic, environmental, and public health and 
safety effects, (ii) potential distributive impacts, and (iii) equity). 
Executive Order 13563 emphasizes the importance of quantifying both 
costs and benefits, reducing costs, harmonizing rules, and promoting 
flexibility.
    These final regulations have been designated as subject to review 
under Executive Order 12866 pursuant to the Memorandum of Agreement 
(April 11, 2018) (MOA) between the Treasury Department and the Office 
of Management and Budget (OMB) regarding review of tax regulations. The 
Office of Information and Regulatory Affairs has designated these final 
regulations as significant under section 1(b) of the MOA.

A. Background, Need for the Final Regulations, and Economic Analysis of 
Final Regulations

    The Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), 
Public Law 97-248, (96 Stat. 610), first directed the Secretary to 
prescribe regulations for requiring returns to be filed on magnetic 
media, a term generally used to refer to electronic filing at that 
time. TEFRA prohibited the Secretary from requiring income tax returns 
of individuals, estates, and trusts to be filed in a manner other than 
on paper forms. In 1998, Congress amended section 6011(e) of the Code 
to prohibit the Secretary from requiring the electronic filing of a 
return unless the filer is required to file at least 250 returns during 
the calendar year. The Treasury Department and the IRS subsequently 
issued regulations that required a person to file information returns 
electronically if that person is required to file 250 or more 
information returns in a calendar year. The regulations provide that 
the 250-return threshold applied separately to each type of information 
return covered under the regulations. The Treasury Department and the 
IRS also issued regulations that set a 250-return threshold in 
determining whether large corporation tax returns, S corporation tax 
returns, and other returns must be electronically filed.
    Since 1998, the technology underlying electronic filing has become 
much more widely available, both in the form of tax return preparation 
software and electronic filing services offered by tax return preparers 
and other service providers. By 2019, over 98.8 percent of information 
returns were already being filed electronically. In July of that year, 
the President signed into law the Taxpayer First Act (TFA). The TFA 
authorizes the Secretary to prescribe regulations that decrease the 
number of returns a filer may file without being required to file 
electronically from 250 to 10.
    When returns are filed on paper, the IRS transcribes much of the 
input data to electronic format. In some cases, employees must manually 
input this data, requiring significant IRS resources to be spent on 
otherwise needless processing and data entry rather than serving 
taxpayers in other ways. Manual data entry can cause delays in the 
input and retrieval of data, affecting the timeliness and accuracy of 
processing these forms. This can lead to delays or other 
disadvantageous outcomes for taxpayers. In some cases, manual data 
entry can cause delays in the information available for law enforcement 
and other users to detect potential money laundering, terrorist 
financing, and other tax and financial fraud. Moreover, the increased 
accuracy of the data received from electronic filing reduces 
transcription errors and the cost for the IRS and taxpayers to resolve 
these errors.
    These final regulations impose electronic-filing requirements on 
persons required to file certain returns, including partnership 
returns, corporate income tax returns, unrelated business income tax 
returns, withholding tax returns, and certain information returns, 
registration statements, disclosure statements, notifications, 
actuarial reports, and certain excise tax returns. Specifically, the 
final regulations reduce the 250-return threshold enacted in 1998 to 
the 10-return threshold provided by the TFA. Under current regulations, 
the 250-return threshold applies separately to each type of information 
return covered under the regulations. The final regulations require 
filers to aggregate across returns types to determine whether a filer 
meets the 10-return threshold and is thus required to file 
electronically.
    The IRS receives nearly 4 billion information returns per year and 
projects that by 2028, it will receive over 5 billion information 
returns each year. See https://www.irs.gov/statistics/soi-tax-stats-calendar-year-projections-publication-6961 (last visited January 13, 
2023). In 2019, the IRS received nearly 40 million paper information

[[Page 11761]]

returns even though approximately 99 percent of all information returns 
for that year were filed electronically.
    For taxable year 2020, the data shows that creating a 50-return 
threshold would require 1-2 percent of the largest paper information 
return filers to file electronically, resulting in approximately 23 
percent of all paper information returns currently filed to be filed 
electronically. For the same year, a 25-return threshold would require 
approximately 4-5 percent of the largest paper information return 
filers to file electronically, resulting in approximately 39-41 percent 
of paper information returns currently filed to be filed 
electronically. At the 10-return threshold, the IRS is only requiring 
13-16 percent of the largest paper information return filers to file 
electronically, but this will result in 62-64 percent of all 
outstanding paper information returns to be filed electronically.
    In 2020, approximately 13 million out of 35 million paper 
information returns were filed by filers filing 1-10 returns and these 
filers averaged 2.78 returns each. This means approximately 85 percent 
of all paper information return filers would not be subject to the 
electronic-filing mandate at a 10-return threshold based on the 2020 
data, yet nearly two-thirds of all paper information returns would then 
be required to be filed electronically. Thus the high rate of 
electronic filing does not negate the need for regulations to further 
reduce the number of paper returns the IRS is required to manually 
process each year.
    Because the vast majority of returns subject to these final 
regulations are already filed electronically, the Treasury Department 
and the IRS expect that the final regulations will not have any 
meaningful impact on economic behavior. Electronic filing has become 
more common, accessible, and economical. The table below shows recent 
trends in the electronic-filing rates of tax returns and information 
returns. Eighty-one percent of all tax returns, including 95 percent of 
individual income tax returns, were filed electronically in fiscal year 
2020, rising from 68 percent for all tax returns and 87 percent for 
individual income tax returns in 2016. Nearly all information returns 
submitted to the IRS were filed electronically.
[GRAPHIC] [TIFF OMITTED] TR23FE23.014

    In the limited circumstances in which the cost to comply with these 
electronic-filing requirements would cause undue hardship, many of 
these regulations provide a waiver from electronically filing. The IRS 
routinely grants meritorious hardship waiver requests. According to the 
regulations, such undue hardship could be caused by a range of factors 
that are not limited to the financial cost that would be incurred by 
the filer. For example, a hardship to comply with the electronic-filing 
requirements can apply to remote populations with limited online access 
and filers who lack adequate technological proficiency. Regardless of 
the factors, little economic burden is expected for the waiver process 
because submitting a hardship waiver requires no more technology than 
filing paper returns. For information returns, waiver requests can be 
made for many returns on the same Form 8508. (See instructions for Form 
8508.)
    In addition to hardship waivers, the final regulations provide 
exemptions for religious communities for whom using the technology 
required to file in electronic form conflicts with their religious 
beliefs. An exemption means that filers do not have to be pre-approved 
to paper file. Thus, filers that are eligible for an exemption would 
not experience additional burden under the regulations.
    In enacting TFA, Congress made clear its intention to broaden the 
requirements to file returns electronically. However, the broadened 
requirements intended by Congress will not occur without final 
regulations. In the absence of these regulations, the IRS would 
continue to devote resources to costly and inefficient processing of 
paper filings, resources that could be allocated to modernization of IT 
infrastructure.
    Significant administrative costs include the time it takes an IRS 
employee to manually process paper information returns. First, the IRS 
employee must open and inspect the mail to determine what type of 
return or other form is in the envelope, re-route the form if needed, 
ensure the return is processable and includes a Taxpayer Identification 
Number (TIN), and then date stamp the return. This initial step must 
take place within 30 days of receipt to allow timely correspondence 
with the filer of processable returns to give the filer time to correct 
the mistakes and re-file.
    The IRS employee must next review the return to determine whether 
it is scannable or non-scannable, which includes removing staples and 
taping any cuts or torn portions of the document. The IRS employee must 
then cross check the information on the returns against the parent 
transmittal return (Form 1096) for the payer's TIN, payer's name, and 
if either is missing or illegible, cross check other submissions for 
the information or send correspondence to the filer.
    Scannable submissions are then prepared for processing through the 
Service Center Recognition/Image Processing System (SCRIPS). Non-
scannable submissions are sorted, coded, and batched after ensuring all 
necessary information is included, which varies between types of 
information returns. The batched information returns are then forwarded 
to the appropriate IRS facility for Integrated Submission and 
Remittance Processing (ISRP). The ISRP employee must manually enter all 
required fields and add the appropriate document and format codes in 
accordance with the Internal Revenue Manual.
    In August 2020, the IRS projected the potential cost and savings 
for implementation of the reduction of the electronic-filing threshold. 
The IRS estimated that the savings for IRS Submission Processing (IRS 
SP) due to fewer paper information returns to process when the 
electronic-filing threshold was reduced from 250 to 100 returns is 35 
full-time equivalents (FTEs), or $2 million. This savings would be 
offset by the cost to enroll new participants in the FIRE System, which 
the IRS estimated would cost 9 FTEs, or

[[Page 11762]]

$500,000. Thus, the IRS's net savings as a result of the reduction to 
the electronic-filing threshold from 250 to 100 returns is estimated to 
be 26 FTEs, or $1.5 million.
    The IRS estimated that the savings for IRS SP due to fewer paper 
information returns to process when the electronic filing threshold was 
reduced from 100 to 10 returns is 147 FTEs, or $8.3 million. This 
savings would be offset by the cost to enroll new participants in the 
FIRE System, which the IRS estimated would cost 40 FTEs, or $2.3 
million. Thus, the IRS's net savings as a result of the reduction to 
the electronic-filing threshold from 100 to 10 returns is estimated to 
be 107 FTEs, or $6 million. Finally, the IRS estimated that the savings 
for IRS SP due to fewer paper information returns to process when the 
electronic-filing threshold was reduced from 250 to 10 returns is 182 
FTEs, or $10.3 million. For the first year of the reduction, the 
savings would be offset by the cost to enroll new participants in the 
FIRE System, which the IRS estimated would cost 49 FTEs, or $2.8 
million. Thus, for the first year of implementation, the IRS's net 
savings as a result of the reduction to the electronic-filing threshold 
from 250 to 10 returns is estimated to be 133 FTEs, or $7.5 million.
    For each subsequent year, the IRS estimated that the savings for 
IRS SP due to fewer paper information returns to process is 147 FTEs, 
or $8.3 million, which would be offset by some cost for telephone 
support.
    An increase in electronic filing percentage rates change will 
result in millions fewer paper documents, freeing up valuable IRS 
resources for other tasks. Based on taxable year 2020 data, a 10-return 
electronic-filing threshold would have resulted in approximately 21 
million fewer paper information returns. While the IRS projects the 
number of paper returns will continue to decrease even absent changes 
to the regulations, the decrease is projected to be gradual.
    Requiring more electronic filing would increase the timeliness and 
accuracy of data entry, reduce postage costs, promote IT modernization 
efforts, reallocate IRS staff for priority assignments, and provide IRS 
criminal and civil investigators and other agencies with access to the 
data with more up-to-date and accurate information. Moreover, increased 
efficiency in processing returns will allow the IRS to provide faster 
and better customer service to taxpayers. Given the increasing 
prevalence of electronic filings in recent years, the final regulations 
reduce the 250-return threshold enacted in 1998 to the 10-return 
threshold provided by the TFA.

II. Regulatory Flexibility Act

    Pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 6), it 
is hereby certified that these regulations will not have a significant 
economic impact on a substantial number of small entities. Although 
these rules may affect a substantial number of small entities, for the 
reasons discussed in the following paragraphs, the economic impact is 
not significant.
    Under section 6011(e) of the Code and Sec. Sec.  1.6050M-1, 
301.6011-2, 301.6011-3, 301.6011-5, 301.6037-2, 301.6057-3, 301.6058-2, 
and 301.6059-2, filers are already required to file returns and 
statements electronically if, during a calendar year, they are required 
to file 250 or more returns. The eight rules--Sec. Sec.  1.6050M-1, 
301.6011-2, 301.6011-3, 301.6011-5, 301.6037-2, 301.6057-3, 301.6058-2, 
and 301.6059-2--will lower the 250-return threshold to 10, as 
authorized by section 6011(e), as amended by section 2301 of the TFA. A 
filer may request that the IRS waive the electronic-filing requirement 
if the filer's cost to comply with the rule would cause a financial 
hardship. The cost to electronically-file for a filer varies by form 
and by how many types of forms the filer is required to file. For 
example, low volume information return filers can electronically-file 
for approximately $3.25 per form, with options available for filing an 
unlimited number of information returns starting at $120. Commercial 
software is available for business returns such as Forms 1120 for as 
low as $125. The IRS routinely grants meritorious hardship-waiver 
requests. Accordingly, the economic burden on the limited number of 
small entities that are not currently filing electronically will be 
slight; small entities that would experience a financial hardship 
because of these eight rules may seek a waiver. Requesting a waiver 
will impose a minor cost in the form of time to read the expanded 
instructions, gather and prepare for submission the information and 
documents substantiating the request (if needed), and to complete the 
form itself.
    Under section 6050I of the Code and Sec. Sec.  1.6050I-1 and 
1.6050I-2, filers are required to file Forms 8300 if, in the course of 
their trade or business, they receive more than $10,000 in cash (as 
that term is defined in section 6050I(d)) in one transaction or in two 
or more related transactions. The rule under Sec.  301.6011-2(b)(3) 
requires filers of Forms 8300 to file those forms electronically if 
such filers are also required to file returns electronically under 
paragraphs (b)(1) and (2) of Sec.  301.6011-2. The Treasury Department 
and the IRS expect filers of Form 8300 to use FinCEN's BSA E-Filing 
System, which is free and may be accessed with an internet connection. 
See https://bsaefiling.fincen.treas.gov/main.html (last visited January 
13, 2023). The filers may incur minor costs in the form of time needed 
to enroll in FinCEN's BSA E-Filing System and to become familiar with 
the system, but the enrollment process should only take several 
minutes. The economic impact on small entities should thus not be 
significant.
    Under section 6011(e)(4) of the Code and Sec.  301.1474-1, 
financial institutions defined in section 1471(d)(5) of the Code 
already are required to electronically file Forms 1042-S. The rule 
under Sec.  301.1474-1(a) extends this filing requirement to Forms 1042 
filed by the same financial institutions. Small entities that would 
experience a financial hardship because of this rule may seek a 
hardship waiver.
    Under section 6011(h) of the Code, as amended by section 3101 of 
the TFA, organizations required to file annual returns relating to any 
tax imposed by section 511 must file those returns in electronic form. 
Because the regulation Sec.  301.6011-10 implements this statutory 
requirement, the economic impact of the regulation on small 
organizations should thus be insignificant.
    Under section 6033(n), as amended by section 3101 of the TFA, 
organizations required to file returns under section 6033 must file 
those returns in electronic form. Because the regulations under 
Sec. Sec.  1.6033-4, 53.6011-1, and 301.6033-4 implement this statutory 
requirement, the economic impact of these regulations on small 
organizations should thus be insignificant.
    The seven regulations under Sec. Sec.  54.6011-3, 301.6011-11, 
301.6011-12, 301.6011-13, 301.6011-14, 301.6011-15, and 301.6012-2 
require electronic filing for certain returns not currently required to 
be filed electronically. Because electronic filing has become more 
common, accessible, and economical, the economic impact of these rules 
on small entities should be insignificant. Moreover, as discussed 
above, if the cost to comply with these electronic-filing requirements 
would cause a financial hardship, an entity may request a waiver. The 
IRS routinely grants meritorious hardship waiver requests. Accordingly, 
the burden on small entities affected by these rules will be slight.
    Accordingly, it is hereby certified that these regulations will not 
have a significant economic impact on a

[[Page 11763]]

substantial number of small entities within the meaning of section 
601(6) of the RFA.
    Pursuant to section 7805(f) of the Internal Revenue Code, the NPRM 
preceding this regulation was submitted to the Chief Counsel for the 
Office of Advocacy of the Small Business Administration for comment on 
its impact on small business. No comments were received from the Chief 
Counsel for the Office of Advocacy of the Small Business 
Administration.

III. Unfunded Mandates Reform Act

    Section 202 of the Unfunded Mandates Reform Act of 1995 requires 
that agencies assess anticipated costs and benefits and take certain 
other actions before issuing a final rule that includes any Federal 
mandate that may result in expenditures in any one year by a state, 
local, or tribal government, in the aggregate, or by the private 
sector, of $100 million in 1995 dollars, updated annually for 
inflation. This regulation does not include any Federal mandate that 
may result in expenditures by state, local, or tribal governments, or 
by the private sector in excess of that threshold.

IV. Executive Order 13132: Federalism

    Executive Order 13132 (Federalism) prohibits an agency from 
publishing any rule that has federalism implications if the rule either 
imposes substantial, direct compliance costs on state and local 
governments, and is not required by statute, or preempts state law, 
unless the agency meets the consultation and funding requirements of 
section 6 of the Executive Order. This rule does not have federalism 
implications and does not impose substantial direct compliance costs on 
state and local governments or preempt state law within the meaning of 
the Executive Order.

V. Congressional Review Act

    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), 
the Office of Information and Regulatory Affairs designated this rule 
as not a ``major rule,'' as defined by 5 U.S.C. 804(2).

Statement of Availability of IRS Documents

    IRS revenue procedures, notices, and other guidance cited in this 
document are published in the Internal Revenue Bulletin and are 
available from the Superintendent of Documents, U.S. Government 
Publishing Office, Washington, DC 20402, or by visiting the IRS website 
at http://www.irs.gov.

Drafting Information

    The principal author of these final regulations is Casey R. Conrad 
of the Office of the Associate Chief Counsel (Procedure and 
Administration). Other personnel from the Treasury Department and the 
IRS participated in the development of the regulations.

List of Subjects

26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

26 CFR Part 53

    Excise taxes, Foundations, Investments, Lobbying, Reporting and 
recordkeeping requirements.

26 CFR Part 54

    Excise taxes, Pensions, Reporting and recordkeeping requirements.

26 CFR Part 301

    Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income 
taxes, Penalties, Reporting and recordkeeping requirements.

Adoption of Amendments to the Regulations

    Accordingly, 26 CFR parts 1, 53, 54, and 301 are amended as 
follows:

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 is amended by adding the 
following entries in numerical order to read in part as follows:

    Authority: 26 U.S.C. 7805 * * *
* * * * *
    Section 1.6033-4 also issued under 26 U.S.C. 6033.
* * * * *
    Section 1.6037-2 also issued under 26 U.S.C. 6037.
* * * * *


0
Par. 2. Section 1.1461-1 is amended by removing paragraph (c)(5); 
redesignating paragraph (i) as paragraph (j); adding a new paragraph 
(i); and revising newly redesignated paragraph (j).
    The addition and revision read as follows:


Sec.  1.1461-1  Payment and returns of tax withheld.

* * * * *
    (i) Reporting in electronic form. See Sec. Sec.  301.6011-2(b) and 
301.6011-15 of this chapter for the requirements of a withholding agent 
that is not a financial institution with respect to the filing of Forms 
1042-S and 1042 in electronic form. See Sec.  301.1474-1(a) of this 
chapter, which applies for purposes of this section to a withholding 
agent that is a financial institution with respect to the filing of 
Forms 1042 and 1042-S in electronic form.
    (j) Applicability date. The rules of this section apply to returns 
required to be filed for taxable years ending on or after December 31, 
2023. (For returns required to be filed for taxable years ending before 
December 31, 2023, see this section as in effect and contained in 26 
CFR part 1, as revised April 1, 2022.)

0
Par. 3. Section 1.1471-0 is amended by revising:
0
a. The entries in the table of contents for Sec.  1.1474-1(e) and (j);
0
b. The heading for Sec.  301.1474-1; and
0
c. Sec.  301.1474-1(d)(1) and (e).
    The revisions read as follows:


Sec.  1.1471-0  Outline of regulation provisions for sections 1471 
through 1474.

* * * * *
    Sec.  1.1474-1 Liability for withheld tax and withholding agent 
reporting.
* * * * *
    (e) Reporting in electronic form.
* * * * *
    (j) Applicability date.
* * * * *
    Sec.  301.1474-1 Required use of electronic form for financial 
institutions filing Form 1042, Form 1042-S, or Form 8966.
* * * * *
    (d) * * *
    (1) Magnetic media or electronic form.
* * * * *
    (e) Applicability date.

0
Par. 4. Section 1.1474-1 is amended by revising paragraphs (e) and (j) 
to read as follows:


Sec.  1.1474-1  Liability for withheld tax and withholding agent 
reporting.

* * * * *
    (e) Reporting in electronic form. See Sec. Sec.  301.6011-2(b) and 
301.6011-15 of this chapter, which apply for purposes of this section, 
for the requirements of a withholding agent that is not a financial 
institution with respect to the filing of Forms 1042-S and Form 1042 in 
electronic form. See Sec.  301.1474-1(a) of this chapter for the 
requirements applicable to a withholding agent that is a financial 
institution with respect to the filing of Forms 1042 and 1042-S in 
electronic form.
* * * * *
    (j) Applicability date. The rules of this section apply to returns 
required to be filed for taxable years ending on or after December 31, 
2023. (For returns required to be filed for taxable years ending before 
December 31, 2023, see this section as in effect and contained in 26 
CFR part 1, as revised April 1, 2022.)

[[Page 11764]]


0
Par. 5. Section 1.6033-4 is revised to read as follows:


Sec.  1.6033-4  Required filing in electronic form for returns by 
organizations required to file returns under section 6033.

    (a) In general. The return of an organization that is required to 
be filed in electronic form under Sec.  301.6033-4 of this chapter must 
be filed in accordance with IRS revenue procedures, publications, 
forms, instructions, or other guidance.
    (b) Applicability date. The rules of this section apply for returns 
required to be filed for taxable years ending on or after February 23, 
2023.

0
Par. 6. Section 1.6037-2 is revised to read as follows:


Sec.  1.6037-2  Required use of electronic form for income tax returns 
of electing small business corporations.

    (a) In general. The return of an electing small business 
corporation that is required to be filed electronically under Sec.  
301.6037-2 of this chapter must be filed in accordance with IRS revenue 
procedures, publications, forms, or instructions, including those 
posted electronically.
    (b) Applicability date. The rules of this section apply to returns 
required to be filed for taxable years ending on or after December 31, 
2023.

0
Par. 7. Section 1.6045-2 is amended by revising paragraphs (g)(2) and 
(i) to read as follows:


Sec.  1.6045-2  Furnishing statement required with respect to certain 
substitute payments.

* * * * *
    (g) * * *
    (2) Reporting in electronic form. For information returns filed 
after December 31, 1996, see Sec.  301.6011-2 of this chapter for rules 
relating to filing information returns in electronic form and for rules 
relating to waivers granted for undue hardship. A broker or barter 
exchange that fails to file a Form 1099 electronically, when required, 
may be subject to a penalty under section 6721 for each such failure. 
See paragraph (g)(4) of this section.
* * * * *
    (i) Applicability date. This section applies to substitute payments 
received by a broker after December 31, 1984. Section 1.6045-2(c) (as 
contained in 26 CFR part 1, revised July 15, 2014) applies to payee 
statements due after December 31, 2014. For payee statements due before 
January 1, 2015, Sec.  1.6045-2(c) (as contained in 26 CFR part 1, 
revised April 2013) applies. Paragraph (g)(2) of this section applies 
to information returns required to be filed during calendar years 
beginning after December 31, 2023.

0
Par. 8. Section 1.6045-4 is amended by removing and reserving paragraph 
(k) and revising paragraph (s).
    The revision reads as follows:


Sec.  1.6045-4  Information reporting on real estate transactions with 
dates of closing on or after January 1, 1991.

* * * * *
    (s) Applicability date. This section applies for real estate 
transactions with dates of closing (as determined under paragraph 
(h)(2)(ii) of this section) that occur on or after January 1, 1991. 
Section 1.6045-4(b)(2)(i)(E), (b)(2)(ii), and (c)(2)(i) (as contained 
in 26 CFR part 1, revised May 28, 2009) applies to sales or exchanges 
of standing timber for lump-sum payments completed after May 28, 2009. 
Section 1.6045-4(m)(1) (as contained in 26 CFR part 1, revised July 15, 
2014) applies to payee statements due after December 31, 2014. For 
payee statements due before January 1, 2015, Sec.  1.6045-4(m)(1) (as 
contained in 26 CFR part 1, revised April 2013) applies. The removal of 
paragraph (k) of this section applies for information returns required 
to be filed during calendar years beginning after December 31, 2023.

0
Par. 9. Section 1.6050I-0 is amended by revising the entry in the table 
of contents for Sec.  1.6050I-1(d)(2)(ii) to read as follows:


Sec.  1.6050I-0  Table of contents.

* * * * *
    Sec.  1.6050I-1 Returns relating to cash in excess of $10,000 
received in a trade or business.
* * * * *
    (d) * * *
    (2) * * *
    (ii) Casinos exempt under 31 CFR 1010.970(c).
* * * * *

0
Par. 10. Section 1.6050I-1 is amended by:
0
a. Revising paragraphs (a)(3)(ii), (c)(1)(iv), and (d)(2)(i) and (ii).
0
b. In paragraph (d)(2)(iv), redesignating the example as paragraph 
(d)(2)(iv)(A).
0
c. Revising newly redesignated paragraph (d)(2)(iv)(A) and adding a 
reserved paragraph (d)(2)(iv)(B).
0
d. Revising paragraphs (e)(1) and (e)(3)(i).
0
e. Adding paragraph (h).
    The revisions and additions read as follows:


Sec.  1.6050I-1  Returns relating to cash in excess of $10,000 received 
in a trade or business.

    (a) * * *
    (3) * * *
    (ii) Exception. An agent who receives cash from a principal and 
uses all of the cash within 15 days in a cash transaction (second cash 
transaction) which is reportable under section 6050I or section 5331 of 
title 31 of the United States Code and the corresponding regulations 
(31 CFR Chapter X), and who discloses the name, address, and taxpayer 
identification number of the principal to the recipient in the second 
cash transaction need not report the initial receipt of cash under this 
section.
* * * * *
    (c) * * *
    (1) * * *
    (iv) Exception for certain loans. A cashier's check, bank draft, 
traveler's check, or money order received in a designated reporting 
transaction is not treated as cash pursuant to paragraph 
(c)(1)(ii)(B)(1) of this section if the instrument constitutes the 
proceeds of a loan from a bank (as that term is defined in 31 CFR 
Chapter X).
* * * * *
    (d) * * *
    (2) * * *
    (i) In general. If a casino receives cash in excess of $10,000 and 
is required to report the receipt of such cash directly to the 
Department of the Treasury (Treasury Department) under 31 CFR 1021.310 
or 1010.360 and is subject to the recordkeeping requirements of 31 CFR 
1021.400, then the casino is not required to make a return with respect 
to the receipt of such cash under section 6050I and these regulations.
    (ii) Casinos exempt under 31 CFR 1010.970(c). Under the authority 
of section 6050I(c)(1)(A), the Secretary may exempt from the reporting 
requirements of section 6050I casinos with gross annual gaming revenue 
in excess of $1,000,000 that are exempt under 31 CFR 1010.970(c) from 
reporting certain cash transactions to the Treasury Department under 31 
CFR 1021.310 or 1010.360. The determination whether a casino which is 
granted an exemption under 31 CFR 1010.970(c) will be required to 
report under section 6050I will be made on a case-by-case basis, 
concurrently with the granting of such an exemption.
* * * * *
    (iv) * * *
    (A) Example. A and B are casinos having gross annual gaming revenue 
in excess of $1,000,000. C is a casino with gross annual gaming revenue 
of less than $1,000,000. Casino A receives $15,000 in cash from a 
customer with respect to a gaming transaction which the casino reports 
to the Treasury Department under 31 CFR 1021.310 and 1010.360. Casino 
B's hotel division receives $15,000 in cash from a customer in payment 
for

[[Page 11765]]

accommodations provided to that customer at Casino B's hotel. Casino C 
receives $15,000 in cash from a customer with respect to a gaming 
transaction. Casino A is not required to report the transaction under 
section 6050I or these regulations because the exception for certain 
casinos provided in paragraph (d)(2)(i) of this section (casino 
exception) applies. Casino B's hotel division is required to report 
under section 6050I and these regulations because the casino exception 
does not apply to the receipt of cash by a nongaming business division. 
Casino C is required to report under section 6050I and these 
regulations because the casino exception does not apply to casinos 
having gross annual gaming revenue of $1,000,000 or less which do not 
have to report to the Treasury Department under 31 CFR 1021.310 and 
1010.360.
    (B) [Reserved]
* * * * *
    (e) * * *
    (1) Time of reporting. The reports required by this section must be 
filed in accordance with the Form 8300 instructions and related 
publications by the 15th day after the date the cash is received. 
However, in the case of multiple payments relating to a single 
transaction (or two or more related transactions), see paragraph (b) of 
this section.
* * * * *
    (3) * * *
    (i) Where to file. A person making a return of information under 
this section must file Form 8300 in accordance with the form 
instructions and related publications.
* * * * *
    (h) Applicability date. The rules of this section apply for returns 
required to be filed during calendar years beginning after December 31, 
2023.

0
Par. 11. Section 1.6050I-2 is amended by revising paragraphs (c)(1)(i), 
(c)(3)(i), and (f) to read as follows:


Sec.  1.6050I-2  Returns relating to cash in excess of $10,000 received 
as bail by court clerks.

* * * * *
    (c) * * *
    (1) * * *
    (i) In general. The information return required by this section 
must be filed in accordance with the Form 8300 instructions and related 
publications by the 15th day after the date the cash bail is received.
* * * * *
    (3) * * *
    (i) Where to file. Returns required by this section must be filed 
in accordance with the Form 8300 instructions and related publications. 
A copy of the information return required to be filed under this 
section must be retained for five years from the date of filing.
* * * * *
    (f) Applicability date. The rules of this section apply for returns 
required to be filed during calendar years beginning after December 31, 
2023.

0
Par. 12. Section 1.6050M-1 is amended by revising paragraphs (d)(2) and 
(3) and (f) to read as follows:


Sec.  1.6050M-1  Information returns relating to persons receiving 
contracts from certain Federal executive agencies.

* * * * *
    (d) * * *
    (2) Form of reporting--(i) General rule concerning electronic 
filing. The information returns required by this section with respect 
to contracts of a Federal executive agency for each calendar quarter 
must be made in one submission (or in multiple submissions if permitted 
by paragraph (d)(4) of this section). Except as provided in paragraph 
(d)(2)(ii) of this section, the required returns must be made in 
electronic form (within the meaning of Sec.  301.6011-2(a)(1) of this 
chapter) in accordance with any applicable revenue procedure or other 
guidance promulgated by the Internal Revenue Service for the filing of 
such returns under section 6050M.
    (ii) Exceptions from electronic filing. Any Federal executive 
agency that, on October 1, has a reasonable expectation of entering 
into, during the one-year period beginning on that date, fewer than 10 
contracts subject to the reporting requirements under this section that 
are to be filed during the calendar years after 2023, may make the 
information returns required by this section for each quarter of that 
one-year period on the prescribed paper Form 8596 in accordance with 
the instructions accompanying such form.
    (iii) Exclusions from electronic-filing requirements--(A) Waivers. 
The Commissioner may grant waivers of the requirements of this section 
in cases of undue hardship. One principal factor in determining 
hardship will be the amount, if any, by which the cost of filing the 
return electronically in accordance with this section exceeds the cost 
of filing the return on paper. A request for a waiver must be made in 
accordance with applicable IRS revenue procedures, publications, forms, 
instructions, or other guidance, including postings to the IRS.gov 
website. The waiver request will specify the type of filing (that is, a 
return required under paragraph (a) of this section) and the period to 
which it applies.
    (B) Exemptions. The Commissioner may provide exemptions from the 
requirements of this section to promote effective and efficient tax 
administration. A submission claiming an exemption must be made in 
accordance with applicable IRS revenue procedures, publications, forms, 
instructions, or other guidance, including postings to the IRS.gov 
website.
    (3) Place of filing--(i) Returns in electronic form. Information 
returns made under this section in electronic form must be filed with 
the Internal Revenue Service in accordance with any applicable revenue 
procedure or other guidance promulgated by the Internal Revenue Service 
relating to the filing of returns under section 6050M.
    (ii) Form 8596. Information returns made on paper Form 8596 must be 
filed with the Internal Revenue Service at the location specified in 
the instructions for that form.
* * * * *
    (f) Applicability date--(1) Contracts required to be reported. 
Except as otherwise provided in this paragraph (f), this section 
applies to each Federal executive agency with respect to its contracts 
entered into on or after January 1, 1989 (including any increase in 
amount obligated on or after January 1, 1989, that is treated as a new 
contract under paragraph (e) of this section).
    (2) Contracts not required to be reported. A Federal executive 
agency is not required to report--
    (i) Any basic or initial contract entered into before January 1, 
1989,
    (ii) Any increase contract action occurring before January 1, 1989, 
that is treated as a new contract under paragraph (e) of this section, 
or
    (iii) Any increase contract action that is treated as a new 
contract under paragraph (e) of this section if the basic or initial 
contract to which that contract action relates was entered into before 
January 1, 1989, and--
    (A) The increase occurs before April 1, 1990, or
    (B) The amount of the increase does not exceed $50,000.
    (3) Illustration. (i) If a Federal executive agency enters into an 
initial contract on December 1, 1988, and the amount of money obligated 
under the contract is increased by $55,000 on April 15, 1990, then 
there is no reporting requirement with respect to the contract when 
entered into on December 1, 1988. However, the April 15, 1990, 
increase, which is treated as a new contract under paragraph (e) of

[[Page 11766]]

this section, is subject to the reporting requirements of this section 
because it is considered to be a new contract entered into on April 15, 
1990.
    (ii) If the $55,000 increase had occurred before April 1, 1990, 
there would not have been a reporting requirement with respect to that 
increase.
    (4) Filing requirements for contracts required to be reported. 
Section 1.6050M-1(d)(2) and (3) (as contained in 26 CFR part 1, revised 
February 23, 2023) applies to information returns required to be filed 
during calendar years beginning after December 31, 2023.

PART 53--FOUNDATION AND SIMILAR EXCISE TAXES

0
Par. 13. The authority citation for part 53 is amended by adding an 
entry in numerical order to read in part as follows:

    Authority: 26 U.S.C. 7805 * * *

    Section 53.6011-1 also issued under 26 U.S.C. 6011.
* * * * *


0
Par. 14. Section 53.6011-1 is amended by:
0
a. Removing paragraph (c).
0
b. Redesignating paragraphs (d) and (e) as paragraphs (c) and (d), 
respectively.
0
c. Adding a new paragraph (e).
    The addition reads as follows:


Sec.  53.6011-1  General requirement of return, statement or list.

* * * * *
    (e) The rules of this section apply to any returns required to be 
filed under this section on or after January 11, 2021.

PART 54--PENSION EXCISE TAXES

0
Par. 15. The authority citation for part 54 is amended by adding an 
entry in numerical order to read in part as follows:

    Authority:  26 U.S.C. 7805 * * *
* * * * *
    Section 54.6011-3 also issued under 26 U.S.C. 6011.
* * * * *

0
Par. 16. Section 54.6011-3 is added to read as follows:


Sec.  54.6011-3  Required use of electronic form for the filing 
requirements for the return for certain excise taxes related to 
employee benefit plans.

    (a) Excise tax returns required in electronic form. Any employer or 
individual required to file an excise tax return on Form 5330, Return 
of Excise Taxes Related to Employee Benefit Plans, under Sec.  54.6011-
1 of this chapter must file the excise tax return electronically if the 
filer is required by the Internal Revenue Code or regulations to file 
at least 10 returns of any type during the calendar year that the Form 
5330 is due. The Commissioner may direct the type of electronic filing 
and may also exempt certain returns from the electronic-filing 
requirements of this section through revenue procedures, publications, 
forms, instructions, or other guidance, including postings on the 
IRS.gov website. Returns filed electronically must be made in 
accordance with the applicable revenue procedures, publications, forms, 
instructions, or other guidance.
    (b) Exclusions from electronic-filing requirements--(1) Waivers. 
The Commissioner may grant waivers of the requirements of this section 
in cases of undue hardship. One principal factor in determining 
hardship will be the amount, if any, by which the cost of filing the 
return electronically in accordance with this section exceeds the cost 
of filing the return on paper. A request for a waiver must be made in 
accordance with applicable IRS revenue procedures, publications, forms, 
instructions, or other guidance, including postings to the IRS.gov 
website. The waiver request will specify the type of filing (that is, a 
return required under Sec.  54.6011-1 of this chapter) and the period 
to which it applies.
    (2) Exemptions. The Commissioner may provide exemptions from the 
requirements of this section to promote effective and efficient tax 
administration. A submission claiming an exemption must be made in 
accordance with applicable IRS revenue procedures, publications, forms, 
instructions, or other guidance, including postings to the IRS.gov 
website.
    (3) Additional exclusion. If the IRS's systems do not support 
electronic filing, taxpayers will not be required to file 
electronically.
    (c) Failure to file. If a filer required to file the Form 5330 
fails to file the report electronically when required to do so by this 
section, the filer has failed to file the report. See generally section 
6651(a)(1) for the penalty for the failure to file a tax return or to 
pay tax. For general rules relating to the failure to file a tax return 
or to pay tax, see the regulations under 26 CFR 301.6651-1 (Regulations 
on Procedure and Administration).
    (d) Meaning of terms. The following definitions apply for purposes 
of this section:
    (1) Magnetic media or electronic form. The terms magnetic media or 
electronic form mean any media or form permitted under applicable 
regulations, revenue procedures, or publications. These generally 
include electronic filing, as well as magnetic tape, tape cartridge, 
diskette, and other media specifically permitted under the applicable 
regulations, procedures, publications, forms, instructions, or other 
guidance.
    (2) Calculating the number of returns a filer is required to file--
(i) In general. For purposes of this section, a filer is required to 
file at least 10 returns during a calendar year if the filer is 
required to file at least 10 returns of any type, including information 
returns (for example, Forms W-2 and Forms 1099), income tax returns, 
employment tax returns, and excise tax returns.
    (ii) Definition of filer. For purposes of this section, the term 
filer means the person required to report the tax on the Form 5330. For 
general rules on who is required to report the tax on the Form 5330, 
see the Instructions to the Form 5330.
    (e) Example. The following example illustrates the provisions of 
paragraph (d)(2) of this section:
    (1) In 2023, Employer A (the plan sponsor and plan administrator of 
Plan B) is required to file Form 5330 for its nondeductible 
contribution under section 4972 to Plan B. During the 2024 calendar 
year, Employer A is required to file 20 returns (including 19 Forms 
1099-R Distributions From Pensions, Annuities, Retirement, Profit-
Sharing Plans, IRAs, Insurance Contracts, etc., and one Form 5500 
series, Annual Return/Report of the Employee Benefit Plan). Plan B's 
plan year is the calendar year. Because Employer A is required to file 
at least 10 returns during the 2024 calendar year, Employer A must file 
the 2023 Form 5330 for Plan B electronically.
    (2) [Reserved]
    (f) Applicability date. The rules of this section apply to any Form 
5330 required to be filed for taxable years ending on or after December 
31, 2023.

PART 301--PROCEDURE AND ADMINISTRATION

0
Par. 17. The authority citation for part 301 is amended by adding 
entries in numerical order to read in part as follows:

    Authority:  26 U.S.C. 7805.
* * * * *
    Section 301.6011-10 also issued under 26 U.S.C. 6011.
    Section 301.6011-11 also issued under 26 U.S.C. 6011.

[[Page 11767]]

    Section 301.6011-12 also issued under 26. U.S.C. 6011.
    Section 301.6011-13 also issued under 26 U.S.C. 6011.
    Section 301.6011-14 also issued under 26 U.S.C. 6011.
    Section 301.6011-15 also issued under 26 U.S.C. 6011.
    Section 301.6012-2 also issued under 26 U.S.C. 6012.
* * * * *
    Section 301.6057-3 also issued under 26 U.S.C. 6011 and 6057.
    Section 301.6058-2 also issued under 26 U.S.C. 6011 and 6058.
    Section 301.6059-2 also issued under 26 U.S.C. 6011 and 6059.
* * * * *
    Section 301.6721-1 also issued under 26 U.S.C. 6011 and 6721.
* * * * *

0
Par. 18. Section 301.1474-1 is amended by revising the section heading 
and paragraphs (a) through (c), (d)(1), and (e) to read as follows:


Sec.  301.1474-1  Required use of electronic form for financial 
institutions filing Form 1042, Form 1042-S, or Form 8966.

    (a) Financial institutions filing certain returns. If a financial 
institution is required to file a Form 1042, Annual Withholding Tax 
Return for U.S. Source Income of Foreign Persons, (or successor form) 
under Sec.  1.1474-1(c) of this chapter, the financial institution must 
file the return information required by the applicable forms and 
schedules electronically. If a financial institution is required to 
file a Form 1042-S, Foreign Person's U.S. Source Income Subject to 
Withholding, (or such other form as the IRS may prescribe) under Sec.  
1.1474-1(d) of this chapter, the financial institution must file the 
information required by the applicable forms and schedules 
electronically. Additionally, if a financial institution is required to 
file Form 8966, FATCA Report, (or such other form as the IRS may 
prescribe) to report certain information about U.S. accounts, 
substantial U.S. owners of foreign entities, or owner-documented FFIs 
as required under this chapter, the financial institution must file the 
required information in electronic form. Returns filed electronically 
must be made in accordance with applicable regulations, revenue 
procedures, publications, forms, instructions, and the IRS.gov internet 
site. In prescribing regulations, revenue procedures, publications, 
forms, and instructions, including those on the IRS.gov internet site, 
the Commissioner may direct the type of electronic filing.
    (b) Exclusions from electronic-filing requirements--(1) Waivers. 
The Commissioner may grant waivers of the requirements of this section 
in cases of undue hardship. One principal factor in determining 
hardship will be the amount, if any, by which the cost of filing the 
return electronically in accordance with this section exceeds the cost 
of filing the return on paper. A request for a waiver must be made in 
accordance with applicable IRS revenue procedures, publications, forms, 
instructions, or other guidance, including postings to the IRS.gov 
website. The waiver request will specify the type of filing (that is, a 
return required under Sec.  1.1474-1(c) or (d) of this chapter, or a 
Form 8966) and the period to which it applies.
    (2) Exemptions. The Commissioner may provide exemptions from the 
requirements of this section to promote effective and efficient tax 
administration. A submission claiming an exemption must be made in 
accordance with applicable IRS revenue procedures, publications, forms, 
instructions, or other guidance, including postings to the IRS.gov 
website.
    (3) Additional Exclusion. If the IRS's systems do not support 
electronic filing, taxpayers will not be required to file 
electronically.
    (c) Failure to file. If a financial institution fails to file a 
Form 1042 electronically when required to do so by this section, the 
financial institution has failed to file the return. See section 6651 
for the addition to tax for failure to file a return. In determining 
whether there is reasonable cause for failure to file the return, Sec.  
301.6651-1(c) and rules similar to the rules in Sec.  301.6724-1(c)(3) 
(undue economic hardship related to filing information returns 
electronically) will apply. If a financial institution fails to file a 
Form 1042-S or a Form 8966 electronically when required to do so by 
this section, the financial institution has failed to comply with the 
information reporting requirements under section 6721 of the Code. See 
section 6724(c) for failure to meet magnetic media requirements. In 
determining whether there is reasonable cause for failure to file the 
return, Sec.  301.6651-1(c) and rules similar to the rules in Sec.  
301.6724-1(c)(3) (undue economic hardship related to filing information 
returns on magnetic media) will apply.
    (d) * * *
    (1) Magnetic media or electronic form. The terms magnetic media or 
electronic form mean any media or form permitted under applicable 
regulations, revenue procedures, or publications. These generally 
include electronic filing, as well as magnetic tape, tape cartridge, 
diskette, and other media specifically permitted under the applicable 
regulations, procedures, publications, forms, instructions, or other 
guidance.
* * * * *
    (e) Applicability date. This section applies to any Form 1042 (or 
successor form) required to be filed for taxable years ending on or 
after December 31, 2023. This section applies to any Form 1042-S or 
Form 8966 (or any other form that the IRS may prescribe) filed with 
respect to calendar years ending after December 31, 2013, except that 
paragraph (b)(2) of this section only applies to Forms 1042-S or Forms 
8966 required to be filed for taxable years ending on or after December 
31, 2023.

0
Par. 19. Section 301.6011-2 is amended by revising the section heading 
and paragraphs (a)(1), (b), (c), and (g) to read as follows:


Sec.  301.6011-2  Required use of electronic form.

    (a) * * *
    (1) Magnetic media or electronic form. The terms magnetic media or 
electronic form mean any media or form permitted under applicable 
regulations, revenue procedures or publications, or, in the case of 
returns filed with the Social Security Administration, Social Security 
Administration publications. These generally include electronic filing, 
as well as magnetic tape, tape cartridge, diskette, and other media 
specifically permitted under the applicable regulations, procedures, or 
publications.
* * * * *
    (b) Returns required electronically. (1) If the use of Form 1042-S, 
Form 1094 series, Form 1095-B, Form 1095-C, Form 1097-BTC, Form 1098, 
Form 1098-C, Form 1098-E, Form 1098-Q, Form 1098-T, Form 1099 series, 
Form 3921, Form 3922, Form 5498 series, Form 8027, or Form W-2G is 
required by the applicable regulations or revenue procedures for the 
purpose of making an information return, the information required by 
the form must be submitted electronically, except as otherwise provided 
in paragraph (c) of this section. Returns filed electronically must be 
made in accordance with applicable revenue procedures, publications, 
forms, or instructions.
    (2) If the use of Form W-2 (Wage and Tax Statement), Form 499R-2/W-
2PR (Withholding Statement (Puerto Rico)), Form W-2VI (U.S. Virgin 
Islands Wage and Tax Statement), Form W-2GU (Guam Wage and Tax 
Statement), or Form W-2AS (American Samoa Wage and Tax Statement) is 
required for the purpose of making an information return, the 
information required by the form must be submitted electronically, 
except as otherwise provided in

[[Page 11768]]

paragraph (c) of this section. Returns described in this paragraph 
(b)(2) must be made in accordance with applicable Social Security 
Administration procedures or publications (which may be obtained from 
the local office of the Social Security Administration).
    (3) If a person is required to make a return for the purpose of 
section 6050I, and such person is required to file returns described in 
paragraphs (b)(1) and (2) of this section electronically, then such 
person must also file the information required by section 6050I 
electronically. Returns described in this paragraph (b)(3) must be made 
in accordance with applicable IRS revenue procedures, publications, 
forms, instructions, or other guidance, including postings to the 
IRS.gov website, as well as instructions and guidance on the FinCEN.gov 
website.
    (4) The Commissioner may exempt certain returns from the electronic 
requirements of this section through revenue procedures, publications, 
forms, instructions, or other guidance, including postings to the 
IRS.gov website.
    (c) Electronic-filing threshold--(1) In general. No person is 
required to file information returns electronically in a calendar year 
unless the person is required to file at least 10 returns during that 
calendar year. Persons required to file fewer than 10 returns during 
the calendar year may make the returns on the prescribed paper form or, 
alternatively, electronically in accordance with paragraph (b) of this 
section.
    (2) Machine-readable forms. Returns made on a paper form under 
paragraph (c)(1) of this section must be machine-readable, as described 
in paragraph (a)(2) of this section, if applicable revenue procedures 
provide for a machine-readable paper form.
    (3) Special rule for partnerships. Notwithstanding paragraph (c)(1) 
of this section, a partnership with more than 100 partners is required 
to file its information returns covered under paragraph (b) of this 
section electronically.
    (4) Calculating the number of returns--(i) Aggregation of returns. 
In calculating whether a person is required to file at least 10 returns 
under paragraph (c)(1) of this section, all the information returns 
described in paragraphs (b)(1) and (2) of this section required to be 
filed during the calendar year are counted in the aggregate. Neither 
corrected information returns, information returns described in 
paragraph (b)(3) of this section, nor returns other than those 
described in paragraphs (b)(1) and (2) of this section are taken into 
account in calculating whether a person is required to file at least 10 
returns.
    (ii) Corrected returns. (A) If an original information return 
covered by paragraph (b) of this section is required to be filed 
electronically, any corrected information return corresponding to that 
original return must also be filed electronically.
    (B) If an original information return is permitted to be filed on 
paper and is filed on paper, any corrected information return 
corresponding to that original return must be filed on paper.
    (5) Examples. The provisions of paragraphs (c)(3) and (4) of this 
section are illustrated by the following examples:
    (i) Example 1. During the 2024 calendar year, Company W, is 
required to file five Forms 1099-INT, Interest Income, and five Forms 
1099-DIV, Dividends and Distributions, for a total of 10 returns 
covered by paragraphs (b)(1) and (2) of this section. Because Company W 
is required to file 10 returns as calculated under paragraph (c)(4) of 
this section during the 2024 calendar year, Company W must file all its 
2023 Forms 1099-INT and 1099-DIV electronically.
    (ii) Example 2. Same facts as paragraph (c)(5)(i) of this section 
(Example 1), except after electronically filing its 10 Forms 1099-DIV 
and 1099-INT, Company W files two corrected Forms 1099-DIV and four 
corrected Forms 1099-INT. Because Company W electronically filed its 
original 2023 Forms 1099-DIV and 1099-INT, Company W must 
electronically file its corrected 2023 Forms 1099-DIV and 1099-INT.
    (iii) Example 3. Same facts as paragraph (c)(5)(i) of this section 
(Example 1), except on May 16, 2024, Company W received cash in excess 
of $10,000 and must file a Form 8300 by May 31, 2024. Because Company W 
is required to file information returns covered under paragraphs (b)(1) 
and (2) of this section electronically during the 2024 calendar year, 
Company W must also file all its Forms 8300 electronically during the 
2024 calendar year.
    (iv) Example 4. Same facts as paragraph (c)(5)(i) of this section 
(Example 1), except Company W is not required to file any Forms 1099-
INT during calendar year 2024. On December 19, 2023, Company W receives 
cash in excess of $10,000 and must file a Form 8300 by January 3, 2024. 
Because Company W is not required to file information returns covered 
under paragraphs (b)(1) and (2) of this section electronically during 
the 2024 calendar year, Company W is not required to file this Form 
8300 electronically.
    (v) Example 5. During the 2024 calendar year, Partnership P, a 
partnership with 15 partners, is required to file eight Forms 1099-
MISC, Miscellaneous Information, and five Forms 1099-INT. Because 
Partnership P is required to file at least 10 returns covered by 
paragraphs (b)(1) and (2) of this section during the 2024 calendar 
year, Partnership P must electronically file all its 2022 Forms 1099-
MISC and 1099-INT.
    (6) Exclusions from electronic-filing requirements--(i) Waivers. 
The Commissioner may grant waivers of the requirements of this section 
in cases of undue hardship. One principal factor in determining 
hardship will be the amount, if any, by which the cost of filing the 
return electronically in accordance with this section exceeds the cost 
of filing the return on paper. A request for a waiver must be made in 
accordance with applicable IRS revenue procedures, publications, forms, 
instructions, or other guidance, including postings to the IRS.gov 
website. The waiver request will specify the type of filing (that is, a 
return required under paragraph (b) of this section) and the period to 
which it applies. For purposes of paragraph (b)(3) of this section, a 
waiver granted for a return under paragraph (b)(1) or (2) will be 
deemed to have waived the electronic-filing requirement for any returns 
required to be filed under section 6050I.
    (ii) Exemptions. The Commissioner may provide exemptions from the 
requirements of this section to promote effective and efficient tax 
administration. An exemption will be allowed for filers for whom using 
the technology required to file in electronic form conflicts with their 
religious beliefs. A submission claiming an exemption must be made in 
accordance with applicable IRS revenue procedures, publications, forms, 
instructions, or other guidance, including postings to the IRS.gov 
website.
    (iii) Additional Exclusion. If an employer is required to make a 
final return on Form 941, or a variation thereof, and expedited filing 
of Forms W-2, Forms 499R-2/W-2PR, Forms W-2VI, Forms W-2GU, or Form W-
2AS is required, if the IRS's systems do not support electronic filing, 
taxpayers will not be required to file electronically (see Sec.  
31.6071(a)-1(a)(3)(ii) of this chapter).
* * * * *
    (g) Applicability date. The rules of this section apply to 
information returns required to be filed during calendar

[[Page 11769]]

years beginning after December 31, 2023.

0
Par. 20. Section 301.6011-3 is amended by:
0
a. Revising the section heading.
0
b. Revising paragraphs (a), (b), and (d)(1).
0
c. Redesignating paragraph (d)(5) as (d)(6) and adding new paragraph 
(d)(5).
0
d. Revising newly redesignated paragraph (d)(6).
0
e. Revising paragraphs (e) and (f).
    The revisions and addition read as follows:


Sec.  301.6011-3  Required use of electronic form for partnership 
returns.

    (a) Partnership returns required electronically. (1) Except as 
otherwise provided in paragraph (b) of this section, a partnership 
required to file a partnership return pursuant to Sec.  1.6031(a)-1 of 
this chapter, must file the information required by the applicable 
forms and schedules electronically, if
    (i) the partnership is required by the Internal Revenue Code or 
regulations to file at least 10 returns (as described in paragraph 
(d)(5) of this section) during the calendar year ending with or within 
the taxable year of the partnership, or
    (ii) the partnership has more than 100 partners during the 
partnership's taxable year.
    (2) The Commissioner may direct the type of electronic filing and 
may also exempt certain returns from the electronic requirements of 
this section through revenue procedures, publications, forms, 
instructions, or other guidance, including postings on the IRS.gov 
website. Returns filed electronically must be made in accordance with 
the applicable revenue procedures, publications, forms, instructions, 
or other guidance.
    (b) Exclusions from electronic-filing requirements--(1) Waivers. 
The Commissioner may grant waivers of the requirements of this section 
in cases of undue hardship. One principal factor in determining 
hardship will be the amount, if any, by which the cost of filing the 
return electronically in accordance with this section exceeds the cost 
of filing the return on paper. A request for a waiver must be made in 
accordance with applicable IRS revenue procedures, publications, forms, 
instructions, or other guidance, including postings to the IRS.gov 
website. The waiver request will specify the type of filing (that is, a 
return required under Sec.  1.6031(a)-1 of this chapter) and the period 
to which it applies.
    (2) Exemptions. The Commissioner may provide exemptions from the 
requirements of this section to promote effective and efficient tax 
administration. An exemption will be allowed for filers for whom using 
the technology required to file in electronic form conflicts with their 
religious beliefs. A submission claiming an exemption must be made in 
accordance with applicable IRS revenue procedures, publications, forms, 
instructions, or other guidance, including postings to the IRS.gov 
website.
    (3) Additional Exclusion. If the IRS's systems do not support 
electronic filing, taxpayers will not be required to file 
electronically.
* * * * *
    (d) * * *
    (1) Magnetic media or electronic form. The terms magnetic media or 
electronic form mean any media or form permitted under applicable 
regulations, revenue procedures, or publications. These generally 
include electronic filing, as well as magnetic tape, tape cartridge, 
diskette, and other media specifically permitted under the applicable 
regulations, procedures, publications, forms, instructions, or other 
guidance.
* * * * *
    (5) Calculating the number of returns. For purposes of this 
section, a partnership is required to file at least 10 returns if, 
during the calendar year ending with or within the taxable year of the 
partnership, the partnership is required to file at least 10 returns of 
any type, including income tax returns, employment tax returns, excise 
tax returns, and information returns (for example, Forms W-2 and Forms 
1099, but not including schedules required to be included with a 
partnership return). In the case of a short-period return, a 
partnership is required to file at least 10 returns if, during the 
calendar year in which the partnership's short taxable year ends, the 
partnership is required to file at least 10 returns of any type, 
including information returns (for example, Forms W-2 and Forms 1099, 
but not including schedules required to be included with a partnership 
return), income tax returns, employment tax returns, and excise tax 
returns.
    (6) Partnerships with more than 100 partners. A partnership has 
more than 100 partners if, over the course of the partnership's taxable 
year, the partnership had more than 100 partners, regardless of whether 
a partner was a partner for the entire year or whether the partnership 
had over 100 partners on any particular day in the year. For purposes 
of this paragraph (d)(6), however, only those persons having a direct 
interest in the partnership must be considered partners for purposes of 
determining the number of partners during the partnership's taxable 
year.
    (e) Examples. The following examples illustrate the provisions of 
this section. In the examples, the partnerships' taxable year is the 
calendar year 2023 and the partnerships had fewer than 10 returns 
required to be filed during calendar year 2023:
    (1) Example 1. Partnership P had five general partners and 90 
limited partners on January 1, 2023. On March 15, 2023, 10 more limited 
partners acquired an interest in P. On September 29, 2023, the 10 
newest partners sold their individual partnership interests to C, a 
corporation which was one of the original 90 limited partners. On 
December 31, 2023, P had the same five general partners and 90 limited 
partners it had on January 1, 2023. P had a total of 105 partners over 
the course of partnership taxable year 2023. Therefore, P must file its 
2023 partnership return electronically.
    (2) Example 2. Partnership Q is a general partnership that had 95 
partners on January 1, 2023. On March 15, 2023, 10 partners sold their 
individual partnership interests to corporation D, which was not 
previously a partner in Q. On September 29, 2023, corporation D sold 
one-half of its partnership interest in equal shares to five 
individuals, who were not previously partners in Q. On December 31, 
2023, Q had a total of 91 partners, and on no date in 2023 did Q have 
more than 100 partners. Over the course of the year, however, Q had 101 
partners. Therefore, Q must file its 2023 partnership return 
electronically.
    (3) Example 3. Partnership G is a general partnership with 100 
partners on January 1, 2023. There are no new partners added to G in 
2023. One of G's partners, A, is a partnership with 53 partners. A is 
one partner, regardless of the number of partners A has. Therefore, G 
has 100 partners and is not required to file its 2023 partnership 
return electronically.
    (4) Example 4. Same facts as paragraph (e)(3) of this section 
(Example 3), except partnership G is also required to file nine Forms 
1099-MISC during calendar year 2023 in addition to its 2022 partnership 
return. Because partnership G is required to file at least 10 returns 
of any type during calendar year 2023, partnership G must file its 2023 
partnership return electronically.
    (f) Applicability date. The rules of this section apply to 
partnership returns required to be filed during calendar years 
beginning after December 31, 2023.

0
Par. 21. Section 301.6011-5 is amended by revising the section

[[Page 11770]]

heading, and paragraphs (a), (b), (d)(1) and (5), (e), and (f) to read 
as follows:


Sec.  301.6011-5  Required use of electronic form for corporate income 
tax returns.

    (a) Corporate income tax returns required electronically. (1) A 
corporation required to file a corporate income tax return on Form 
1120, U.S. Corporation Income Tax Return, under Sec.  1.6012-2 of this 
chapter must file its corporate income tax return electronically if the 
corporation is required by the Internal Revenue Code or regulations to 
file at least 10 returns (as defined in paragraph (d)(5) of this 
section) during the calendar year ending with or within the taxable 
year of the corporation.
    (2) All members of a controlled group of corporations must file 
their corporate income tax returns electronically if the aggregate 
number of returns required to be filed by the controlled group of 
corporations is at least 10 (as defined in paragraph (d)(5) of this 
section) during the calendar year ending with or within the taxable 
year of the controlled group of corporations.
    (3) The Commissioner may direct the type of electronic filing and 
may also exempt certain returns from the electronic requirements of 
this section through revenue procedures, publications, forms, 
instructions, or other guidance, including postings on the IRS.gov 
website. Returns filed electronically must be made in accordance with 
the applicable revenue procedures, publications, forms, instructions, 
or other guidance.
    (b) Exclusions from electronic-filing requirements--(1) Waivers. 
The Commissioner may grant waivers of the requirements of this section 
in cases of undue hardship. One principal factor in determining 
hardship will be the amount, if any, by which the cost of filing the 
return electronically in accordance with this section exceeds the cost 
of filing the return on paper. A request for a waiver must be made in 
accordance with applicable IRS revenue procedures, publications, forms, 
instructions, or other guidance, including postings to the IRS.gov 
website. The waiver request will specify the type of filing (that is, a 
return required under Sec.  1.6012-2 of this chapter) and the period to 
which it applies.
    (2) Exemptions. The Commissioner may provide exemptions from the 
requirements of this section to promote effective and efficient tax 
administration. An exemption will be allowed for filers for whom using 
the technology required to file in electronic form conflicts with their 
religious beliefs. A submission claiming an exemption must be made in 
accordance with applicable IRS revenue procedures, publications, forms, 
instructions, or other guidance, including postings to the IRS.gov 
website.
    (3) Additional Exclusion. If the IRS's systems do not support 
electronic filing, taxpayers will not be required to file 
electronically.
* * * * *
    (d) * * *
    (1) Magnetic media or electronic form. The terms magnetic media or 
electronic form mean any media or form permitted under applicable 
regulations, revenue procedures, or publications. These generally 
include electronic filing, as well as magnetic tape, tape cartridge, 
diskette, and other media specifically permitted under the applicable 
regulations, procedures, publications, forms, instructions, or other 
guidance.
* * * * *
    (5) Calculating the number of returns. For purposes of this 
section, a corporation or controlled group of corporations is required 
to file at least 10 returns if, during the calendar year ending with or 
within the taxable year of the corporation or the controlled group, the 
corporation or the controlled group is required to file at least 10 
returns of any type, including information returns (for example, Forms 
W-2 and Forms 1099), income tax returns, employment tax returns, and 
excise tax returns. In the case of a short-period return, a corporation 
is required to file at least 10 returns if, during the calendar year in 
which the corporation's short taxable year ends, the corporation is 
required to file at least 10 returns of any type, including information 
returns (for example, Forms W-2 and Forms 1099), income tax returns, 
employment tax returns, and excise tax returns. If the corporation is a 
member of a controlled group, calculating the number of returns the 
corporation is required to file includes all returns required to be 
filed by all members of the controlled group during the calendar year 
ending with or within the taxable year of the controlled group.
    (e) Example. The following example illustrates the provisions of 
this section:
    (1) The taxable year of Corporation X, a fiscal-year taxpayer, ends 
on September 30. During the calendar year ending December 31, 2023, X 
was required to file one Form 1120, U.S. Corporation Income Tax Return, 
six Forms W-2, Wage and Tax Statement, three Forms 1099-DIV, Dividends 
and Distributions, one Form 940, Employer's Annual Federal Unemployment 
(FUTA) Tax Return, and four Forms 941, Employer's Quarterly Federal Tax 
Return. Because X is required to file 10 returns of any type during 
calendar year 2023, the calendar year that ended within its taxable 
year ending September 30, 2024, X is required to file its Form 1120 
electronically for its taxable year ending September 30, 2024.
    (2) [Reserved]
    (f) Applicability date. The rules of this section apply to 
corporate income tax returns required to be filed during calendar years 
beginning after December 31, 2023.

0
Par. 22. Section 301.6011-10 is added to read as follows:


Sec.  301.6011-10  Certain organizations, including trusts, required to 
file unrelated business income tax returns in electronic form.

    (a) Unrelated business income tax returns required in electronic 
form. (1) Organizations, including trusts, subject to tax under section 
511 that are required to file a return under Sec.  1.6012-2(e) or Sec.  
1.6012-3(a)(5) of this chapter to report gross income included in 
computing unrelated business taxable income, as defined in section 512, 
or that are otherwise required to file Form 990-T, Exempt Organization 
Business Income Tax Return (and proxy tax under section 6033(e)), are 
required to file that return in electronic form.
    (2) Returns filed in electronic form must be filed in accordance 
with applicable revenue procedures, publications, forms, instructions, 
or other guidance.
    (b) Failure to file. If an organization or trust fails to file an 
unrelated business income tax return in electronic form when required 
to do so by this section, the organization or trust has failed to file 
the return. See section 6651 for the addition to tax for failure to 
file a return. In determining whether there is reasonable cause for 
failure to file the return, Sec.  301.6651-1(c) will apply.
    (c) Applicability date. The rules of this section apply to 
unrelated business income tax returns required to be filed during 
calendar years beginning after February 23, 2023.

0
Par. 23. Section 301.6011-11 is added to read as follows:


Sec.  301.6011-11  Required use of electronic form for certain returns 
for tax-advantaged bonds.

    (a) Return for credit payments to issuers of qualified bonds. (1) 
An issuer of a qualified bond required to file a return for credit 
payments on Form 8038-CP, Return for Credit Payments to Issuers of 
Qualified Bonds, must file the return electronically if the issuer is 
required to file at least 10 returns (as

[[Page 11771]]

determined under paragraph (d) of this section) during the calendar 
year.
    (2) Returns filed electronically must be completed in accordance 
with applicable revenue procedures, publications, forms, instructions, 
or other guidance, including postings to the IRS.gov website.
    (b) Exclusions from electronic-filing requirements--(1) Waivers. 
The Commissioner may grant waivers of the requirements of this section 
in cases of undue hardship. One principal factor in determining 
hardship will be the amount, if any, by which the cost of filing the 
return electronically in accordance with this section exceeds the cost 
of filing a paper return. An issuer's request for a waiver must be 
submitted in accordance with applicable revenue procedures, 
publications, forms, instructions, or other guidance, including 
postings to the IRS.gov website. The waiver request must specify the 
type of filing (that is, the return required to be filed electronically 
under this section), the name of the issuer, the name of the bond 
issue, the issue date of the tax-advantaged bond (as defined in Sec.  
1.150-1(b) of this chapter), and any other information specified in the 
applicable revenue procedures, publications, forms, instructions, or 
other guidance, including postings to the IRS.gov website.
    (2) Exemptions. The Commissioner may provide an exemption from the 
electronic-filing requirement of paragraph (a)(1) of this section 
through revenue procedures, publications, forms, instructions, or other 
guidance, including postings to the IRS.gov website, to promote 
effective and efficient tax administration. A submission claiming an 
exemption must be made in accordance with applicable revenue 
procedures, publications, forms, instructions, or other guidance, 
including postings to the IRS.gov website.
    (3) Additional Exclusion. If the IRS's systems do not support 
electronic filing, taxpayers will not be required to file a return 
electronically under this section.
    (c) Meaning of terms. The following definitions apply for purposes 
of this section:
    (1) Magnetic media or electronic form. The terms magnetic media or 
electronic form mean any media or form permitted under applicable 
regulations, revenue procedures, or publications. These generally 
include electronic filing, as well as magnetic tape, tape cartridge, 
diskette, and other media specifically permitted under the applicable 
regulations, procedures, publications, forms, instructions, or other 
guidance.
    (2) Qualified bond. The term qualified bond means a tax-advantaged 
bond that is a taxable bond that provides a refundable Federal tax 
credit payable directly to the issuer of the bond under former section 
6431 or any other tax-advantaged bond (as defined in Sec.  1.150-1(b) 
of this chapter) that provides a refundable Federal tax credit payment 
to an issuer of such bond.
    (3) Return for credit payments to issuers of qualified bonds. The 
term return for credit payments to issuers of qualified bonds means a 
Form 8038-CP, Return for Credit Payments to Issuers of Qualified Bonds, 
or such other form prescribed by the Commissioner for the purpose of 
filing a return for credit payment with respect to a qualified bond.
    (d) Calculating the number of returns--(1) Aggregation of returns. 
For purposes of this section, an issuer of a tax-advantaged bond is 
required to file at least 10 returns if, during the calendar year, the 
issuer is required to file at least 10 returns of any type, including 
information returns (for example, Forms W-2 and Forms 1099), income tax 
returns, employment tax returns, and excise tax returns.
    (2) Corrected returns. (i) If an original return covered by this 
section is required to be filed electronically, any corrected return 
corresponding to that original return must also be filed 
electronically.
    (ii) If an original return covered by this section is permitted to 
be filed on paper and is filed on paper, any corrected return 
corresponding to that original return must be filed on paper.
    (e) Applicability date. The rules of this section apply to returns 
for tax-advantaged bonds filed after December 31, 2023.

0
Par. 24. Section 301.6011-12 is added to read as follows:


Sec.  301.6011-12  Required use of electronic form for returns of 
certain excise taxes under Chapters 41 and 42 of the Internal Revenue 
Code.

    (a) Excise tax returns required electronically. (1) Any person 
required to file an excise tax return on Form 4720, Return of Certain 
Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code, 
under Sec.  53.6011-1 of this chapter must file its excise tax return 
electronically if the person is required by the Internal Revenue Code 
or regulations to file at least 10 returns (as defined in paragraph 
(d)(3) of this section) during the calendar year.
    (2) The Commissioner may direct the type of electronic filing and 
may also exempt certain returns from the electronic requirements of 
this section through revenue procedures, publications, forms, 
instructions, or other guidance, including postings on the IRS.gov 
website. Returns filed electronically must be made in accordance with 
the applicable revenue procedures, publications, forms, instructions, 
or other guidance.
    (3) Paragraph (a)(1) of this section is not applicable to private 
foundations that are subject to the filing requirements of Sec.  
301.6033-4.
    (b) Exclusions from electronic-filing requirements--(1) Waivers. 
The Commissioner may grant waivers of the requirements of this section 
in cases of undue hardship. One principal factor in determining 
hardship will be the amount, if any, by which the cost of filing the 
return electronically in accordance with this section exceeds the cost 
of filing the return on paper. A request for a waiver must be made in 
accordance with applicable IRS revenue procedures, publications, forms, 
instructions, or other guidance, including postings to the IRS.gov 
website. The waiver request will specify the type of filing (that is, a 
return required under Sec.  53.6011-1 of this chapter) and the period 
to which it applies.
    (2) Exemptions. The Commissioner may provide exemptions from the 
requirements of this section to promote effective and efficient tax 
administration. A submission claiming an exemption must be made in 
accordance with applicable IRS revenue procedures, publications, forms, 
instructions, or other guidance, including postings to the IRS.gov 
website.
    (3) Additional exclusion. If the IRS's systems do not support 
electronic filing, taxpayers will not be required to file 
electronically.
    (c) Failure to file. If a person fails to file an excise tax return 
electronically when required to do so by this section, the person has 
failed to file the return. See section 6651 for the addition to tax for 
failure to file a return. In determining whether there is reasonable 
cause for failure to file the return, Sec.  301.6651-1(c) and rules 
similar to the rules in Sec.  301.6724-1(c)(3) (undue economic hardship 
related to filing information returns electronically) will apply.
    (d) Meaning of terms. The following definitions apply for purposes 
of this section:
    (1) Magnetic media or electronic form. The terms magnetic media or 
electronic form mean any media or form permitted under applicable 
regulations, revenue procedures, or publications. These

[[Page 11772]]

generally include electronic filing, as well as magnetic tape, tape 
cartridge, diskette, and other media specifically permitted under the 
applicable regulations, procedures, publications, forms, instructions, 
or other guidance.
    (2) Excise tax return. The term excise tax return means a Form 
4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the 
Internal Revenue Code, along with all other related forms, schedules, 
and statements that are required to be attached to the Form 4720, 
including amended and superseding returns.
    (3) Calculating the number of returns. For purposes of this 
section, a person is required to file at least 10 returns if, during 
the calendar year ending with or within the person's taxable year, the 
person is required to file at least 10 returns of any type, including 
information returns (for example, Forms W-2 and Forms 1099), income tax 
returns, employment tax returns, and excise tax returns. In the case of 
a short-period return, a person is required to file at least 10 returns 
if, during the calendar year in which the person's short taxable year 
ends, the person is required to file at least 10 returns of any type, 
including information returns (for example, Forms W-2 and Forms 1099), 
income tax returns, employment tax returns, and excise tax returns.
    (e) Example. The following example illustrates the provisions of 
this section:
    (1) During the calendar year ending December 31, 2023, Trust X was 
required to file one Form 4720, Return of Certain Excise Taxes Under 
Chapters 41 and 42 of the Internal Revenue Code, which related to the 
2022 taxable year, and 10 Forms W-2, Wage and Tax Statement, which 
reported wages paid to employees during 2022. Because X is required to 
file 11 returns during calendar year 2023, X is required to file its 
Form 4720 electronically for its taxable year ended December 31, 2023.
    (2) [Reserved]
    (f) Applicability date. The rules of this section apply to excise 
tax returns required to be filed for taxable years ending on or after 
December 31, 2023.

0
Par. 25. Section 301.6011-13 is added to read as follows:


Sec.  301.6011-13  Required use of electronic form for split-interest 
trust returns.

    (a) Split-interest trust returns required electronically. (1) Any 
trust required to file an information return on Form 5227, Split-
Interest Trust Information Return, under Sec.  53.6011-1 of this 
chapter must file its return electronically if the trust is required by 
the Internal Revenue Code or regulations to file at least 10 returns 
(as defined in paragraph (d)(3) of this section) during the calendar 
year.
    (2) The Commissioner may direct the type of electronic filing and 
may also exempt certain returns from the electronic requirements of 
this section through revenue procedures, publications, forms, 
instructions, or other guidance, including postings on the IRS.gov 
website. Returns filed electronically must be made in accordance with 
applicable revenue procedures, publications, forms, or instructions.
    (b) Exclusions from electronic-filing requirements--(1) Waivers. 
The Commissioner may grant waivers of the requirements of this section 
in cases of undue hardship. One principal factor in determining 
hardship will be the amount, if any, by which the cost of filing the 
return electronically in accordance with this section exceeds the cost 
of filing the return on paper. A request for a waiver must be made in 
accordance with applicable IRS revenue procedures, publications, forms, 
instructions, or other guidance, including postings to the IRS.gov 
website. The waiver request will specify the type of filing (that is, a 
return required under Sec.  53.6011-1 of this chapter) and the period 
to which it applies.
    (2) Exemptions. The Commissioner may provide exemptions from the 
requirements of this section to promote effective and efficient tax 
administration. A submission claiming an exemption must be made in 
accordance with applicable IRS revenue procedures, publications, forms, 
instructions, or other guidance, including postings to the IRS.gov 
website.
    (3) Additional exclusion. If the IRS's systems do not support 
electronic filing, taxpayers will not be required to file 
electronically.
    (c) Failure to file. If a trust fails to file an excise tax return 
electronically when required to do so by this section, the trust has 
failed to file the return. See section 6652 for the addition to tax for 
failure to file a return. In determining whether there is reasonable 
cause for failure to file the return, Sec.  301.6652-1(f) and rules 
similar to the rules in Sec.  301.6724-1(c)(3) (undue economic hardship 
related to filing information returns electronically) will apply.
    (d) Meaning of terms. The following definitions apply for purposes 
of this section:
    (1) Magnetic media or electronic form. The terms magnetic media or 
electronic form mean any media or form permitted under applicable 
regulations, revenue procedures, or publications. These generally 
include electronic filing, as well as magnetic tape, tape cartridge, 
diskette, and other media specifically permitted under the applicable 
regulations, procedures, publications, forms, instructions, or other 
guidance.
    (2) Split-Interest Trust return. The term split-interest trust 
return means a Form 5227, Split-Interest Trust Information Return, 
along with all other related forms, schedules, and statements that are 
required to be attached to the Form 5227, including amended and 
superseding returns.
    (3) Calculating the number of returns. For purposes of this 
section, a trust is required to file at least 10 returns if, during the 
calendar year ending with or within the trust's taxable year, the trust 
is required to file at least 10 returns of any type, including 
information returns (for example, Forms W-2 and Forms 1099), income tax 
returns, employment tax returns, and excise tax returns. In the case of 
a short-period return, a trust is required to file at least 10 returns 
if, during the calendar year in which the trust's short taxable year 
ends, the trust is required to file at least 10 returns of any type, 
including information returns (for example, Forms W-2 and Forms 1099), 
income tax returns, employment tax returns, and excise tax returns.
    (e) Example. The following example illustrates the provisions of 
this section:
    (1) During the calendar year ending December 31, 2023, Trust X was 
required to file one Form 5227, Split-Interest Trust Information 
Return, one Form 4720, Return of Certain Excise Taxes Under Chapters 41 
and 42 of the Internal Revenue Code, and 10 Forms 1099-DIV, Dividends 
and Distributions. Because X is required to file 12 returns during the 
calendar year 2023, X is required to file its Form 5227 electronically 
for its taxable year ending December 31, 2023.
    (2) [Reserved]
    (f) Applicability date. The rules of this section apply to Split-
Interest Trust returns required to be filed for taxable years ending on 
or after December 31, 2023.

0
Par. 26. Section 301.6011-14 is added to read as follows:


Sec.  301.6011-14  Required use of electronic form or other machine-
readable form for material advisor disclosure statements.

    (a) Material advisor disclosure statements required electronically 
or in other machine-readable form. (1) Any material advisor required to 
file a return on Form 8918, Material Advisor Disclosure Statement, 
under Sec.  301.6111-3(a) of this chapter must file its return 
electronically or in other machine-readable form, in accordance

[[Page 11773]]

with revenue procedures, publications, forms, instructions, or other 
guidance, including postings on the IRS.gov website, if the material 
advisor is required by the Internal Revenue Code or regulations to file 
at least 10 returns (as determined under paragraph (d)(4) of this 
section) during the calendar year.
    (2) The Commissioner may direct the type of electronic or other 
machine-readable form through revenue procedures, publications, forms, 
instructions, or other guidance, including postings on the IRS.gov 
website. Returns filed electronically or in other machine-readable form 
must be made in accordance with applicable revenue procedures, 
publications, forms, instructions, or other guidance.
    (b) Exclusions from electronic-filing requirements--(1) Waivers. 
The Commissioner may grant waivers of the requirements of this section 
in cases of undue hardship. One principal factor in determining 
hardship will be the amount, if any, by which the cost of filing the 
return electronically in accordance with this section exceeds the cost 
of filing the return on paper. A request for a waiver must be made in 
accordance with applicable IRS revenue procedures, publications, forms, 
instructions, or other guidance, including postings to the IRS.gov 
website. The waiver request will specify the type of filing (that is, a 
return required under Sec.  301.6111-3(a) of this chapter) and the 
period to which it applies.
    (2) Exemptions. The Commissioner may provide exemptions from the 
requirements of this section to promote effective and efficient tax 
administration. A submission claiming an exemption must be made in 
accordance with applicable IRS revenue procedures, publications, forms, 
instructions, or other guidance, including postings to the IRS.gov 
website.
    (3) Additional Exclusion. If the IRS's systems do not support 
electronic filing, taxpayers will not be required to file 
electronically.
    (c) Failure to file. If a material advisor fails to file Form 8918 
electronically or in other machine-readable form when required to do so 
by this section, the material advisor has failed to file the return. 
See section 6707 for the penalty for failure to file the return.
    (d) Meaning of terms. The following definitions apply for purposes 
of this section:
    (1) Magnetic media or electronic form. The terms magnetic media or 
electronic form mean any media or form permitted under applicable 
regulations, revenue procedures, or publications. These generally 
include electronic filing, as well as magnetic tape, tape cartridge, 
diskette, and other media specifically permitted under the applicable 
regulations, procedures, publications, forms, instructions, or other 
guidance.
    (2) Machine-readable form. The term machine-readable form means any 
machine-readable form specifically permitted under applicable 
regulations, procedures, publications, forms, instructions, or other 
guidance.
    (3) Material advisor disclosure statement. The term material 
advisor disclosure statement means a Form 8918, Material Advisor 
Disclosure Statement, along with all other related forms, schedules, 
and statements that are required to be attached to the Form 8918, 
including amended material advisor disclosure statements.
    (4) Calculating the number of returns. (i) Except as provided in 
paragraph (d)(4)(ii) of this section, for purposes of this section, a 
material advisor is required to file at least 10 returns if during the 
calendar year the material advisor is required to file at least 10 
returns of any type, including information returns (for example, Forms 
W-2 and Forms 1099), income tax returns, employment tax returns, and 
excise tax returns.
    (ii) Form 8918 is not taken into account in calculating whether a 
material advisor is required to file at least 10 returns during a 
calendar year.
    (e) Example. The following example illustrates the provisions of 
this section:
    (1) During the calendar year ending December 31, 2024, Material 
Advisor X was required to file one Form 1040, U.S. Individual Income 
Tax Return, and 10 Forms 1099-NEC, Nonemployee Compensation. Because 
Material Advisor X is required to file 11 returns during the calendar 
year 2024, X is required to file its Forms 8918 electronically or in 
other machine-readable form, in accordance with revenue procedures, 
publications, forms, instructions, or other guidance, including 
postings on the IRS.gov website, during the calendar year ending 
December 31, 2024.
    (2) [Reserved]
    (f) Applicability date. The rules of this section apply to Material 
Advisor Disclosure Statements required to be filed after December 31, 
2023.

0
Par. 27. Section 301.6011-15 is added to read as follows:


Sec.  301.6011-15  Required use of electronic form for withholding tax 
returns.

    (a) Withholding tax returns required electronically. (1) A 
withholding agent required to file an income tax return on Form 1042, 
Annual Withholding Tax Return for U.S. Source Income of Foreign 
Persons, under Sec.  1.1461-1(b) of this chapter must file its return 
electronically if the withholding agent is required by the Internal 
Revenue Code or regulations to file at least 10 returns (as defined in 
paragraph (d)(5) of this section) during the calendar year in which the 
Form 1042 is required to be filed. Notwithstanding the previous 
sentence, a withholding agent that is an individual, estate, or trust 
is not required to file its Form 1042 electronically.
    (2) The Commissioner may direct the type of electronic filing and 
may also exempt certain returns from the electronic requirements of 
this section through revenue procedures, publications, forms, 
instructions, or other guidance, including postings on the IRS.gov 
website. Returns filed electronically must be made in accordance with 
the applicable revenue procedures, publications, forms, instructions, 
or other guidance.
    (b) Exclusions from electronic-filing requirements--(1) Waivers. 
The Commissioner may grant waivers of the requirements of this section 
in cases of undue hardship. One principal factor in determining 
hardship will be the amount, if any, by which the cost of filing the 
return electronically in accordance with this section exceeds the cost 
of filing the return on paper. A request for a waiver must be made in 
accordance with applicable IRS revenue procedures, publications, forms, 
instructions, or other guidance, including postings to the IRS.gov 
website. The waiver request will specify the type of filing (that is, a 
return required under Sec.  1.1461-1 of this chapter) and the period to 
which it applies.
    (2) Exemptions. The Commissioner may provide exemptions from the 
requirements of this section to promote effective and efficient tax 
administration. A submission claiming an exemption must be made in 
accordance with applicable IRS revenue procedures, publications, forms, 
instructions, or other guidance, including postings to the IRS.gov 
website.
    (3) Additional exclusion. If the IRS's systems do not support 
electronic filing, taxpayers will not be required to file 
electronically.
    (c) Failure to file. If a withholding agent fails to file a 
withholding tax return electronically when required to do so by this 
section, the withholding agent has failed to file the return. See 
section 6651 for the addition to tax for failure to file a return. In 
determining whether there is reasonable cause for

[[Page 11774]]

failure to file the return, Sec.  301.6651-1(c) and rules similar to 
the rules in Sec.  301.6724-1(c)(3) (undue economic hardship related to 
filing information returns electronically) will apply.
    (d) Meaning of terms. The following definitions apply for purposes 
of this section:
    (1) Magnetic media or electronic form. The terms magnetic media or 
electronic form mean any media or form permitted under applicable 
regulations, revenue procedures, or publications. These generally 
include electronic filing, as well as magnetic tape, tape cartridge, 
and diskette, and other media specifically permitted under the 
applicable regulations, procedures, publications, forms, or 
instructions.
    (2) Withholding agent. The term withholding agent means a 
withholding agent as defined in Sec.  1.1441-7(a) of this chapter.
    (3) Withholding tax return. The term withholding tax return means a 
Form 1042, Annual Withholding Tax Return for U.S. Source Income of 
Foreign Persons, along with all other related forms, schedules, and 
statements that are required to be attached to the Form 1042, including 
amended and superseding returns.
    (4) Special rule for partnerships. Notwithstanding paragraph (d)(5) 
of this section, a withholding agent that is a partnership with more 
than 100 partners (as determined under Sec.  301.6011-3(d)(6)) is 
required to file a return described in paragraph (a) of this section 
electronically.
    (5) Calculating the number of returns. For purposes of this 
section, a withholding agent is required to file at least 10 returns 
if, during the calendar year in which the Form 1042 is required to be 
filed, the withholding agent is required to file at least 10 returns of 
any type, including information returns (for example, Forms W-2, Forms 
1099, Forms 1042-S), income tax returns (for example, Form 1042), 
employment tax returns, and excise tax returns.
    (e) Special rule for returns filed by financial institutions. For 
rules that require withholding agents that are financial institutions 
to file returns electronically, see Sec.  301.1474-1.
    (f) Applicability date. The rules of this section apply to 
withholding tax returns required to be filed for taxable years ending 
on or after December 31, 2023.

0
Par. 28. Section 301.6012-2 is added to read as follows:


Sec.  301.6012-2   Required use of electronic form for income tax 
returns of certain political organizations.

    (a) Income tax returns of certain political organizations required 
electronically. (1) Any organization required to file an income tax 
return on Form 1120-POL, U.S. Income Tax Return for Certain Political 
Organizations, under Sec.  1.6012-6 of this chapter must file its 
income tax return, along with all other related forms, schedules, and 
statements that are required to be attached to the Form 1120-POL, 
including amended and superseding returns, electronically if the 
organization is required by the Internal Revenue Code or regulations to 
file at least 10 returns of any type (as defined in paragraph (d)(2) of 
this section) during the calendar year.
    (2) The Commissioner may direct the type of electronic filing and 
may also exempt certain returns from the electronic requirements of 
this section through revenue procedures, publications, forms, 
instructions, or other guidance, including postings on the IRS.gov 
website. Returns filed electronically must be made in accordance with 
the applicable revenue procedures, publications, forms, instructions, 
or other guidance.
    (b) Exclusions from electronic-filing requirements--(1) Waivers. 
The Commissioner may grant waivers of the requirements of this section 
in cases of undue hardship. One principal factor in determining 
hardship will be the amount, if any, by which the cost of filing the 
return electronically in accordance with this section exceeds the cost 
of filing the return on paper. A request for a waiver must be made in 
accordance with applicable IRS revenue procedures, publications, forms, 
instructions, or other guidance, including postings to the IRS.gov 
website. The waiver request will specify the type of filing (that is, a 
return required under Sec.  1.6012-6 of this chapter) and the period to 
which it applies.
    (2) Exemptions. The Commissioner may provide exemptions from the 
requirements of this section to promote effective and efficient tax 
administration. A submission claiming an exemption must be made in 
accordance with applicable IRS revenue procedures, publications, forms, 
instructions, or other guidance, including postings to the IRS.gov 
website.
    (3) Additional exclusion. If the IRS's systems do not support 
electronic filing, taxpayers will not be required to file 
electronically.
    (c) Failure to file. If an organization fails to file an income tax 
return electronically when required to do so by this section, the 
organization has failed to file the return. See section 6651 for the 
addition to tax for failure to file a return. In determining whether 
there is reasonable cause for failure to file the return, Sec.  
301.6651-1(c) and rules similar to the rules in Sec.  301.6724-1(c)(3) 
(undue economic hardship related to filing information returns 
electronically) will apply.
    (d) Meaning of terms. The following definitions apply for purposes 
of this section:
    (1) Magnetic media or electronic form. The terms magnetic media or 
electronic form mean any media or form permitted under applicable 
regulations, revenue procedures, or publications. These generally 
include electronic filing, as well as magnetic tape, tape cartridge, 
diskette, and other media specifically permitted under the applicable 
regulations, procedures, publications, forms, instructions, or other 
guidance.
    (2) Income tax return for certain political organizations. The term 
income tax return for certain political organizations means a Form 
1120-POL, U.S. Income Tax Return for Certain Political Organizations, 
along with all other related forms, schedules, and statements that are 
required to be attached to the Form 1120-POL, including amended and 
superseding returns.
    (3) Calculating the number of returns. For purposes of this 
section, an organization is required to file at least 10 returns if, 
during the calendar year ending with or within the organization's 
taxable year, the organization is required to file at least 10 returns 
of any type, including information returns (for example, Forms W-2 and 
Forms 1099), income tax returns, employment tax returns, and excise tax 
returns. In the case of a short-period return, an organization is 
required to file at least 10 returns if, during the calendar year in 
which the organization's short taxable year ends, the organization is 
required to file at least 10 returns of any type, including information 
returns (for example, Forms W-2 and Forms 1099), income tax returns, 
employment tax returns, and excise tax returns.
    (e) Example. The following example illustrates the provisions of 
this section:
    (1) During the calendar year ending December 31, 2023, Organization 
X was required to file one Form 1120-POL, U.S. Income Tax Return for 
Certain Political Organizations, four (quarterly) Forms 8872, Political 
Organization Report of Contributions and Expenditures, two Forms W-2, 
Wage and Tax Statement, one Form 940, Employer's Annual Federal 
Unemployment (FUTA) Tax Return, and four Forms 941, Employer's 
Quarterly Federal Tax Return. Because X is required to file 12 returns 
during the

[[Page 11775]]

calendar year, X is required to file its Form 1120-POL electronically 
for its taxable year ending December 31, 2023.
    (2) [Reserved]
    (f) Applicability date. The rules of this section apply to income 
tax returns required to be filed for taxable years ending on or after 
December 31, 2023.

0
Par. 29. Section 301.6033-4 is revised to read as follows:


Sec.  301.6033-4  Required filing in electronic form for returns by 
organizations required to file returns under section 6033.

    (a) Returns by organizations required to file returns under section 
6033 in electronic form. (1) An organization required to file a return 
under section 6033 must file its return in electronic form.
    (2) Returns filed in electronic form must be filed in accordance 
with applicable revenue procedures, publications, forms, instructions, 
or other guidance.
    (b) Failure to file. If an organization required to file a return 
under section 6033 fails to file an information return in electronic 
form when required to do so by this section, the organization has 
failed to file the return. See section 6652 for the addition to tax for 
failure to file a return. In determining whether there is reasonable 
cause for failure to file the return, Sec.  301.6652-2(f) will apply.
    (c) Meaning of terms. For purposes of this section the term return 
required under section 6033 means a Form 990, Return of Organization 
Exempt From Income Tax; Form 990-EZ, Short Form Return of Organization 
Exempt From Income Tax; and Form 990-PF, Return of Private Foundation 
or Section 4947(a)(1) Trust Treated as Private Foundation, along with 
all other related forms, schedules, and statements that are required to 
be attached to the Form 990, Form 990-EZ, or Form 990-PF, and all 
members of the Form 990 series of returns, including amended and 
superseding returns. A Form 4720 filed by a private foundation is a 
form required to be filed under section 6033.
    (d) Applicability date. The rules of this section apply to any 
returns under section 6033 required to be filed during calendar years 
beginning after February 23, 2023.

0
Par. 30. Section 301.6037-2 is amended by revising the section heading 
and paragraphs (a), (b), (d)(1) and (5), (e), and (f) to read as 
follows:


Sec.  301.6037-2  Required use of electronic form for returns of 
electing small business corporation.

    (a) Returns of electing small business corporation required 
electronically. (1) An electing small business corporation required to 
file an electing small business return on Form 1120-S, U.S. Income Tax 
Return for an S Corporation, under Sec.  1.6037-1 of this chapter must 
file its Form 1120-S electronically if the small business corporation 
is required by the Internal Revenue Code and regulations to file at 
least 10 returns during the calendar year.
    (2) The Commissioner may direct the type of electronic filing and 
may also exempt certain returns from the electronic requirements of 
this section through revenue procedures, publications, forms, 
instructions, or other guidance, including postings on the IRS.gov 
website. Returns filed electronically must be made in accordance with 
the applicable revenue procedures, publications, forms, instructions, 
or other guidance.
    (b) Exclusions from electronic-filing requirements--(1) Waivers. 
The Commissioner may grant waivers of the requirements of this section 
in cases of undue hardship. One principal factor in determining 
hardship will be the amount, if any, by which the cost of filing the 
return electronically in accordance with this section exceeds the cost 
of filing the return on paper. A request for a waiver must be made in 
accordance with applicable IRS revenue procedures, publications, forms, 
instructions, or other guidance, including postings to the IRS.gov 
website. The waiver request will specify the type of filing (that is, a 
return required under section 6037) and the period to which it applies.
    (2) Exemptions. The Commissioner may provide exemptions from the 
requirements of this section to promote effective and efficient tax 
administration. An exemption will be allowed for filers for whom using 
the technology required to file in electronic form conflicts with their 
religious beliefs. A submission claiming an exemption must be made in 
accordance with applicable IRS revenue procedures, publications, forms, 
instructions, or other guidance, including postings to the IRS.gov 
website.
    (3) Additional Exclusion. If the IRS's systems do not support 
electronic filing, taxpayers will not be required to file 
electronically.
* * * * *
    (d) * * *
    (1) Magnetic media or electronic form. The terms magnetic media or 
electronic form mean any media or form permitted under applicable 
regulations, revenue procedures, or publications. These generally 
include electronic filing, as well as magnetic tape, tape cartridge, 
diskette, and other media specifically permitted under the applicable 
regulations, procedures, publications, forms, instructions, or other 
guidance.
* * * * *
    (5) Calculating the number of returns. For purposes of this 
section, a corporation is required to file at least 10 returns if, 
during the calendar year ending with or within the corporation's 
taxable year, the corporation is required to file at least 10 returns 
of any type, including income tax returns, employment tax returns, 
excise tax returns, and information returns (for example, Forms W-2, 
Forms 1099, but not including schedules required to be attached to an S 
corporation return). In the case of a short-period return, a 
corporation is required to file at least 10 returns if, during the 
calendar year in which the corporation's short taxable year ends, the 
corporation is required to file at least 10 returns of any type, 
including information returns (for example, Forms W-2, Forms 1099, but 
not including schedules required to be attached to an S corporation 
return), income tax returns, employment tax returns, and excise tax 
returns.
    (e) Example. The following example illustrates the provisions of 
this section. In the example, the corporation is a calendar-year 
taxpayer.
    (1) In 2023, Corporation S, an electing small business corporation, 
is required to file one 2022 Form 1120-S, U.S. Income Tax Return for an 
S Corporation, two Forms W-2, Wage and Tax Statement, two Forms 1099-
DIV, Dividends and Distributions, one Form 940, Employer's Annual 
Federal Unemployment (FUTA) Tax Return, and four Forms 941, Employer's 
Quarterly Federal Tax Return. Because S is required to file 10 returns 
during the calendar year 2023, S is required to file its 2023 Form 
1120-S electronically.
    (2) [Reserved]
    (f) Applicability date. The rules of this section apply to electing 
small business corporation returns required to be filed during calendar 
years beginning after December 31, 2023.

0
Par. 31. Section 301.6057-3 is amended by:
0
a. Revising the section heading.
0
b. Revising paragraphs (a), (b), and (d)(1).
0
c. Revising the heading of paragraph (d)(4) and revising paragraph 
(d)(4)(i).
0
d. In paragraph (e), redesignating the example as paragraph (e)(1).
0
e. Revising newly redesignated paragraph (e)(1).
0
f. Adding a reserved paragraph (e)(2).
0
g. Revising paragraph (f).
    The revisions and addition read as follows:

[[Page 11776]]

Sec.  301.6057-3   Required use of electronic form for filing 
requirements relating to deferred vested retirement benefit.

    (a) Electronic-filing requirements under section 6057. A 
registration statement required under section 6057(a) or a notification 
required under section 6057(b) with respect to an employee benefit plan 
must be filed electronically if the filer is required by the Internal 
Revenue Code or regulations to file at least 10 returns during the 
calendar year that includes the first day of the plan year. The 
Commissioner may direct the type of electronic filing and may also 
exempt certain returns from the electronic requirements of this section 
through revenue procedures, publications, forms, instructions, or other 
guidance, including postings on the IRS.gov website. Returns filed 
electronically must be made in accordance with applicable revenue 
procedures, publications, forms, instructions, or other guidance.
    (b) Exclusions from electronic-filing requirements--(1) Waivers. 
The Commissioner may grant waivers of the requirements of this section 
in cases of undue hardship. One principal factor in determining 
hardship will be the amount, if any, by which the cost of filing the 
return electronically in accordance with this section exceeds the cost 
of filing the return on paper. A request for a waiver must be made in 
accordance with applicable IRS revenue procedures, publications, forms, 
instructions, or other guidance, including postings to the IRS.gov 
website. The waiver request will specify the type of filing (that is, a 
registration statement or notification under section 6057) and the 
period to which it applies.
    (2) Exemptions. The Commissioner may provide exemptions from the 
requirements of this section to promote effective and efficient tax 
administration. A submission claiming an exemption must be made in 
accordance with applicable IRS revenue procedures, publications, forms, 
instructions, or other guidance, including postings to the IRS.gov 
website.
    (3) Additional Exclusion. If the IRS's systems do not support 
electronic filing, taxpayers will not be required to file 
electronically.
* * * * *
    (d) * * *
    (1) Magnetic media or electronic form. The terms magnetic media or 
electronic form mean any media or form permitted under applicable 
regulations, revenue procedures, or publications. These generally 
include electronic filing, as well as magnetic tape, tape cartridge, 
diskette, and other media specifically permitted under the applicable 
regulations, procedures, publications, forms, instructions, or other 
guidance.
* * * * *
    (4) Calculating the number of returns--(i) In general. For purposes 
of this section, a filer is required to file at least 10 returns if, 
during the calendar year that includes the first day of the plan year, 
the filer is required to file at least 10 returns of any type, 
including information returns (for example, Forms W-2 and Forms 1099), 
income tax returns, employment tax returns, and excise tax returns.
* * * * *
    (e) * * *
    (1) Example. In 2024, P, the plan administrator of Plan B, is 
required to file 12 returns (including Forms 1099-R, Distributions From 
Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, 
Insurance Contracts, etc.; Form 8955-SSA; Form 5500, Annual Return/
Report of Employee Benefit Plan; and Form 945, Annual Return of 
Withheld Federal Income Tax). Plan B's plan year is the calendar year. 
Because P is required to file at least 10 returns during the 2024 
calendar year, P must file the 2024 Form 8955-SSA for Plan B 
electronically.
    (2) [Reserved]
    (f) Applicability date. The rules of this section apply to 
registration statements and other notifications required to be filed 
under section 6057 for plan years that begin on or after January 1, 
2024.

0
Par. 32. Section 301.6058-2 is amended by:
0
a. Revising the section heading.
0
b. Revising paragraphs (a), (b), and (d)(1).
0
c. Revising the heading of paragraph (d)(3).
0
d. Revising paragraphs (d)(3)(i) and (iii), (e), and (f).
    The revisions read as follows:


Sec.  301.6058-2  Required use of electronic form for filing 
requirements relating to information required in connection with 
certain plans of deferred compensation.

    (a) Electronic-filing requirements under section 6058. A return 
required under section 6058 with respect to an employee benefit plan 
must be filed electronically if the filer is required by the Internal 
Revenue Code or regulations to file at least 10 returns during the 
calendar year that includes the first day of the plan year. The 
Commissioner may direct the type of electronic filing and may also 
exempt certain returns from the electronic requirements of this section 
through revenue procedures, publications, forms, instructions, or other 
guidance, including postings on the IRS.gov website. Returns filed 
electronically must be made in accordance with the applicable revenue 
procedures, publications, forms, instructions, or other guidance.
    (b) Undue hardship. The Commissioner may waive the requirements of 
this section in cases of undue economic hardship. One principal factor 
in determining hardship will be the amount, if any, by which the cost 
of filing the return electronically in accordance with this section 
exceeds the cost of filing the return on paper. A request for a waiver 
must be made in accordance with applicable IRS revenue procedures, 
publications, forms, instructions, or other guidance, including 
postings to the IRS.gov website. The waiver request will specify the 
type of filing (that is, a return required under section 6058) and the 
period to which it applies.
* * * * *
    (d) * * *
    (1) Magnetic media or electronic form. The terms magnetic media or 
electronic form mean any media or form permitted under applicable 
regulations, revenue procedures, or publications. These generally 
include electronic filing, as well as magnetic tape, tape cartridge, 
diskette, and other media specifically permitted under the applicable 
regulations, procedures, publications, forms, instructions, or other 
guidance.
* * * * *
    (3) Calculating the number of returns--(i) In general. For purposes 
of this section, a filer is required to file at least 10 returns if, 
during the calendar year that includes the first day of the plan year, 
the filer is required to file at least 10 returns of any type, 
including information returns (for example, Forms W-2 and Forms 1099), 
income tax returns, employment tax returns, and excise tax returns. See 
section 6011(e)(6), Application of numerical limitation to returns 
relating to deferred compensation plans.
* * * * *
    (iii) Special rules relating to calculating the number of returns. 
For purposes of applying paragraph (d)(3)(ii) of this section, the 
aggregation rules of section 414(b), (c), (m), and (o) will apply to a 
filer that is or includes an employer. Thus, for example, a filer that 
is a member of a controlled group of corporations within the meaning of 
section 414(b) must file the Form 5500 series electronically if the 
aggregate number of returns required to be filed by all members of the 
controlled group of corporations is at least 10 returns.

[[Page 11777]]

    (e) Example. The following example illustrates the provisions of 
paragraph (d)(3) of this section:
    (1) In 2024, Employer X (the plan sponsor and plan administrator of 
Plan A) is required to file 12 returns. The sole shareholder of X and 
his spouse are the only participants in Plan A. Employer X is required 
to file the following: one Form 1120, U.S. Corporation Income Tax 
Return; two Forms W-2, Wage and Tax Statement; one Form 940, Employer's 
Annual Federal Unemployment (FUTA) Tax Return; four Forms 941, 
Employer's Quarterly Federal Tax Return; one Form 945, Annual Return of 
Withheld Federal Income Tax; and two Forms 1099-DIV, Dividends and 
Distributions. Employer X is required to file one Form 5500-EZ. Plan 
A's plan year is the calendar year. Because Employer X is required to 
file at least 10 returns during the 2024 calendar year, the 2024 Form 
5500-EZ must be filed electronically.
    (2) [Reserved]
    (f) Applicability date. This section is applicable for returns 
required to be filed under section 6058 for plan years that begin on or 
after January 1, 2024.

0
Par. 33. Section 301.6059-2 is amended by:
0
a. Revising the section heading.
0
b. Revising paragraphs (a), (b), and (d)(1).
0
c. Revising the heading for paragraph (d)(3) and revising paragraph 
(d)(3)(i).
0
d. Removing paragraph (e) and redesignating paragraph (f) as paragraph 
(e).
0
e. Revising newly redesignated paragraph (e).
    The revisions read as follows:


Sec.  301.6059-2  Required use of electronic form for filing 
requirements relating to periodic report of actuary.

    (a) Electronic-filing requirements under section 6059. An actuarial 
report required under section 6059 with respect to an employee benefit 
plan must be filed electronically if the filer is required by the 
Internal Revenue Code or regulations to file at least 10 returns during 
the calendar year that includes the first day of the plan year. The 
Commissioner may direct the type of electronic filing and may also 
exempt certain returns from the electronic requirements of this section 
through revenue procedures, publications, forms, instructions, or other 
guidance, including postings on the IRS.gov website. Actuarial reports 
filed electronically must be made in accordance with the applicable 
revenue procedures, publications, forms, instructions, or other 
guidance.
    (b) Undue hardship. The Commissioner may waive the requirements of 
this section in cases of undue economic hardship. One principal factor 
in determining hardship will be the amount, if any, by which the cost 
of filing the reports electronically in accordance with this section 
exceeds the cost of filing the return on paper. A request for a waiver 
must be made in accordance with applicable IRS revenue procedures, 
publications, forms, instructions, or other guidance, including 
postings to the IRS.gov website. The waiver request will specify the 
type of filing (that is, an actuarial report required under 6059) and 
the period to which it applies.
* * * * *
    (d) * * *
    (1) Magnetic media or electronic form. The terms magnetic media or 
electronic form mean any media or form permitted under applicable 
regulations, revenue procedures, or publications. These generally 
include electronic filing, as well as magnetic tape, tape cartridge, 
diskette, and other media specifically permitted under the applicable 
regulations, procedures, publications, forms, instructions, or other 
guidance.
* * * * *
    (3) Calculating the number of returns--(i) In general. For purposes 
of this section, a filer is required to file at least 10 returns if, 
during the calendar year that includes the first day of the plan year, 
the filer is required to file at least 10 returns of any type, 
including information returns (or example, Forms W-2 and Forms 1099), 
income tax returns, employment tax returns, and excise tax returns.
* * * * *
    (e) Applicability date. This section is applicable for actuarial 
reports required to be filed under section 6059 for plan years that 
begin on or after January 1, 2024.

0
Par. 34. Section 301.6721-1 is amended by:
0
a. Revising paragraphs (a)(2)(ii) and (b)(5) introductory text.
0
b. Redesignating Examples 1 through 4 in paragraph (d)(5) as paragraphs 
(b)(5)(i) through (iv).
0
c. Revising newly designated paragraphs (b)(5)(iii) and (iv).
0
d. Adding paragraphs (b)(5)(v) and (vi) and (h).
    The revisions and additions read as follows:


Sec.  301.6721-1  Failure to file correct information returns.

    (a) * * *
    (2) * * *
    (ii) A failure to include all the information required to be shown 
on the return or including incorrect information (failure to include 
correct information). A failure to file timely includes a failure to 
file in the required manner, for example, electronically or in other 
machine-readable form as provided under section 6011(e). However, no 
penalty is imposed under paragraph (a)(1) of this section solely by 
reason of any failure to comply with the requirements of section 
6011(e)(2), except to the extent that the failure occurs with respect 
to more than 10 returns, or with respect to a return described in 
section 6011(e)(4). If a partnership return under section 6031(a) is 
required to be filed electronically, each schedule required to be 
included with such return with respect to each partner will be treated 
as a separate information return for purposes of this section. See 
section 6724(e). Filers who are required to file information returns 
electronically and who file those information returns electronically 
are considered to have satisfied the electronic-filing requirement. 
Except as provided in paragraph (c)(1) or (e)(1) of this section, a 
failure to include correct information encompasses a failure to include 
the information required by applicable information-reporting statutes 
or by any administrative pronouncements (such as regulations, revenue 
rulings, revenue procedures, or information-reporting forms, and form 
instructions). A failure to include information in the correct format 
may be either a failure to file timely an information return or a 
failure to include correct information on an information return. For 
example, an error on an electronic submission to the Internal Revenue 
Service that prevents processing by the Internal Revenue Service may 
constitute a failure to file timely. However, if information is set 
forth on the wrong field of the electronic submission, that error may 
constitute a failure to file timely or a failure to include correct 
information, depending upon the extent of the failure. For purposes of 
paragraph (b) of this section, a failure to file corrected information 
returns in the format required under Sec.  301.6011-2(c)(4)(ii) is a 
failure to correct the corresponding original information returns.
    (b) * * *
    (5) Examples. The provisions of paragraphs (a) and (b)(1) through 
(4) of this section may be illustrated by the following examples. These 
examples do not take into account any possible application of the de 
minimis exception under paragraph (d) of this section, the lower small-
business limitations under paragraph (e) of this section, the penalty 
for intentional disregard under

[[Page 11778]]

paragraph (f) of this section, adjustments for inflation under section 
6721(f), or the reasonable-cause waiver under Sec.  301.6724-1(a):
* * * * *
    (iii) Example 3. In calendar year 2024, Corporation U timely files 
on paper 12 Forms 1099-MISC for the 2023 calendar year with correct 
information. Under Sec.  301.6011-2, a person required to file at least 
10 returns during calendar year 2024 must file those returns 
electronically. Corporation U does not correct its failures to file 
these returns electronically by August 1, 2024. See section 6721(b)(2). 
Corporation U is therefore subject to a penalty for a failure to file 
timely under paragraph (a)(2) of this section. However, under section 
6724(c) and paragraph (a)(2) of this section, the penalty for a failure 
to file timely electronically applies only to the extent the number of 
returns exceeds 10. As Corporation U was required to file 12 returns 
electronically, it is subject to a penalty of $500 for two returns 
($250 x 2 = $500).
    (iv) Example 4. In calendar year 2024, Corporation W timely 
electronically files 25 Forms 1099-B (relating to proceeds from broker 
and barter exchange transactions) with incorrect information. On August 
1, 2024, Corporation W discovers the errors and files 25 corrected 
Forms 1099-B on paper. Under Sec.  301.6011-2(c)(4)(ii)(A), a person 
required to file an original information return covered by Sec.  
301.6011-2(b) electronically must file any corrected information return 
corresponding to that original return electronically. Under paragraph 
(a)(2)(ii) of this section, a failure to file a corrected information 
return electronically when required to do so is a failure to correct 
the corresponding original information return. As Corporation W was 
required to file its 25 corrected information returns electronically, 
it has failed to correct the original information returns and is 
subject to a penalty of $6,250 for failure to include correct 
information on its 25 original Forms 1099-B ($250 x 25 = $6,250), 
without any reductions for correcting the information on or before 
August 1.
    (v) Example 5. During the 2024 calendar year, Corporation V files 
25 Forms 1099-B (relating to proceeds from broker and barter exchange 
transactions) on paper. The forms were filed on March 15, 2024, rather 
than on the required filing date of February 28, 2024. Under Sec.  
301.6011-2, a person required to file at least 10 returns during 
calendar years 2024 and after must file those returns electronically. 
Corporation V does not correctly file these returns electronically by 
August 1, 2024. See section 6721(b)(2). Corporation V is subject to a 
penalty of $500 for filing 10 of the returns late, but within 30 days 
after the required filing date ($50 x 10). In addition, Corporation V 
is subject to a penalty of $3,750 for failing to file 15 returns 
electronically ($250 x 15).
    (vi) Example 6. Partnership X has 120 partners in calendar year 
2023. In calendar year 2024, it timely filed on paper its 2023 Form 
1065 and 230 accompanying Schedules K-1 and Schedules K-3 (120 
Schedules K-1 and 110 Schedules K-3). Partnership X filed no other 
returns during calendar year 2024. Under Sec.  301.6011-3(a)(1)(ii), a 
partnership with more than 100 partners must electronically file its 
partnership return, including Schedules K-1 and K-3. Under section 
6724(e), Schedules K-1 and K-3 are treated as separate information 
returns for purposes of penalties under section 6721, even though they 
are not listed under Sec.  301.6011-2(b) as information returns 
required to be filed electronically and are not defined as information 
returns under section 6724(d). Under section 6724(c) and paragraph 
(a)(2) of this section, the penalty for a failure to file timely 
electronically applies only to the extent the number of returns exceeds 
10. Partnership X would be subject to a penalty of $55,000 for failing 
to electronically file 220 Schedules K-1 and K-3 required to be 
included with the partnership return: the 11th through the 230th of the 
required schedules ($250 x 220 = $55,000). See section 6698 for the 
penalty for the failure to file the partnership return.
* * * * *
    (h) Applicability date. The rules of paragraph (a)(2)(ii) of this 
section apply to information returns required to be filed during 
calendar years beginning after December 31, 2023. For the rules that 
apply under paragraph (a)(2)(ii) of this section to information returns 
required to be filed during calendar years beginning before January 1, 
2024, see 26 CFR part 301, revised as of April 1, 2022.

Melanie R. Krause,
Acting Deputy Commissioner for Services and Enforcement.
    Approved: August 7, 2022.
Lily Batchelder,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2023-03710 Filed 2-21-23; 11:15 am]
BILLING CODE 4830-01-P