Proposed Rule2021-15615
Electronic-Filing Requirements for Specified Returns and Other Documents
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
July 23, 2021
Issuing agencies
Treasury DepartmentInternal Revenue Service
Abstract
This document contains proposed 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, and certain information returns, registration statements, disclosure statements, notifications, actuarial reports, and certain excise tax returns. The proposed amendments reflect changes made by the Taxpayer First Act of 2019 (TFA) and are consistent with the TFA's emphasis on increasing electronic filing. This document also withdraws proposed regulations published in the Federal Register on May 31, 2018, amending the rules for determining whether information returns must be filed electronically.
Full Text
<html>
<head>
<title>Federal Register, Volume 86 Issue 139 (Friday, July 23, 2021)</title>
</head>
<body><pre>
[Federal Register Volume 86, Number 139 (Friday, July 23, 2021)]
[Proposed Rules]
[Pages 39910-39937]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-15615]
[[Page 39909]]
Vol. 86
Friday,
No. 139
July 23, 2021
Part III
Department of the Treasury
-----------------------------------------------------------------------
Internal Revenue Service
-----------------------------------------------------------------------
26 CFR Parts 1, 53, 54, et al.
Electronic-Filing Requirements for Specified Returns and Other
Documents; Proposed Rule
Federal Register / Vol. 86 , No. 139 / Friday, July 23, 2021 /
Proposed Rules
[[Page 39910]]
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 1, 53, 54 and 301
[REG-102951-16]
RIN 1545-BN36
Electronic-Filing Requirements for Specified Returns and Other
Documents
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Withdrawal of notice of proposed rulemaking; notice of proposed
rulemaking.
-----------------------------------------------------------------------
SUMMARY: This document contains proposed 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, and certain information
returns, registration statements, disclosure statements, notifications,
actuarial reports, and certain excise tax returns. The proposed
amendments reflect changes made by the Taxpayer First Act of 2019 (TFA)
and are consistent with the TFA's emphasis on increasing electronic
filing. This document also withdraws proposed regulations published in
the Federal Register on May 31, 2018, amending the rules for
determining whether information returns must be filed electronically.
DATES: Written or electronic comments must be received by September 21,
2021. The public hearing is being held by teleconference on September
22, 2021 at 10 a.m. EST. Requests to speak and outlines of topics to be
discussed at the public hearing must be received by September 21, 2021.
If no outlines are received by September 21, 2021, the public hearing
will be cancelled. Requests to attend the public hearing must be
received by 5:00 p.m. EST on September 20, 2021. The telephonic hearing
will be made accessible to people with disabilities. Requests for
special assistance during the telephonic hearing must be received by
September 20, 2021.
ADDRESSES: Commenters are strongly encouraged to submit public comments
electronically. Submit electronic submissions via the Federal
eRulemaking Portal at <a href="http://www.regulations.gov">www.regulations.gov</a> (indicate IRS and REG-102951-
16) by following the online instructions for submitting comments. Once
submitted to the Federal eRulemaking Portal, comments cannot be edited
or withdrawn. The Department of the Treasury (Treasury Department) and
the IRS will publish for public availability any comments submitted to
its public docket. Send paper submissions to: CC:PA:LPD:PR (REG-102951-
16), Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin
Station, Washington, DC 20044.
FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations,
call Casey R. Conrad of the Office of the Associate Chief Counsel
(Procedure and Administration), (202) 317-6844; concerning submission
of comments or requests for a public hearing, call Regina Johnson,
(202) 317-5177 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Background
This document contains proposed 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, and 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 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; and 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. This document also withdraws proposed
regulations under section 6011 that were published in the Federal
Register on May 31, 2018 (May 2018 proposed regulations), amending the
rules for determining whether information returns must be filed using
magnetic media.
Section 6011(e) was added to the Code by section 319 of the Tax
Equity and Fiscal Responsibility Act of 1982, Public Law 97-248, 96
Stat. 610, and required the Secretary of the Treasury or her delegate
(Secretary) to prescribe regulations providing standards for
determining which returns were required to be filed on magnetic media
(hereinafter references to filing ``in electronic form'' will be used
in place of filing ``on magnetic media''). A year later, the statute
was amended by section 109 of the Interest and Dividend Tax Compliance
Act of 1983, Public Law 98-67, 97 Stat. 383, to require information
returns under sections 6042(a) (dividends and corporate earnings and
profits), 6044(a) (patronage dividends), and 6049(a) (interest), with
respect to more than 50 payees for any calendar year, to be filed
electronically. The amendment also added a waiver provision from
electronically filing to any person who established undue hardship.
On March 25, 1986, the Secretary first published guidance under
section 6011(e) with respect to the electronic filing requirement as
Sec. 301.6011-2 (TD 8081), which specified Forms 1042-S, 1098, 1099
series, 5498, 6248, 8027, W-2G, W-2, W-2P as the information returns
covered by the regulation that had to be filed electronically unless
the person was granted a waiver or was a low-volume filer. The term
``low-volume filers'' was defined as persons not required to file, for
any calendar year beginning on or after January 1, 1987, 250 or more of
the specified returns (other than Forms 1099-DIV, Dividends and
Distributions; 1099-PATR, Taxable Distributions Received from
Cooperatives; 1099-INT, Interest Income; or 1099-OID, Original Issue
Discount). For those four Forms 1099, the regulation provided a special
rule that reduced the 250-return threshold to 50 and required that the
four forms be aggregated for purposes of determining whether a person
met the 50-return threshold. The regulation also provided that the
Commissioner of Internal Revenue or his delegate (Commissioner) could
prescribe by revenue procedure additional forms to be covered by the
regulation.
Section 6011(e) was again amended in 1989 by section 7713, Title
VII, of the Revenue Reconciliation Act of 1989 (1989 Act), Public Law
101-239, 103 Stat. 2394, to prohibit the Secretary from requiring any
person to file returns electronically unless that person was required
to file at least 250 returns during the calendar year. The 1989 Act
also required the Secretary to consider the taxpayer's ability to
comply at reasonable costs with the regulation's requirements.
On June 30, 1998, the Secretary promulgated amending regulations
under section 6011(e), Sec. 301.6011-2 (TD 8772), that removed the
special rules related to the four Forms 1099 and
[[Page 39911]]
clarified that the 250-return threshold applied separately to each
information return covered by Sec. 301.6011-2. The regulation also
added Forms 499R-2/W-2PR, W-2VI, W-2GU, and W-2AS as information
returns covered by the regulation and removed Form 6248.
On August 5, 1997, the President signed into law the Taxpayer
Relief Act of 1997, Public Law 105-34. Section 1224 of that Act amended
6011(e)(2) by adding a sentence that required the Secretary to
promulgate regulations to require partnerships with over 100 partners
to file returns electronically. On November 12, 1999, the Secretary
promulgated regulations under section 6011(e) relating to this special
rule for partnerships with more than 100 partners, Sec. 301.6011-3 (TD
8843), requiring partnerships with more than 100 partners to file
partnership returns and all information required by the applicable
forms and schedules electronically.
On April 29, 2002, the Secretary promulgated regulations under
section 6011(e) (TD 8992) to add Form 1098-E as an information return
covered by the regulation; on February 7, 2003, the Secretary
promulgated regulations under section 6011(e) (TD 9029) to add Form
1098-T as an information return covered by the regulation.
On November 13, 2007, the Secretary promulgated regulations
relating to the requirements for filing corporate income tax returns
and returns of organizations required to file returns under section
6033 electronically under section 6011(e), Sec. 301.6011-5, Sec.
301.6033-4, and Sec. 301.6037-2 (TD 9363). The regulations specify
that all returns required to be filed during the calendar year,
including income tax returns, employment tax returns, excise tax
returns, and information returns, are counted in determining whether a
corporation or organization meets the 250-return threshold. Sections
301.6011-5 and 301.6037-2 apply to large corporations and S
corporations, respectively, if the corporation is required to file at
least 250 returns during the calendar year and the corporation reports
total assets at the end of the corporation's taxable year that equal or
exceed $10 million on Schedule L of their Form 1120 ($10 million rule).
Section 301.6033-4 applies to organizations required to file Form 990,
Return of Organization Exempt From Income Tax, that have total assets
of $10 million or more as of the end of the taxable year, and that are
required to file at least 250 returns during the calendar year; it also
applies to any organization (regardless of total assets) required to
file Form 990-PF, Return of Private Foundation or Section 4947(a)(1)
Trust Treated as Private Foundation, if the organization is required to
file at least 250 returns during the calendar year.
Section 6011(e)(4) was added to the Code in 2010 by section 522,
Title V, of the Hiring Incentives to Restore Employment (HIRE) Act,
Public Law 111-147, 124 Stat. 71, to authorize the Secretary to require
financial institutions that file returns with respect to withholding on
foreign transfers to file those returns electronically regardless of
the number. On January 28, 2013, the Secretary promulgated regulations
under section 1474(f), Sec. 301.1474-1 (TD 9610), to require financial
institutions defined in section 1471(d)(5) to electronically file Form
1042-S, Foreign Persons' U.S. Source Income Subject to Withholding,
regardless of the number of returns filed for the calendar year, but
did not include in those regulations a requirement to electronically
file Form 1042, Annual Withholding Tax Return for U.S. Source Income of
Foreign Persons.
On March 10, 2014, the Secretary promulgated regulations under
section 6011(e), Sec. 301.6011-2 (TD 9660), to add the Forms 1094
series and 1095 series as information returns covered by the
regulation. And on December 19, 2016, the Secretary promulgated
regulations under section 6011(e), Sec. 301.6011-2 (TD 9804), to
remove the Form 1095 series and add Form 1095-B and Form 1095-C as
information returns covered by the regulation.
On March 23, 2018, the President signed into law the Tax Technical
Corrections Act of 2018 (TTCA), Public Law 115-141. Section 301, div.
U, title III, of the TTCA added a new paragraph (5), Special rule for
partnerships, to section 6011(e). Section 6011(e)(5)(A), Partnerships
permitted to be required to file on magnetic media, authorized the
Secretary to lower the electronic-filing threshold to 200 returns and
statements for all partnerships filing returns and statements relating
to calendar year 2018, reducing that number by 50 each year until 2023,
when partnerships filing more than 20 returns and statements relating
to 2022 or any subsequent calendar year could be required to file
electronically. The TTCA also moved the rule authorizing the Secretary
to require partnerships with more than 100 partners to file their
returns electronically from section 6011(e)(2) to new section
6011(e)(5)(B), Partnerships required to file on magnetic media. The
Secretary did not promulgate regulations under section 6011(e) relating
to the lower electronic-filing thresholds for partnerships.
On May 31, 2018, the Secretary proposed regulations under section
6011(e) (83 FR 24948) amending Sec. 301.6011-2. The proposed
regulations would have required that all information returns covered
under that regulation, regardless of type, be included in determining
whether the returns a person must file meet the 250-return threshold
and the person must file the information returns electronically. The
May 2018 proposed regulations also provided that corrected information
returns would be required to be filed electronically if the
corresponding original return was required to be filed electronically.
On July 1, 2019, the President signed into law the Taxpayer First
Act of 2019 (TFA), Public Law 116-25. Section 2301 of the TFA amended
section 6011(e) by adding new paragraph 5 that authorizes the 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. These amendments included changes to the special rule
for partnerships. Section 2301 of the TFA moved the rule requiring
partnerships with more than 100 partners to file returns electronically
from section 6011(e)(5), titled ``Partnerships required to file on
magnetic media'', to new section 6011(e)(6). 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 November 19, 2020, the Secretary promulgated regulations under
section 529A of the Code, which amended a regulation under section
6011(e) of the Code, Sec. 301.6011-2 (TD 9923), to add the Forms 5498-
ESA, Coverdell ESA Contribution Information, 5498-QA, ABLE Account
Contribution Information, and 5498-SA, HSA, Archer MSA, or Medicare
Advantage MSA Information, as information returns covered by the
regulation.
On December 20, 2019, the President signed into law the Setting
Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act),
enacted as part of the Further Consolidated Appropriations Act, 2020,
Public Law 116-94, div. O. Section 202 of the SECURE Act allows a group
of plans to file a single aggregated annual
[[Page 39912]]
return or report for plan years beginning after December 31, 2021.
Section 202(d) of the SECURE Act clarifies the electronic-filing
requirements for these deferred compensation plans. Section 202 of the
SECURE Act also added to section 6011 a second paragraph (e)(6),
although the headings of the two paragraphs (e)(6) differ. The one
moved to paragraph (e)(6) by the TFA is titled ``Partnerships required
to file on magnetic media.'' The one added by the SECURE Act is titled
``Application of numerical limitation to returns related to deferred
compensation plans'' and treats information regarding each plan for
which information is provided on a return required to be filed under
section 6058 of the Code as a separate return for purposes of
determining the number of returns a taxpayer may file without being
required to file electronically. These proposed regulations do not
address amendments made by section 202(d) of the SECURE Act.
Explanation of Provisions
1. Scope of the Proposed Regulations for Filing Returns Electronically
These proposed regulations would impose electronic-filing
requirements on persons required to file certain returns as authorized
by the TFA by amending the following regulations:
(1) Sec. 301.6011-2, Required use of electronic form, which
prescribes standards for determining whether certain information
returns must be filed electronically;
(2) Sec. 1.6045-2, Furnishing statement required with respect to
certain substitute payments, which requires persons to report certain
substitute payments;
(3) Sec. 1.6045-4, Information reporting on real estate
transactions with dates of closing on or after January 1, 1991, which
requires persons to report on real estate transactions;
(4) Sec. 1.6050I-0, Table of contents, which lists the major
captions that appear in Sec. Sec. 1.6050I-1 and 1.6050I-2;
(5) Sec. 1.6050I-1, Returns relating to cash in excess of $10,000
received in a trade or business, which requires persons to report
information about these financial transactions to the IRS;
(6) Sec. 1.6050I-2, Returns relating to cash in excess of $10,000
received as bail by court clerks, which requires persons to report
information about these financial transactions to the IRS;
(7) Sec. 1.6050M-1, Information returns relating to persons
receiving contracts from certain Federal executive agencies, which
requires certain Federal executive agencies to report information with
respect to each contract entered into by that agency;
(8) Sec. 301.6721-1, Failure to file correct information returns,
which provides the penalty for failure to file correct information
returns;
(9) Sec. 301.6011-3, Required use of electronic form for
partnership returns, which prescribes standards for determining whether
a partnership must file its partnership return electronically;
(10) Sec. 301.6011-5, Required use of electronic form for
corporate income tax returns, which prescribes standards for
determining whether a corporation must file its corporate income tax
returns electronically;
(11) Sec. 1.6037-2, Required use of electronic form for income tax
returns of electing small business corporations, which prescribes
standards for determining whether an electing small-business
corporation (S corporation) must file its S corporation return
electronically;
(12) Sec. 301.6037-2, Required use of electronic form for returns
of electing small business corporations, which prescribes standards for
determining whether an electing small-business corporation (S
corporation) must file its S corporation return electronically;
(13) Sec. 1.6033-4, Required filing in electronic form for returns
by organizations required to file returns under section 6033, which
prescribes standards for filing returns required to be filed
electronically under Sec. 301.6033-4;
(14) Sec. 301.6033-4, Required filing in electronic form for
returns by organizations required to file returns under section 6033,
which prescribes standards for determining whether returns by
organizations required to file a return under section 6033 must be
filed electronically;
(15) Sec. 53.6011-1, General requirement of return, statement or
list, which requires persons subject to certain enumerated excise taxes
under Chapter 42 of the Code to file a Form 4720 to accompany payment
of those excise taxes;
(16) Sec. 301.6057-3, Required use of electronic form for filing
requirements relating to deferred vested retirement benefit, which
prescribes standards for determining whether a registration statement
required to be filed under section 6057(a) or a notification required
to be filed under section 6057(b) must be filed electronically;
(17) Sec. 301.6058-2, Required use of electronic form for filing
requirements relating to information required in connection with
certain plans of deferred compensation, which prescribes standards for
determining whether a return required to be filed under section 6058
with respect to an employee benefit plan must be filed electronically;
and
(18) Sec. 301.6059-2, Required use of electronic form for filing
requirements relating to periodic report of actuary, which prescribes
standards for determining whether an actuarial report required to be
filed under section 6059 with respect to an employee benefit plan must
be filed electronically.
The proposed regulations would also create the following new
regulations that impose an electronic-filing requirement:
(1) Sec. 301.6011-10, Certain organizations, including trusts,
required to file unrelated business income tax returns in electronic
form, which requires certain organizations, including trusts, to file
their unrelated business income tax returns electronically;
(2) Sec. 301.6011-11, Required use of electronic form for certain
returns for tax-advantaged bonds, which prescribes standards for
determining whether a return for credit payments to issuers of
qualified bonds must be filed electronically;
(3) 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, which prescribes standards for determining whether an
excise tax return on Form 4720 must be filed electronically;
(4) Sec. 301.6011-13, Required use of electronic form for split-
interest trust returns, which prescribes standards for determining
whether an information return on Form 5227 must be filed
electronically;
(5) Sec. 301.6011-14, Required use of electronic form or other
machine-readable form for material advisor disclosure statements, which
prescribes standards for determining whether a material advisor
disclosure statement on Form 8918 must be filed electronically or in
other machine-readable form;
(6) Sec. 301.6012-2, Required use of electronic form for income
tax returns of certain political organizations, which prescribes
standards for determining whether an income tax return on Form 1120-POL
must be filed electronically;
(7) 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, which prescribes standards for determining
whether an income tax return on Form 5330, Return of Excise Taxes
Related to Employee Benefit Plans, must be filed electronically; and
(8) Sec. 301.6011-15, Required use of electronic form for
withholding tax returns, which prescribes standards for determining
whether an income tax
[[Page 39913]]
return filed by a withholding agent on Form 1042 must be filed
electronically.
In addition, the proposed regulations would amend the following
regulations regarding the filing requirements of withholding agents:
(1) Sec. 1.1461-1, Payment and returns of tax withheld, which
prescribes requirements for withholding agents to file returns with
respect to U.S. source income of foreign persons;
(2) Sec. 1.1471-0, Outline of regulation provisions for sections
1471 through 1474, which lists the major captions that appear in
Sec. Sec. 1.1471-1 through 1.1474-7 and Sec. 301.1474-1;
(3) Sec. 1.1474-1, Liability for withheld tax and withholding
agent reporting, which provides rules for withholding agents making
payments under chapters 3 or 4 of the Code; and
(4) Sec. 301.1474-1, Required use of electronic form for financial
institutions filing Form 1042-S or Form 8966, which provides rules for
withholding agents making payments under chapter 4 of the Code.
The regulations proposed in this document include reordering and
renumbering of paragraphs when necessary for clarification and logic.
In addition, cross references have been updated, and typographical,
grammatical, and punctuation corrections have been made.
As many of these regulations imposing electronic-filing
requirements also provide a waiver from electronically filing to any
person who establishes undue hardship, the Treasury Department and the
IRS request 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.
2. Proposed Sec. 301.6011-2, Rules for Filing Certain Information
Returns Electronically
These proposed regulations would amend Sec. 301.6011-2 as
discussed in detail in the following sections 2.A though 2.G.
A. Additional Information Returns Required To Be Filed Electronically
i. Forms 1098-C and 1098-Q
Section 301.6011-2(b)(1) provides a list of information returns
required to be filed electronically in accordance with Sec. 301.6011-
2. Among those returns are three in the Form 1098 series: Form 1098,
Mortgage Interest Statement; Form 1098-E, Student Loan Interest
Statement; and Form 1098-T, Tuition Statement, added to Sec. 301.6011-
2(b)(1) by, respectively, TD 8081 (March 25, 1986), TD 8992 (April 29,
2002), and TD 9029 (February 7, 2003). After those three forms were
added to Sec. 301.6011-2(b)(1), the IRS created additional returns in
the Form 1098 series: Form 1098-C, Contributions of Motor Vehicles,
Boats, and Airplanes; and Form 1098-Q, Qualifying Longevity Annuity
Contract Information. These two additional 1098 series forms, as well
as the three currently listed in Sec. 301.6011-2(b), are all filed and
furnished by larger organizations and institutions that generally
electronically file returns even when not required to do so by Sec.
301.6011-2. Based on the size and sophistication of the entities that
file these forms and the accessibility and availability of electronic
filing, the Treasury Department and the IRS have determined that filers
of Forms 1098-C and 1098-Q are unlikely to incur unreasonable costs to
electronically file these returns. Thus, the proposed regulations would
amend Sec. 301.6011-2(b)(1) to add Forms 1098-C and 1098-Q to the list
of information returns covered by Sec. 301.6011-2(b).
ii. Forms 3921 and 3922
The proposed regulations would also amend Sec. 301.6011-2(b)(1) to
add the Form 3921, Exercise of an Incentive Stock Option Under Section
422(b), and Form 3922, Transfer of Stock Acquired Through an Employee
Stock Purchase Plan Under Section 423(c). These forms are filed and
furnished by sophisticated taxpayers that generally electronically file
returns even when not required to do so by Sec. 301.6011-2. Based on
the sophistication of these filers and the accessibility and
availability of electronic filing, the Treasury Department and the IRS
have determined that filers of Forms 3921 and 3922 are unlikely to
incur unreasonable costs to electronically file these returns.
iii. Form 1097-BTC
The proposed regulations would also amend Sec. 301.6011-2(b)(1) to
add the Form 1097-BTC, Bond Tax Credit. This form is filed and
furnished by bond issuers with respect to certain tax credit bonds. For
the reasons discussed in this preamble, the Treasury Department and the
IRS have determined that filers of Form 1097-BTC should not incur any
unreasonable costs to electronically file this return. See section
2.D., Aggregation of returns to determine whether the electronic-filing
threshold is met. Proposed Sec. 301.6011-2 would allow for a waiver of
the electronic filing requirements for Form 1097-BTC if hardship is
shown in a request for waiver made in accordance with the regulation.
B. Form 8300 Required To Be Filed Electronically
Form 8300, Report of Cash Payments Over $10,000 Received in a Trade
or Business, is a dual-purpose form, designed to meet both the section
6050I reporting requirement and, since January 1, 2002, a similar Bank
Secrecy Act (BSA) reporting requirement found in 31 U.S.C. 5331 and 31
CFR 1010.330. Generally, any person in a trade or business who receives
more than $10,000 in cash in a single transaction or related
transactions must file Form 8300. The IRS uses the information on the
Form 8300 for civil and criminal tax administration and compliance. The
Financial Crimes Enforcement Network (FinCEN) relies on up-to-date Form
8300 filings for law enforcement, reporting, and statistical purposes.
The instructions on Form 8300 state that filers can file the form
either on paper with the IRS or electronically through FinCEN's BSA E-
Filing System.
Approximately 250,000 of the 300,000 Forms 8300 filed during each
calendar year from 2015 to 2018 were filed on paper with the IRS. IRS
employees manually input data from the paper-filed Forms 8300 into
FinCEN's BSA E-Filing System. This procedure requires significant
resources to be spent on processing and data entry. Manual data entry
can cause delays in the input and retrieval of data, affecting the
timeliness of information available for law enforcement and other users
to detect potential money laundering, terrorist financing, and other
tax and financial fraud.
These proposed regulations would require filers who are required to
file at least the applicable number of returns identified in paragraphs
(b)(1) and (b)(2) of proposed Sec. 301.6011-2 during the calendar year
to also file their Forms 8300 electronically, as directed by the form's
instructions. This requirement 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 up-to-date and accurate information. Electronic filing would
also protect against possible future disruption and delays in
processing paper-filed Forms 8300. It is anticipated that the form will
direct filers to use FinCEN's BSA E-Filing system (<a href="https://bsaefiling.fincen.treas.gov/main.html">https://bsaefiling.fincen.treas.gov/main.html</a>), which is an internet-based
secure system with no cost to the user. The only technical
[[Page 39914]]
requirement of the BSA E-Filing System is to have an internet
connection for access to the system. Nonetheless, the proposed
regulations would continue to allow the Commissioner to waive the
requirement to file information returns electronically if the request
for waiver demonstrates hardship. The principal factor in determining
hardship will be the extent, if any, to which the cost of
electronically filing Form 8300 exceeds the cost of filing Form 8300 on
paper. The proposed regulations would also edit the example in Sec.
1.6050I-1(d)(2)(iv) to provide additional clarity for the rule
illustrated in that example.
C. Amending the Electronic-Filing Threshold
Under section 6011(e)(1), the Secretary must prescribe regulations
providing standards for determining which returns must be filed
electronically. Section 6011(e)(2)(A), however, until it was amended by
the TFA, prevented the Secretary from requiring any person to file
returns electronically unless the person was required to file at least
250 returns during the calendar year. Section 2301 of the TFA amended
section 6011(e), changing the statutory 250-return threshold to a
decreasing number over several years, as set forth in new section
6011(e)(5). In accordance with section 2301 of the TFA, these proposed
regulations would amend Sec. 301.6011-2(c)(1)(i), which currently
provides that no person is required to electronically file an
information return covered under Sec. 301.6011-2(b) unless the person
is required to file 250 or more returns during the calendar year. The
proposed amendments would remove references to the 250-return threshold
in Sec. 301.6011-2(c)(1)(i) and add a new paragraph (c)(3)(i) to Sec.
301.6011-2 that, in accordance with the TFA, reduces the electronic-
filing threshold for information returns covered under Sec. 301.6011-
2(b) from 250 to 100, for returns required to be filed during calendar
year 2022, and from 100 to 10, for returns required to be filed during
calendar years after 2022.
Information returns are generally required to be filed between
January and March of the year following the calendar year to which such
returns relate. See sections 6071(b) and (c). If a taxpayer has, for
example, 13 employees in calendar year 2022 and is required to file
Forms W-2 for those employees during calendar year 2023, that taxpayer
would, under these proposed regulations, be required to file those 13
Forms W-2 electronically.
The proposed incremental step-down from 250 to 100 for information
returns required to be filed during calendar year 2022, and then from
100 to 10 for information returns required to be filed after 2022, will
allow the IRS time to ensure it has sufficient resources and updated
programming to seamlessly handle and process the increased volume of
electronically-filed information returns and the applications required
to file those information returns electronically.
The Treasury Department and the IRS expect that by calendar year
2023 the IRS will be prepared to handle and process the anticipated
increased volume of returns and applications, and that no further
incremental step-down would be necessary if these proposed regulations
are finalized and applicable to returns required to be filed during
calendar year 2023. Consequently, persons required to file at least 10
information returns during the calendar year 2023 would be required to
file those returns electronically. The Treasury Department and the IRS
request comments on why persons required to file at least 10
information returns during the calendar year 2023 would not be able to
file those returns electronically during that calendar year and whether
the Treasury Department and the IRS should provide an incremental step-
down to 100 for information returns required to be filed during
calendar year 2023, and then from 100 to 10 for information returns
required to be filed during calendar years after 2023.
D. Aggregation of Returns To Determine Whether the Electronic-Filing
Threshold Is Met
Section 301.6011-2(c)(1)(iii) provides that each type of
information return covered under Sec. 301.6011-2(b) is considered
separately for purposes of determining whether a person meets the 250-
return electronic-filing threshold. Therefore, different types of
information returns are not counted in the aggregate for purposes of
determining whether a person is required to file a number of returns
that equals or exceeds the 250-return electronic-filing threshold
during the calendar year (non-aggregation rule).
These proposed regulations would remove the non-aggregation rule
from Sec. 301.6011-2(c)(1)(iii). Section 6011(e) does not prohibit the
aggregation of information returns of different types in determining
whether a person meets the electronic-filing threshold during a
calendar year. When the regulations specifically providing for non-
aggregation were published in 1998, electronic filing was still in the
early stages of development and not as commonly used as it is today.
Both the 250-return limitation that Congress had included in the 1989
amendment to section 6011(e) and the non-aggregation rule that the
Secretary prescribed helped ensure that electronic-filing burdens and
costs were appropriate, given the existing limits and accessibility to
electronic-filing technology at that time.
Since that time, 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. In 2018, for example,
approximately 98.5 percent of information returns were filed
electronically. Moreover, electronic filing increases the IRS's
timeliness and accuracy in processing return information, which, in
turn, provides faster and better customer service to taxpayers with
respect to those returns.
In light of the prevalence of electronic filing and Congress's
enactment of the TFA, which significantly expanded the Secretary's
authority to prescribe regulations requiring persons to file returns
electronically, the Treasury Department and the IRS have determined
that the non-aggregation rule is no longer necessary and propose to
remove it from Sec. 301.6011-2(c). The proposed regulations would add
a new paragraph (c)(4)(i) to Sec. 301.6011-2 to provide that a person
required to file original information returns of any type covered by
Sec. 301.6011-2(b)(1) and (b)(2) must count all those returns together
to determine whether the person meets or exceeds the electronic-filing
threshold for the relevant calendar year.
The proposed regulations do not include Forms 8300 in the
aggregation rule, and no Form 8300 would be included in determining
whether a person is required to file the applicable number of
information returns. A Form 8300 generally must be filed within 15 days
after a reportable payment of more than $10,000 is received. A filer
may not know the number of Forms 8300 it will file in a calendar year
until after the year is over, because the filer will not know how many
cash transactions over $10,000 will occur during the year. On the other
hand, other information returns described in Sec. 301.6011-2(b)(1) and
(2) do not need to be filed until after the calendar year of the event
being reported. A filer of those other information returns will
therefore know at the beginning of the calendar year whether the filer
is required to file at
[[Page 39915]]
least the applicable number of those other information returns because
those returns relate to the preceding calendar year. Thus, the Treasury
Department and the IRS propose to require electronic filing of Forms
8300 only if the filer is required to file other information returns
electronically.
Under these proposed regulations, filers would generally understand
early in the calendar year their electronic-filing obligations for
Forms 8300 without an unduly complex aggregation rule. In addition,
these proposed regulations are consistent with the TFA's emphasis on
development, improvement, and expansion of modern technology (see, for
example, ``An Act To amend the Internal Revenue Code of 1986 to
modernize and improve the Internal Revenue Service, and for other
purposes'' and ``Subtitle B--Development of Information Technology''
under ``Title II--21st Century IRS''), and are within the Secretary's
expanded authority under the TFA to prescribe regulations requiring
persons to file returns electronically.
E. Corrected Returns Must Be Filed in the Same Manner as the Original
Return
Section 301.6011-2 provides that the non-aggregation rule applies
separately to each type of corrected information return covered by
Sec. 301.6011-2(b) such that, for purposes of determining whether a
person meets the 250-return electronic-filing threshold, corrected
information returns are counted separately from original information
returns, and each type of corrected information return is counted
separately.
The Treasury Department and the IRS have determined that, to
increase the IRS's timeliness and accuracy in processing information
returns, if persons are required to file original information returns
electronically, they must file any corresponding corrected information
returns electronically. Likewise, if persons permitted to file
information returns on paper file those information returns on paper,
they must also file any corresponding corrected information returns on
paper. As discussed in the next three paragraphs, this will increase
the IRS's efficiency in processing returns and should not cause
taxpayers to incur unreasonable costs.
Paper information returns are generally filed at one of three
different IRS Submission Processing Centers, depending on the filer's
legal residence (for individuals) or principal place of business (for
entities). When the IRS receives paper returns, it must convert the
return to an electronic-data record before it can use the information
effectively. Electronic information returns, on the other hand, do not
go through Submission Processing Centers; they are generally filed
through the IRS's Filing Information Returns Electronically (FIRE)
system or Affordable Care Act Information Returns (AIR) system,
depending on the type of return.
Because the procedures for processing electronic returns and paper
returns are different, when an original return is filed on paper and a
corrected return is filed electronically shortly thereafter, the IRS
may not have finished processing the original paper return before the
electronic return is received. The IRS is thus not able to reconcile
differences as quickly as when the original and corrected returns are
filed in the same manner. Similar processing issues arise when an
original return is filed electronically and the corrected return is
filed on paper.
This proposed requirement will not result in any additional costs
or burdens on taxpayers with respect to electronic filing because a
filer who filed the original return electronically has the software
necessary to file a corrected return electronically. Thus, the proposed
regulations would add new paragraphs (c)(4)(ii)(A) and (c)(4)(ii)(B) to
Sec. 301.6011-2 to provide that corrected information returns must be
filed electronically if the corresponding original return was required
to be filed electronically, and that corrected returns must be filed on
paper if the corresponding original return was permitted to be, and
was, filed on paper. In addition, the proposed regulations would amend
Sec. 301.6721-1(a)(2)(ii), as discussed under section 5, Proposed
Sec. 301.6721-1, Rules Relating to Penalties for Failure to File
Correct Information Returns, to provide that a failure to file a
corrected information return in the same manner as the corresponding
original will be deemed a failure to correct the corresponding original
information return.
F. Special Electronic-Filing Threshold for Partnerships of Any Size
Section 2301 of the TFA amended the special rule for partnerships
in section 6011(e)(5) to authorize the Secretary to reduce the
electronic-filing threshold for partnerships required to file returns.
The amended special rule for partnerships authorized the Secretary to
reduce the electronic-filing threshold at an accelerated rate when
compared to the general electronic-filing threshold, phasing out this
special rule for partnerships for returns required to be filed during
calendar years after 2021. These proposed regulations do not include a
special electronic-filing threshold for partnerships because the final
regulations are not expected to be applicable before the 2022 filing
season, at which point the special rule for partnerships will be phased
out. For all the reasons discussed in this preamble, the proposed
regulations would reduce, for all persons, including partnerships, the
electronic-filing threshold for information returns covered under Sec.
301.6011-2(b) from 250 to 100, for returns required to be filed during
calendar year 2022, and from 100 to 10, for returns required to be
filed during calendar years after 2022. See section 2.C., Amending the
electronic-filing threshold.
G. Special Electronic-Filing Rule for Partnerships Having More Than
100 Partners
Paragraph (6) of section 6011(e), as that section was amended by
the TFA, provides, ``Notwithstanding paragraph (2)(A), the Secretary
shall require partnerships having more than 100 partners to file
returns on magnetic media'' (100-partner rule). The statute uses the
general term ``returns'' without specifying the type of returns that
must be filed electronically. But the legislative history of the
Taxpayer Relief Act of 1997, which added the 100-partner rule to
section 6011(e), mentions the rule's application only with respect to
partnership returns. H.R. Rep. No. 105-220, at 675 (1997) (Conf. Rep.)
(``The House bill provides generally that any partnership is required
to provide the tax return of the partnership (Form 1065), as well as
copies of the schedule[s] sent to each partner (Form K-1), to the
Internal Revenue Service on magnetic media. An exception is provided
for partnerships with 100 or fewer partners.'').
In accordance with this legislative history, the Secretary
promulgated regulations in 1999, Sec. 301.6011-3 (TD 8843), requiring
partnerships with more than 100 partners to file partnership returns
and all other information required by the applicable forms and
schedules electronically.
In 2018, however, Congress enacted the TTCA and moved this 100-
partner rule from section 6011(e)(2), where it appeared as flush
language under the 250-threshold limitation, to a new subparagraph (B)
under section 6011(e)(5), ``Special rules for partnerships.'' There is
no legislative history to the 2018 TTCA that explains why Congress
moved the 100-partner rule. But after the TTCA was enacted, the Joint
Committee on Taxation describes the rule with respect to ``returns,''
rather than ``tax return of the
[[Page 39916]]
partnership (Form 1065),'' which is how the legislative history of the
Taxpayer Relief Act of 1997 described it. Staff of the J. Comm. On
Taxation, Technical Explanation of the Revenue Provisions of the House
Amendment to the Senate Amendment to H.R. 1625, at 52 (JCX-6-18)
(``Present law requires that . . . . partnerships having more than 100
partners are required to file returns electronically.''). In 2019, a
year after TTCA moved the 100-partner rule, Congress, in Title II of
the TFA, under Subtitle D, ``Expanded Use of Electronic Systems,''
again moved the 100-partner rule to a new paragraph (6) under section
6011(e), ``Partnerships required to file on magnetic media.''
In light of the Joint Committee on Taxation's referring to
``returns'' in general in describing this provision of the TTCA, the
TFA's emphasis on development, improvement, and expansion of modern
technology, as discussed in this preamble, the TFA's emphasis on
electronic filing (see ``Subtitle D--``Expanded Use of Electronic
Systems'' under Title II), and the accessibility and prevalence of
electronic filing, the Treasury Department and the IRS propose to add a
new paragraph (c)(3)(ii)(B) to Sec. 301.6011-2 to require partnerships
with more than 100 partners to file their information returns covered
by Sec. 301.6011-2(b) electronically, regardless of the number of
information returns being filed.
3. Proposed Sec. 1.6050I-0, Table of Contents, and Sec. 1.6050I-1,
Returns Relating to Cash in Excess of $10,000 Received in a Trade or
Business
Section 1.6050I-1(e)(1) provides that Form 8300 must be filed with
the IRS by the 15th day after the date cash in excess of $10,000 is
received in a trade or business. Section 1.6050I-1(e)(3) provides that
Form 8300 must be filed by mailing it to the address shown in the
instructions on the form. For all the reasons discussed in this
preamble, the proposed regulations would remove references to mailing
Form 8300 to the IRS and require that the form be filed as directed by
the form's instructions. See section 2.B., Form 8300 required to be
filed electronically; section 2.C., Amending the electronic-filing
threshold; and section 2.D., Aggregation of returns to determine
whether the electronic-filing threshold is met. The instructions to
Form 8300 will explain how to file the form electronically. The
proposed regulations would also update outdated citations in Sec.
1.6050I-0 and Sec. 1.6050I-1 that cross-reference to the regulations
under Title 31 of the CFR and clarify the example in Sec. 1.6050I-
1(d)(2)(iv).
4. Proposed Sec. 1.6050I-2, Returns Relating to Cash in Excess of
$10,000 Received as Bail by Court Clerks
Section 1.6050I-2(c)(1)(i) provides that Form 8300 must be filed
with the IRS by the 15th day after the date cash bail in excess of
$10,000 is received. Section 1.6050I-2(c)(3)(i) provides that Form 8300
must be filed with the IRS office designated in the instructions on the
form. For all the reasons discussed in this preamble, the proposed
regulations would remove references to filing Form 8300 with a specific
IRS office and require that the form be filed as directed by the form's
instructions. See section 2.B., Form 8300 required to be filed
electronically; section 2.C., Amending the electronic-filing threshold;
and section 2.D., Aggregation of returns to determine whether the
electronic-filing threshold is met. The instructions to Form 8300 will
explain how to file the form electronically.
5. Proposed Sec. 301.6721-1, Rules Relating to Penalties for Failure
To File Correct Information Returns
Paragraph (a)(2)(ii) of Sec. 301.6721-1, Failure to file correct
information returns, states that no penalty will be imposed solely by
reason of failing to file electronically, except to the extent that a
failure occurs with respect to more than 250 returns. In accordance
with changes made to the 250-return threshold by section 2301 of the
TFA, the proposed amendments to Sec. 301.6721-1 would remove
references to a 250-return threshold with respect to penalties for
failure to file correct information returns.
Section 301.6721-1(a)(2)(ii) also states that the threshold
requirements apply separately to original and corrected returns, such
that a filer that files 300 returns on Form 1099-DIV and later files 70
corrected returns on Form 1099-DIV could file the corrected returns
either on the prescribed paper form (because they fall below the 250-
threshold requirement) or electronically. For the reasons discussed in
this preamble, the Treasury Department and the IRS propose to remove
this rule because they have determined that corrected returns should be
filed electronically if the corresponding original returns were so
filed. See section 2.E., Corrected returns must be filed in the same
manner as the original return. These proposed regulations would thus
amend Sec. 301.6721-1(a)(2)(ii) to provide that a failure to file a
corrected information return in the same manner as the corresponding
original will be deemed a failure to correct the corresponding original
information return such that the filer will not receive the benefit of
a reduced penalty under Sec. 301.6721-1(b) for that corrected
information return.
6. Proposed Sec. 301.6011-3, Rules for Filing Partnership Returns
Electronically
Section 301.6011-3 prescribes standards for determining whether a
partnership must file its partnership return electronically. In 2018,
the TTCA amended section 6011(e) to authorize the Secretary to
incrementally reduce, by regulation, the electronic-filing threshold
for partnerships. When section 2301 of the TFA amended that particular
statute again in 2019, to further reduce the electronic-filing
threshold for partnerships, the Secretary had not yet promulgated
regulations to implement that reduced-threshold rule for partnerships.
As discussed in this preamble, these proposed regulations do not
include a special electronic-filing threshold for partnerships because
the final regulations are not expected to be applicable before the 2022
filing season, at which point the special rule for partnerships will be
phased out. See section 2.F., Special electronic-filing threshold for
partnerships of any size. For returns required to be filed during
calendar years after 2021, section 2301 of the TFA authorizes the
Secretary to reduce the electronic-filing threshold to 10 for all
persons, including partnerships. These proposed regulations would amend
Sec. 301.6011-3(a) to reduce the electronic-filing threshold to 10
returns for any partnership, in accordance with section 6011(e), as
amended by the TFA. In addition, for all the reasons discussed in this
preamble, the proposed regulations would add a new paragraph (a)(5) to
Sec. 301.6011-3 that provides that all returns of any type, including
partnership returns, excise-tax returns, employment-tax returns, and
information returns (but not including schedules required to be
attached to or included with a partnership return), are counted in the
aggregate for purposes of determining whether a partnership of any size
meets the electronic-filing threshold of 10 returns in a calendar year,
and thus must file its partnership return electronically. See sections
2.D., Aggregation of returns to determine whether the electronic-filing
threshold is met; and 2.G., Special electronic-filing rule for
partnerships having more than 100 partners. These rules relating to the
requirements for determining when a partnership is required to file its
partnership return electronically do not
[[Page 39917]]
limit the application of any other statute affecting partnership
returns that must be filed electronically, such as section 6033(n),
which requires a partnership return filed by a section 501(d) apostolic
organization to be filed electronically.
7. Proposed Sec. 301.6011-5, Rules for Filing Corporate Income Tax
Returns Electronically
Section 301.6011-5 prescribes standards for determining whether a
corporation must file its income tax returns electronically and
requires large corporations to file the corporate income tax return
electronically if the corporation is required to file during the
calendar year at least 250 returns of any type. The regulation,
however, applies only to those corporations that report total assets at
the end of the corporate taxable year of $10 million or more on
Schedule L of their Form 1120. Section 2301 of the TFA amended section
6011(e) to authorize the Secretary to prescribe regulations to reduce
the number of returns that a person may be required to file during a
calendar year before the Secretary may impose an electronic-filing
requirement. These proposed regulations would remove references to the
250-return threshold and reduce the electronic-filing threshold for
corporate income tax returns to 10, for returns required to be filed
during calendar years after 2021, in accordance with section 6011(e),
as amended by the TFA. In addition, the Treasury Department and the IRS
propose to remove the $10 million rule, making the regulation
applicable to all corporations regardless of reportable assets. The $10
million rule was never required by the Code; rather, the Treasury
Department and the IRS prescribed the rule in 2007 to help ensure that
electronic-filing burdens and costs were appropriate, given the
existing limits and accessibility to electronic-filing technology at
that time. With the current prevalence and accessibility of electronic
filing even for small businesses, as well as the benefits of quicker
return processing, the $10-million rule is no longer needed.
Accordingly, the proposed regulations would require that any
corporation required to file a corporate income tax return under Sec.
1.6012-2, regardless of the corporation's reported total assets at the
end of its taxable year, file that return electronically if the
corporation is required to file at least 10 returns of any type during
calendar years after 2021. The proposed regulations would also update
the example to reflect these changes. The proposed regulations do not
change the existing rule in Sec. 301.6011-5 that all returns of any
type are counted in determining whether a corporation is required to
file its income tax return electronically.
8. Proposed Sec. 301.6037-2, Required Use of Electronic Form for
Returns of Electing-Small Business Corporation
Section 301.6037-2 prescribes standards for determining whether an
S corporation must file its S corporation return electronically.
Section 301.6037-2 requires S corporations to file their corporate
income tax return electronically if the corporation is required to file
during the calendar year at least 250 returns of any type, but the
regulation applies only to those S corporations that report total
assets at the end of the corporation's taxable year that equal or
exceed $10 million on Schedule L of Form 1120-S.
Section 2301 of the TFA amended section 6011(e), authorizing the
IRS to change the 250-return threshold to 10, for returns required to
be filed during calendar years after 2021. These proposed regulations
would remove references to the 250-return threshold and reduce the
electronic-filing threshold for S corporations to 10 in accordance with
section 6011(e), as amended by the TFA. In addition, the Treasury
Department and the IRS propose to remove the $10 million rule for the
same reasons that it is eliminating the rule for corporations. See
section 7, Proposed Sec. 301.6011-5, Rules for Filing Corporate Income
Tax Returns Electronically. With the current prevalence and
accessibility of e-filing, as well as the benefits of quicker
processing of returns, the $10 million rule is no longer needed.
Accordingly, the proposed regulations would require that any S
corporation required to file an S-corporation return under Sec.
1.6037-1, regardless of the corporation's reported total assets at the
end of its taxable year, file its income tax return electronically if
the corporation is required to file at least 10 returns of any type
during the calendar year. The proposed regulations would also update
the example illustrating this rule to reflect these changes.
9. Proposed Sec. Sec. 1.6033-4 and 301.6033-4, Required Filing in
Electronic Form for Returns by Organizations Required To File Returns
Under Section 6033
Section 1.6033-4 provides that the return of an organization that
is required to be filed electronically under Sec. 301.6033-4 must be
filed in accordance with IRS revenue procedures, publications, forms,
or instructions, including those posted electronically.
Section 301.6033-4 provides that an organization required to file a
return under section 6033 on Form 990 must file its Form 990
electronically if the organization is required to file during the
calendar year at least 250 returns of any type and if the organization
has total assets as of the end of the taxable year of $10 million or
more. It also provides that any organization (regardless of total
assets) required to file Form 990-PF must file its Form 990-PF
electronically if it is required to file at least 250 returns of any
type during the calendar year.
In accordance with section 3101 of the TFA, these proposed
regulations would amend Sec. Sec. 1.6033-4 and 301.6033-4 to replace
the term ``magnetic media'' with ``in electronic form.'' These proposed
regulations would also amend Sec. 301.6033-4 to remove any references
to thresholds that establish a requirement to file electronically
because the TFA now requires that any organization required to file a
return under section 6033 must file such return in electronic form.
Likewise, the proposed regulations would amend Sec. 301.6033-4 by
removing the following paragraphs: Paragraph (d)(1), which defines the
term ``magnetic media''; paragraph (d)(3), which defines the term
``determination of 250 returns''; and paragraph (e), which illustrates
by example how the 250 number is determined. In addition, the proposed
regulations would remove Sec. 301.6033-4(b), which provides that the
Commissioner may grant waivers of the electronic-filing requirement.
Section 3101 of the TFA does not provide for any waiver of or
alternate method to the electronic-filing requirements for returns
required to be filed under section 6033. Accordingly, these proposed
regulations would amend Sec. 301.6033-4 by removing paragraph (b) that
provides for a waiver of the requirements.
Finally, these proposed regulations would amend Sec. 301.6033-
4(d)(2) to include Form 990-EZ, ``Short Form Return of Organization
Exempt From Income Tax,'' as a return required to be filed under
section 6033, clarifying that section 3101 of the TFA mandates that all
returns required to be filed under section 6033 must be filed in
electronic form.
10. Proposed Sec. 53.6011-1(c) Deletion, Joint Filing of a Form 4720
Return
Section 3101(a) of the TFA amended section 6033(n) to provide that
any exempt organization required to file a return under section 6033
must file such return in electronic form. Section 1.6033-2(a)(2)
provides, under the
[[Page 39918]]
broad authority of section 6033(a)(1) (requiring every organization
exempt from taxation under section 501(a) to file an annual return,
stating specifically the items of gross income, receipts, and
disbursements, and such other information for the purpose of carrying
out the internal revenue laws as the Secretary may by forms or
regulations prescribe), that every private foundation must file Form
990-PF, Return of Private Foundation, as its annual information return.
In the case of a private foundation liable for tax under chapter 42,
such information as is required by Form 4720 is to be furnished by the
private foundation as part of its annual information return. See Sec.
1.6033-2(a)(2)(ii)(J). The preamble to the final regulations adding
Sec. 1.6033-2(a)(2)(ii)(J) specifically noted that Form 4720, when
filed by a private foundation, is part of the annual information return
required to be filed under section 6033 as well as a tax return
required to be filed under section 6011. Accordingly, Form 4720 filed
by a private foundation as part of the Form 990-PF is a return required
to be filed under section 6033 and is thus required to be filed in
electronic form as a return required under section 6033(n). For the
electronic-filing requirement for persons not described under section
509(a) as a private foundation, see section 16 of this preamble,
Proposed 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.
If Form 4720 is filed by a private foundation (or by a trust
described in section 4947(a)(2)) with respect to a transaction to which
other persons are required to file under Sec. 53.6011-1(b) (persons
liable for excise tax imposed by Chapters 41 and 42 of the Code), and
if the other persons' tax years are the same as the foundation's or
trust's, Sec. 53.6011-1(c) allows the private foundation and such
other persons to file a joint Form 4720, and, to the extent applicable,
that form will be considered as the other persons' return for purposes
of complying with the filing requirement under Sec. 53.6011-1(b). This
current regulatory permission to jointly file Form 4720, however, is
incompatible with the requirement under section 6033(n) to file the
return electronically. Accordingly, because the Form 4720 cannot be
filed jointly in electronic form, the proposed regulations would delete
Sec. 53.6011-1(c). Disqualified persons thus will no longer be able to
meet their tax filing obligation under Sec. 53.6011-1(b) by the joint-
filing process.
Notice 2021-01, 2021-2 I.R.B. 315 (January 11, 2021), announced the
IRS's intent to remove Sec. 53.6011-1(c) because the amendments the
TFA made to sections 6104 (that any annual return required to be filed
electronically under section 6033(n) must be made available by the
Secretary to the public as soon as practicable in a machine-readable
format) and 6033 rendered unfeasible the ability for a private
foundation and other persons to jointly file the same Form 4720
electronically. Notice 2021-01 was first released to the public on
December 16, 2020, and substantially described the expected contents of
the proposed amendments to Sec. 53.6011-1, in accordance with section
7805(b)(1)(C). Thus, the proposed changes to Sec. 53.6011-1 described
in this section are proposed to apply retroactively as of January 1,
2021, as allowed by section 7805(b)(1)(C).
11. Proposed Sec. 301.6057-3, Required Use of Electronic Form for
Filing Requirements Relating to Deferred Vested Retirement Benefit
Section 6057(a) requires the plan administrator (within the meaning
of section 414(g)) of each plan, to which the vesting standards of
section 203 of the Employee Retirement Income Security Act of 1974
(ERISA) apply for a plan year, to file, within the time prescribed by
regulations, a registration statement with the Secretary. The
registration statement must set forth the following information
relating to the plan: (1) The name of the plan; (2) the name and
address of the plan administrator; (3) the name and identifying
information of plan participants who separated from service covered by
the plan and are entitled to deferred vested retirement benefits; and
(4) the nature, amount, and form of deferred vested retirement benefits
to which the plan participants are entitled. The form used to satisfy
the reporting requirements under section 6057 is Form 8955-SSA, Annual
Registration Statement Identifying Separated Participants with Deferred
Vested Benefits.
Section 6057(b) provides that any plan administrator required to
register under section 6057(a) must, within the time prescribed by
regulations, also notify the Secretary of any change in the name of the
plan or the name and address of the plan administrator, the termination
of the plan, or the merger or consolidation of the plan with any other
plan or its division into two or more plans.
Section 301.6057-3 provides that a registration statement required
to be filed under section 6057(a) or a notification required to be
filed under section 6057(b) must be filed electronically if the filer
is required by the Code or regulations to file at least 250 returns
during the calendar year that includes the first day of the plan year.
For the reasons discussed in this preamble, and consistent with section
6011(e), as amended by the TFA, these proposed regulations would remove
references to the 250-return threshold and would reduce the electronic-
filing threshold to 10 for registration statements required to be filed
under section 6057(a) and notifications required under section 6057(b)
with respect to an employee benefit plan for any plan year that begins
after December 31, 2021 (but only for filings with a filing deadline,
not taking into account extensions, after July 31, 2022). See section
2.C., Amending the electronic-filing threshold.
12. Proposed Sec. 301.6058-2, Required Use of Electronic Form for
Filing Requirements Relating to Information Required in Connection With
Certain Plans of Deferred Compensation
Section 6058(a) generally requires that every employer maintaining
a pension, annuity, stock bonus, profit-sharing, or other funded plan
of deferred compensation, or the plan administrator (within the meaning
of section 414(g)) of the plan, file an annual return stating such
information as the Secretary may by regulations prescribe with respect
to the qualification, financial condition, and operations of the plan.
The reporting requirement under section 6058(a) is satisfied by filing
a return in the Form 5500 series. The Form 5500, Annual Return/Report
of Employee Benefit Plan, the Form 5500-SF, Short Form Annual Return/
Report of Small Employee Benefit Plan, and Form 5500-EZ, Annual Return
of A One-Participant (Owners/Partners and Their Spouses) Retirement
Plan or A Foreign Plan, make up the Form 5500 series.
Section 301.6058-2(a) provides that a return required to be filed
under section 6058 with respect to an employee benefit plan must be
filed electronically if the filer is required by the Code or
regulations to file at least 250 returns during the calendar year that
includes the first day of the plan year. For the reasons discussed in
this preamble, and in accordance with section 6011(e), as amended by
the TFA, these proposed regulations would remove references to the 250-
return threshold and reduce the electronic-filing threshold to 10 for
returns required to be filed under section 6058 with respect to an
employee benefit plan for any plan year that begins after December 31,
2021 (but
[[Page 39919]]
only for filings with a filing deadline, not taking into account
extensions, after July 31, 2022). See section 2.C., Amending the
electronic-filing threshold. In addition, these proposed regulations
would provide a cross reference, under Sec. 301.6058-2(d)(3),
Calculating the number of returns, to new section 6011(e)(6) to alert
taxpayers that information regarding each plan for which information is
provided on a combined annual return to satisfy the requirements under
section 6058 is treated as a separate return for purposes of
determining the electronic-filing threshold.
Under section 104 of ERISA, the plan administrator of a plan
described in section 6058(a) of the Code that is also an employee
pension benefit plan within the meaning of section 3(2) of ERISA must
file an annual report on Form 5500, Annual Return/Report of Employee
Benefit Plan, or Form 5500-SF, Short Form Annual Return/Report of Small
Employee Benefit Plan (and all attachments to those forms, including
Schedules SB and MB) electronically using the Department of Labor's
EFAST2 system, without regard to the number of returns the filer is
required to file under the Code. The Department of Labor has advised
the Treasury Department and the IRS that this proposed regulation does
not affect the obligations of any person required to file an annual
report electronically under 29 CFR 2520.104a-2 and section 104 of
ERISA. An electronic filing on Form 5500 or Form 5500-SF also satisfies
any obligation to file such forms using electronic form under section
6011 of the Code. An employer that maintains a one-participant or
foreign plan (which is not subject to section 104 of ERISA) or the plan
administrator of the plan may satisfy the annual return filing
requirements under section 6058(a) of the Code by filing a Form 5500-
EZ, Annual Return of A One-Participant (Owners/Partners and Their
Spouses) Retirement Plan or A Foreign Plan, which is required to be
filed electronically using the Department of Labor's EFAST2 system only
if the employer or plan administrator is otherwise required to file
using electronic form under section 6011.
13. Proposed Sec. 301.6059-2, Required Use of Electronic Form for
Filing Requirements Relating to Periodic Report of Actuary
Section 6059(a) generally requires that a plan administrator (as
defined in section 414(g)) of each defined benefit plan to which
section 412 applies file the actuarial report described in section
6059(b) for the first plan year for which section 412 applies to the
plan and for each third plan year thereafter (or more frequently if the
Secretary determines that more frequent reports are necessary). The
reporting requirements under section 6059(a) and (b) are satisfied by
filing Schedule SB (Form 5500), Single Employer Defined Benefit Plan
Actuarial Information and Schedule MB (Form 5500), Multiemployer
Defined Benefit Plan and Certain Money Purchase Plan Actuarial
Information. Section 301.6059-2 provides that an actuarial report
required to be filed under section 6059 with respect to an employee
benefit plan must be filed electronically if the filer is required by
the Code or regulations to file at least 250 returns during the
calendar year that includes the first day of the plan year. For the
reasons discussed in this preamble, and in accordance with section
6011(e), as amended by the TFA, these proposed regulations would remove
references to the 250-return threshold and would reduce the electronic-
filing threshold to 10, for actuarial reports required to be filed
under section 6059 with respect to an employee benefit plan for any
plan year that begins after December 31, 2021 (but only for filings
with a filing deadline, not taking into account extensions, after July
31, 2022). See section 2.C., Amending the electronic-filing threshold.
The Department of Labor has advised the Treasury Department and the IRS
that the electronic-filing threshold under section 6011(e) does not
affect the obligation of a plan administrator or plan sponsor to file
electronically with the Department of Labor a Schedule SB or Schedule
MB as an attachment to the Form 5500, as required by 29 CFR 2520.104a-2
and section 104 of ERISA.
14. Proposed Sec. 301.6011-10, Certain Organizations, Including
Trusts, Required To File Unrelated Business Income Tax Returns in
Electronic Form
Section 3101(b)(2) of the TFA amended section 6011 to redesignate
paragraph (h) as paragraph (i) and add new paragraph (h) that requires
any organization required to file an annual return under section 6011
that relates to any tax imposed by section 511 to file such return in
electronic form, effective for taxable years beginning after July 1,
2019. Section 3101 of the TFA does not provide for any waiver of or
alternative method to the electronic-filing requirement for returns
required to be filed under section 6011(h). The proposed regulations
would add a new regulation under section 6011(h), Sec. 301.6011-10, in
accordance with the TFA, to require any organization described in
section 511(a)(2) subject to the tax under section 511(a)(1) or any
trust described in section 511(b)(2) subject to the tax under section
511(b)(1) on their respective unrelated business taxable income to file
their unrelated business income tax returns electronically.
15. Proposed Sec. 301.6011-11, Required Use of Electronic Form for
Returns for Certain Tax-Advantaged Bonds
Under former sections 54AA and 6431(f) of the Code, issuers of
qualified taxable bonds that provide a refundable federal tax credit
payable directly to the issuer of the bond, such as build-America
bonds, recovery zone economic development bonds, new clean renewable
energy bonds, qualified energy conservation bonds, qualified zone
academy bonds, and qualified school construction bonds, can elect to
receive a direct payment from the federal government based upon a
percentage of the interest payments on these bonds. Section 3.1 of
Notice 2009-26, 2009-16 I.R.B. 833, 836 (April 20, 2009), and section 3
of Notice 2010-35, 2010-19 I.R.B. 660, 662 (May 10, 2010), provide that
issuers of qualified bonds must submit a Form 8038-CP, Return for
Credit Payments to Issuers of Qualified Bonds, to request payment of
the amount of the credit within a prescribed time before or after each
applicable interest payment date, depending on whether the bonds are
fixed rate or variable rate. During 2013 to 2018, the IRS processed an
average of $5 billion in direct payment requests; amounts paid on each
return varied from less than $1,000 to more than $65 million. During
2019, state and local governments filed approximately 10,000 Forms
8038-CP in paper form. The IRS expects that it will continue to receive
Forms 8038-CP from these issuers during the entire term of the bonds,
which may be more than 20 years.
The proposed regulations would require filers who are required to
file at least 10 returns of any type during the calendar year to file
their Forms 8038-CP electronically, as directed by the form's
instructions. This requirement would increase the timeliness and
accuracy of processing these forms and promote IT modernization
efforts. Proposed Sec. 301.6011-11 would also provide that the
Commissioner may grant individual waivers of the e-filing requirement
of this section in cases of undue hardship. The Treasury Department and
the IRS anticipate issuing guidance that will set forth procedures
whereby a taxpayer may request a hardship waiver for filing Form 8038-
CP electronically.
[[Page 39920]]
16. Proposed 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
Section 2301 of the TFA amended section 6011(e), changing the 250-
return threshold to a 10-return threshold for returns required to be
filed in calendar years after 2021. The proposed regulations would add
a new regulation under section 6011(e), Sec. 301.6011-12, that would
require the electronic filing of Form 4720, Return of Certain Excise
Taxes Under Chapters 41 and 42 of the Internal Revenue Code. The
proposed regulations would require a person to file the Form 4720
electronically if that person is required to file at least 10 returns
of any type during the calendar year. Proposed Sec. 301.6011-12 would
also provide that the Commissioner may grant individual waivers of the
requirements of this section in cases of undue hardship. The Treasury
Department and the IRS anticipate issuing guidance that will set forth
procedures whereby a taxpayer may request a hardship waiver for filing
Form 4720 electronically. The proposed regulations relating to the
requirements for determining whether a person must file its Form 4720
electronically would not limit the application of any other statute
affecting Form 4720, such as section 6033(n), which requires a Form
4720 filed by organizations recognized as tax exempt under section
501(c)(3) and classified as private foundations under section 509(a) to
be filed electronically, as discussed under section 10, Proposed Sec.
53.6011-1(c) Deletion, Joint Filing of a Form 4720 Return.
17. Proposed Sec. 301.6011-13, Required Use of Electronic Form for
Split-Interest Trust Returns
Section 2301 of the TFA amended section 6011(e), changing the 250-
return threshold to a 10-return threshold for returns required to be
filed in calendar years after 2021. The proposed regulations would add
a new regulation under section 6011(e), Sec. 301.6011-13, that would
require the filing of Form 5227, Split-Interest Trust Information
Return, electronically. Forms 5227 are filed by split-interest trusts
to report the trust's financial activities, including distributions to
the beneficiaries. The proposed regulations would require a trust to
file the Form 5227 electronically if the trust is required to file at
least 10 returns of any type during the calendar year. Proposed Sec.
301.6011-13 would also provide that the Commissioner may grant
individual waivers of the requirements of this section in cases of
undue hardship. The Treasury Department and the IRS anticipate issuing
guidance that will set forth procedures whereby a taxpayer may request
a hardship waiver for filing Form 5227 electronically.
18. Proposed Sec. 301.6011-14, Required Use of Electronic Form or
Other Machine-Readable Form for Material Advisor Disclosure Statements
The proposed regulations would add a new regulation under section
6011(e), Sec. 301.6011-14, that would require the filing of Form 8918,
Material Advisor Disclosure Statement, electronically or in other
machine-readable form, in accordance with revenue procedures,
publications, forms, instructions, or other guidance, including
postings on the <a href="http://IRS.gov">IRS.gov</a> website. Section 6111 requires each material
advisor with respect to any reportable transaction to make a return
setting forth certain information with respect to the reportable
transaction. Section 301.6111-3(d) clarifies that the return required
to be filed under section 6111(a) is the Form 8918. Form 8918 is
currently filed on paper and must be mailed to the Office of Tax
Shelter Analysis in Ogden, Utah. The proposed regulations would require
a material advisor to file the Form 8918 electronically or in other
machine-readable form if the material advisor is required to file at
least 10 returns of any type during the calendar year, in accordance
with section 6011(e), as amended by section 2301 of the TFA. This
requirement would increase the timeliness and accuracy of processing
the data on Form 8918, reduce postage costs, and promote IT
modernization efforts. Proposed Sec. 301.6011-14 would also provide
that the Commissioner may grant individual waivers of the requirements
of this section in cases of undue hardship. The Treasury Department and
the IRS anticipate issuing guidance that will set forth procedures
whereby a taxpayer may request a hardship waiver from filing Form 8918
electronically.
19. Proposed Sec. 301.6011-15, Required Use of Electronic Form for
Withholding Tax Returns
The proposed regulations would add a new regulation under section
6011(e), Sec. 301.6011-15, that would require the filing of Form 1042,
Annual Withholding Tax Return for U.S. Source Income of Foreign
Persons, electronically in accordance with revenue procedures,
publications, forms, instructions, or other guidance, including
postings on the <a href="http://IRS.gov">IRS.gov</a> website. Sections 1441 and 1442 require
withholding agents to withhold tax from payments made to foreign
persons with respect to certain U.S. source income and to report those
payments and the tax withheld for each recipient. Section 1.1461-1(c)
specifies that the reporting be on Form 1042-S, Foreign Persons' U.S.
Source Income Subject to Withholding. In addition, Sec. 1.1461-1(b)
requires withholding agents to make an annual income tax return on Form
1042 that reports the aggregate income paid and taxes withheld for the
preceding calendar year.
The IRS verifies the amount of withholding reported on Form 1042
and deposited with the IRS against amounts reported as withheld on
Forms 1042-S. Form 1042-S is already required to be electronically
filed to the extent provided under Sec. 301.6011-2 for a withholding
agent that is not a financial institution. But the Form 1042 is not
required to be electronically filed. To increase the timeliness and
accuracy of processing refunds and credits claimed by foreign persons
that have amounts withheld and reported on Form 1042-S, proposed Sec.
301.6011-15 would require Form 1042 filers--except for individuals,
estates, or trusts--to file Form 1042 electronically if they are
required to file 10 or more returns of any type during the calendar
year, in accordance with section 6011(e), as amended by section 2301 of
the TFA. Proposed Sec. 301.6011-15 would also require partnerships
with more than 100 partners to file their Forms 1042 electronically,
regardless of the number of returns the partnership is required to file
during the calendar year. Proposed Sec. 301.6011-15 would also provide
that the Commissioner may grant individual waivers of the requirements
of this section in cases of undue hardship.
20. Proposed Sec. 301.6012-2, Required Use of Electronic Form for
Income Tax Returns of Certain Political Organizations
Section 2301 of the TFA amended section 6011(e), changing the 250-
return threshold to a 10-return threshold for returns required to be
filed in calendar years after 2021. The proposed regulations would add
a new regulation under sections 6011(e) and 6012(a), Sec. 301.6012-2,
to require the filing of Form 1120-POL, U.S. Income Tax Return for
Certain Political Organizations electronically. The Form 1120-POL is
filed by political organizations, described in section 527 of the Code,
to report income not specifically excluded from tax under section 527
and by exempt organizations subject to tax under section 527(f)(1) of
the Code. The
[[Page 39921]]
proposed regulations would require an organization to file the Form
1120-POL electronically if the organization is required to file at
least 10 returns of any type during the calendar year. Proposed Sec.
301.6012-2 would also provide that the Commissioner may grant
individual waivers of the requirements of this section in cases of
undue hardship. The Treasury Department and the IRS anticipate issuing
guidance that will set forth procedures whereby a taxpayer may request
a hardship waiver for filing Form 1120-POL electronically.
21. Proposed 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
The proposed regulations would add a new regulation under section
6011(e), Sec. 54.6011-3, to require the filing of Forms 5330, Return
of Excise Taxes Related to Employee Benefit Plans, electronically.
Section 2301 of the TFA amended section 6011(e), changing the 250-
return threshold to a 10-return threshold for returns required to be
filed during calendar years after 2021. The proposed regulations would
require a filer to file the Form 5330 electronically if the filer is
required to file at least 10 returns of any type during the calendar
year. Proposed Sec. 54.6011-3 would also provide that the Commissioner
may grant individual waivers of the requirements of this section in
cases of undue hardship. The Treasury Department and the IRS anticipate
issuing guidance that will set forth procedures whereby a taxpayer may
request a hardship waiver for filing Form 5330 electronically.
22. Proposed Sec. 1.1461-1, Payment and Returns of Tax Withheld
Section 1.1461-1 prescribes requirements for withholding agents to
file information returns with respect to U.S. source income of foreign
persons. Section 1.1461-1(c)(5) provides that a withholding agent that
makes 250 or more Form 1042-S information returns for a taxable year
must file those forms electronically as required under Sec. 301.6011-
2(b). The proposed regulations would amend Sec. 1.1461-1 to remove
paragraph (c)(5) because the electronic-filing requirement for Form
1042-S is contained in Sec. 301.6011-2(b) and the 250-return threshold
would no longer apply if the proposed amendments to Sec. 301.6011-2
are finalized in a Treasury decision.
23. Proposed Sec. 1.1474-1, Liability for Withheld Tax and Withholding
Agent Reporting
Section 1.1474-1 provides rules for withholding agents making
payments under chapter 4 of the Code. The first sentence in Sec.
1.1474-1(e) provides that withholding agents that are not financial
institutions and that are required to file 250 or more Forms 1042-S for
a taxable year must file those forms electronically, referencing Sec.
301.6011-2(b). The proposed regulations would amend Sec. 1.1474-1 to
remove the first sentence in Sec. 1.1474-1(e) because the electronic-
filing requirement for Form 1042-S is contained in Sec. 301.6011-2(b)
and the 250-return threshold would no longer apply if the proposed
amendments to Sec. 301.6011-2 are finalized in a Treasury decision.
24. Proposed Sec. 301.1474-1, Required Use of Electronic Form for
Financial Institutions Filing Form 1042, Form 1042-S, or Form 8966
These proposed regulations would amend Sec. 301.1474-1 to add a
requirement that a financial institution must file its Form 1042
electronically, without regard to the number of returns required to be
filed during the calendar year, in accordance with section 6011(e)(4).
The existing provision in Sec. 301.1474-1(b), which provides that the
Commissioner may grant individual waivers of the requirements of Sec.
301.1474-1 in cases of undue hardship, would also apply to the proposed
electronic-filing requirement relating to Form 1042.
25. Proposed Sec. 1.6050M-1, Information Returns Relating to Persons
Receiving Contracts From Certain Federal Executive Agencies
Section 1.6050M-1 requires federal executive agencies who enter
into certain contracts, as defined under Sec. 1.6050M-1(b)(2), to file
information returns with respect to those contracts. Under Sec.
1.6050M-1(d), the information returns must be filed on a quarterly
basis; in addition, if the federal executive agency, on any October 1,
expects to enter into 250 or more contracts during the one-year period
beginning on October 1, it must file the information returns
electronically.
Section 2301 of the TFA amended section 6011(e), authorizing the
IRS to change the 250-return threshold to 10, for returns required to
be filed during calendar years after 2021. For the reasons discussed in
this preamble, and consistent with section 6011(e), as amended by the
TFA, these proposed regulations would remove references to the 250-
return threshold under Sec. 1.6050M-1 and would reduce the electronic-
filing threshold from 250 to 100, for information returns required to
be filed during calendar year 2022, and from 100 to 10, for information
returns required to be filed during calendar years after 2022.
Proposed Sec. 1.6050M-1 would also provide that the Commissioner
may grant individual waivers of the requirements of this section in
cases of undue hardship.
26. Proposed Sec. 1.6045-4, Information Returns Relating to Persons
Receiving Contracts From Certain Federal Executive Agencies
Section 1.6045-4 requires a real estate reporting person to file
information returns with respect to real-estate transactions. Section
1.6045-4(k) provides rules for filing these returns electronically. The
form used to report these transactions is a form covered under Sec.
301.6011-2(b)(1). Section 301.6011-2 provides the rules for
electronically filing the forms listed in Sec. 301.6011-2(b)(1). These
proposed regulations would thus remove paragraph (k) from Sec. 1.6045-
4 because the electronic-filing requirement is contained in Sec.
301.6011-2.
27. Withdrawal of May 2018 Proposed Regulations
In light of the TFA, the Treasury Department and the IRS withdraw
the May 2018 proposed regulations under section 6011(e) because those
proposed regulations interpret a provision of the Code that has been
amended. The Treasury Department and the IRS have determined that the
amendments made to section 6011(e) by the TFA require guidance to be
issued by regulations. Withdrawing the proposed regulations and
reissuing new proposed regulations ensure that all persons affected by
the proposed regulations will have a meaningful opportunity to publicly
comment.
Special Analyses
These regulations are not subject to review under section 6(b) of
Executive Order 12866 pursuant to the Memorandum of Agreement (April
11, 2018) between the Treasury Department and the Office of Management
and Budget regarding review of tax regulations.
Pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 6), it
is hereby certified that this proposed rule, if finalized, will not
have a significant economic impact on a substantial number of small
entities. Although these rules may affect a substantial
[[Page 39922]]
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 proposed 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--would lower the 250-return threshold 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 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; and small entities that would experience a hardship because of
these seven proposed rules may seek a waiver.
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 in one
transaction or in two or more related transactions. The proposed rule
under Sec. 301.6011-2(b)(3) would require filers of Forms 8300 to file
those forms electronically if such filers are also required to file
returns electronically under paragraphs (b)(1) and (b)(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, requiring only
an internet connection. The economic impact on small entities should
thus not be significant. Nonetheless, small entities that would
experience a hardship because of this proposed rule may seek a hardship
waiver.
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 proposed
rule under Sec. 301.1474-1(a) would extend this filing requirement to
Forms 1042 filed by the same financial institutions. The economic
impact on small entities should thus not be significant. Nonetheless,
small entities that would experience a hardship because of this
proposed 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.
The proposed regulation Sec. 301.6011-10 implements this statutory
requirement. The economic impact of the proposed regulation 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. The proposed regulations under
Sec. Sec. 1.6033-4, 53.6011-1, and 301.6033-4 implement this statutory
requirement. The economic impact of these proposed regulations should
thus be insignificant.
The seven proposed 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 would 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 proposed rules on small entities should be
insignificant. But 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 proposed regulations
will not have a significant economic impact on a substantial number of
small entities within the meaning of section 601(6) of the RFA.
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.
Executive Order 13132 (titled 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.
Pursuant to section 7805(f) of the Code, this proposed regulation
has been submitted to the Chief Counsel for the Office of Advocacy of
the Small Business Administration for comment on its impact on small
business.
Comments and Public Hearing
Before these proposed regulations are adopted as final regulations,
consideration will be given to comments that are submitted timely to
the IRS as prescribed in this preamble under the ADDRESSES section. The
Treasury Department and the IRS request comments on all aspects of the
proposed regulations. Any comments submitted will be available at
<a href="http://www.regulations.gov">www.regulations.gov</a> or upon request.
The public hearing is being held by teleconference on September 22,
2021 at 10 a.m. EST. Requests to speak and outlines of topics to be
discussed at the public hearing must be received by September 21, 2021.
If no outlines are received by September 21, 2021, the public hearing
will be cancelled. Requests to attend the public hearing must be
received by 5:00 p.m. EST on September 20, 2021. The telephonic hearing
will be made accessible to people with disabilities. Requests for
special assistance during the telephonic hearing must be received by
September 20, 2021.
Drafting Information
The principal author of these proposed 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.
Statement of Availability of IRS Documents
IRS revenue procedures, notices, and other guidance cited in this
document are published in the Internal Revenue Bulletin (or Cumulative
Bulletin) and are available from the Superintendent of Documents, U.S.
Government Publishing Office, Washington, DC 20402, or by visiting the
IRS website at <a href="http://www.irs.gov">http://www.irs.gov</a>.
Withdrawal of Proposed Regulations
Under the authority of 26 U.S.C. 7805, Sec. 301.6011-2 and Sec.
301.6721-1 of the notice of proposed rulemaking (REG-102951-16) that
was published in the
[[Page 39923]]
Federal Register on Thursday, May 31, 2018 (83 FR 24948) is withdrawn.
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.
Proposed Amendments to the Regulations
Accordingly, 26 CFR parts 1, 53, 54 and 301 are proposed to be
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:
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) and
revising paragraph (i) to read as follows:
Sec. 1.1461-1. Payment and returns of tax withheld.
* * * * *
(i) Applicability date. Except as provided in paragraph (c)(2)(iii)
of this section, this section applies to returns required for payments
made on or after [the date of publication of the Treasury decision
adopting these rules as final regulations in the Federal Register].
(For payments made before [Date of publication of the Treasury decision
adopting these rules as final regulations in the Federal Register] and
on or after January 1, 2022, see this section as in effect and
contained in 26 CFR part 1, as revised April 1, 2021. For payments made
before January 1, 2022, see this section as in effect and contained in
26 CFR part 1, as revised April 1, 2020.)
0
Par. 3. Section 1.1471-0 is amended by revising the entries in the
table of contents for Sec. 1.1474-1(e) and (j) and Sec. 301.1474-
1(d)(1) and (e) to 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. 301.6011-2(b) 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 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-S in electronic
form.
* * * * *
(j) Applicability date. This section applies to returns required
for payments made on or after [Date of publication of the Treasury
decision adopting these rules as final regulations in the Federal
Register]. (For the rules that apply before [the date of publication of
the Treasury decision adopting these rules as final regulations in the
Federal Register] and on or after January 6, 2017, see this section as
in effect and contained in 26 CFR part 1, as revised April 1, 2021.)
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 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 [Date of
publication of the Treasury decision adopting these rules as final
regulations in the Federal Register].
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 Internal
Revenue Service revenue procedures, publications, forms, or
instructions, including those posted electronically.
(b) Applicability date. The rules of this section apply for returns
required to be filed for taxable years ending on or after [Date of
publication of the Treasury decision adopting these rules as final
regulations in the Federal Register].
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. The amendments to
paragraph (c) of this section apply 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)
shall apply. The amendments to paragraph (g)(2) of this section apply
to information returns required to be filed during calendar years
beginning after [Date of publication of the Treasury decision adopting
these rules as final regulations in the Federal Register].
0
Par. 8. Section 1.6045-4 is amended by removing and reserving paragraph
(k) and revising paragraph (s) to read 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
[[Page 39924]]
occur on or after January 1, 1991. The amendments to paragraphs
(b)(2)(i)(E), (b)(2)(ii) and (c)(2)(i) of this section apply to sales
or exchanges of standing timber for lump-sum payments completed after
May 28, 2009. The amendments to paragraph (m)(1) of this section apply
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) shall apply. The removal of paragraph
(k) of this section applies for information returns required to be
filed during calendar years beginning after [Date of publication of the
Treasury decision adopting these rules as final regulations in the
Federal Register].
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) as follows:
Sec. 1.6050I-0 Table of contents.
* * * * *
(d) * * *
(2) * * *
(ii) Casinos exempt under 31 CFR 1010.970(c).
* * * * *
0
Par. 10. Section 1.6050I-1 is amended by:
0
1. Revising paragraphs (a)(3)(ii), (c)(1)(iv), (d)(2)(i), (d)(2)(ii):
0
2. In paragraph (d)(2)(iv), designating the example as paragraph
(d)(2)(iv)(A);
0
3. Revising newly designated paragraph (d)(2)(iv)(A) and adding
paragraph (d)(2)(iv)(B);
0
4. Revising paragraphs (e)(1) and (e)(3)(i); and
0
5. 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 5312 of title
31 of the United States Code and the regulations thereunder (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 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 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 [Date of
publication of the Treasury decision adopting these rules as final
regulations in the Federal Register].
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 [Date of
publication of the Treasury decision adopting these rules as final
regulations in the Federal Register].
0
Par. 12. Section 1.6050M-1 is amended by revising paragraphs (d)(2),
(d)(3), and (f) as follows:
[[Page 39925]]
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)) 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 100
contracts subject to the reporting requirements under this section that
are to be filed during the calendar year 2022, or fewer than 10
contracts subject to the reporting requirements under this section that
are to be filed during the calendar years after 2022, 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) Undue hardship. The Commissioner may grant waivers of the
electronic-filing requirements of this section in cases of undue
hardship. The 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 <a href="http://IRS.gov">IRS.gov</a> website. The
waiver will specify the type of filing (that is, a return required
under paragraph (a) of this section) and the period to which it
applies.
(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 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 (A)
there is no reporting requirement with respect to the contract when
entered into on December 1, 1988, and (B) the April 15, 1990, increase,
which is treated as a new contract under paragraph (e) of 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 have been no reporting requirement with respect to that
increase.
(4) Filing requirements for contracts required to be reported. The
amendments to paragraphs (d)(2) and (d)(3) of this section apply for
information returns required to be filed during calendar years
beginning after [Date of publication of the Treasury decision adopting
these rules as final regulations in the Federal Register].
PART 53--FOUNDATION AND SIMILAR EXCISE TAXES
0
Par. 13. The authority citation for part 53 is amended by adding the
following entry:
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
1. Removing paragraph (c).
0
2. Redesignating paragraphs (d) and (e) as paragraphs (c) and (d),
respectively.
0
3. Adding a new paragraph (e).
The addition reads as follows:
Sec. 53.6011-1 General requirement of return, statement or list.
* * * * *
(e) Applicability Date. The rules of this section apply for 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 the
following entry:
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
<a href="http://IRS.gov">IRS.gov</a> 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 grant waivers of the
requirements of this section in cases of undue hardship. The 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
[[Page 39926]]
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 <a href="http://IRS.gov">IRS.gov</a> website. The waiver will specify the type of
filing (that is, a return required under Sec. 54.6011-1) and the
period to which it applies.
(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 is deemed to have 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 tax return or to pay tax, see the regulations under 26 CFR
301.6651 (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 2022, 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 2023 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 2023 calendar year, Employer A must file the 2022
Form 5330 for Plan B electronically.
(2) [Reserved]
(f) Applicability date. The rules of this section apply for any
Form 5330 required to be filed for taxable years ending on or after
[Date of publication of the Treasury decision adopting these rules as
final regulations in the Federal Register].
PART 301--PROCEDURE AND ADMINISTRATION
0
Par. 17. The authority citation for part 301 is amended by adding
entries in numerical order to read 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.
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:
0
1. Revising the section heading.
0
2. Revising paragraphs (a) through (c).
0
3. Revising paragraph (d)(1).
0
4. Adding a sentence at the end of paragraph (e).
The revisions and addition 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 <a href="http://IRS.gov">IRS.gov</a> internet
site. In prescribing regulations, revenue procedures, publications,
forms, and instructions, including those on the <a href="http://IRS.gov">IRS.gov</a> internet site,
the Commissioner may direct the type of electronic filing.
(b) Undue hardship. The Commissioner may grant waivers of the
requirements of this section in cases of undue hardship. The 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 <a href="http://IRS.gov">IRS.gov</a> website. The waiver 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.
(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 is deemed to have 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 is deemed to have 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,
[[Page 39927]]
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) * * * This section applies to any Form 1042 (or successor form)
filed during calendar years beginning after [Date of publication of the
Treasury decision adopting these rules as final regulations in the
Federal Register].
0
Par. 19. Section 301.6011-2 is amended by:
0
1. Revising paragraphs (a)(1).
0
2. Revising paragraph (b).
0
3. Revising the heading of paragraph (c) and paragraph (c)(1).
0
4. Redesignating paragraph (c)(2) as (c)(6) and adding new paragraphs
(c)(2) through (5).
0
5. Revising newly redesignated paragraphs (c)(6)(i) and (ii).
0
6. Revising paragraph (g).
The revisions and additions 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, Form W-2G, or other
forms prescribed under paragraph (b)(4) of this section treated as
forms specified in this paragraph (b)(1) 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), Form W-2AS (American Samoa Wage and Tax Statement), or
other forms prescribed under paragraph (b)(4) of this section as
treated as forms specified in this paragraph (b)(2) 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 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 on Form
8300 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 <a href="http://IRS.gov">IRS.gov</a> website.
(4) The Commissioner may prescribe by revenue procedure that
additional forms are treated, for purposes of this section, as forms
specified in paragraphs (b)(1) or (2) of this section. In addition, 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
<a href="http://IRS.gov">IRS.gov</a> website.
(c) Applicable number-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 the applicable number of
returns during that calendar year. Persons required to file fewer than
the applicable number of 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) Calculating the applicable number--(i) In general. For purposes
of paragraph (c)(1) of this section, the applicable number is 100, for
returns required to be filed during calendar year 2022, and 10, for
returns required to be filed during calendar years after 2022.
(ii) Special rule for partnerships. Notwithstanding paragraph
(c)(3)(i) 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 the
applicable number of returns under paragraph (c)(3) of this section,
all the information returns described in paragraphs (b)(1) and (b)(2)
of this section required to be filed during the calendar year, are
counted in the aggregate. Corrected information returns and information
returns described in paragraph (b)(3) of this section are not taken
into account in calculating whether a person is required to file at
least the applicable number of 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 2023 calendar year, Company W, is
required to file 5 Forms 1099-INT, Interest Income, and 5 Forms
1099-DIV, Dividends and Distributions, for a total of 10 returns
covered by paragraph (b) of this section. The applicable number for
returns required to be filed during calendar year 2023 is 10.
Because Company W is required to file the applicable number of
returns covered by paragraph (c)(3) of this section during the 2023
calendar year, Company W must file all its 2022 Forms 1099-INT and
Forms 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-
[[Page 39928]]
DIV and 1099-INT, Company W files 2 corrected Forms 1099-DIV and 4
corrected Forms 1099-INT. Because Company W electronically filed its
original 2022 Forms 1099-DIV and 1099-INT, Company W must
electronically file its corrected 2022 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, 2023, Company W received cash
in excess of $10,000 and must file a Form 8300 by May 31, 2023.
Because Company W is required to file information returns covered
under paragraphs (b)(1) and (2) of this section electronically
during the 2023 calendar year, Company W must also file all its
Forms 8300 electronically during the 2023 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 2023. On December 19, 2022,
Company W receives cash in excess of $10,000 and must file a Form
8300 by January 3, 2023. Because Company W is not required to file
information returns covered under paragraphs (b)(1) and (b)(2) of
this section electronically during the 2023 calendar year, Company W
is not required to file this Form 8300 electronically.
(v) Example 5. During the 2023 calendar year, Partnership P, a
partnership with 15 partners, is required to file 8 Forms 1099-MISC,
Miscellaneous Income, and 5 Forms 1099-INT. The applicable number of
returns required to be filed by partnerships during calendar year
2023 is 10. Because Partnership P is required to file at least the
applicable number of returns covered by paragraph (b) of this
section during the 2023 calendar year, Partnership P must
electronically file all its 2022 Forms 1099-MISC and 1099-INT.
(6) * * *
(i) The Commissioner may grant waivers of the requirements of this
section in cases of undue hardship. The 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. Notwithstanding the foregoing, 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, the unavailability of
the specifications for electronic filing will be treated as creating a
hardship (see Sec. 31.6071(a)-1(a)(3)(ii) of this chapter). 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 <a href="http://IRS.gov">IRS.gov</a> website. The waiver will specify the
type of filing (that is, a return required under paragraph (b) of this
section) and the period to which it applies.
(ii) The Commissioner may supplement the provisions of paragraph
(c)(6)(i) of this section through revenue procedures, publications,
forms, instructions, or other guidance, including postings on the
<a href="http://IRS.gov">IRS.gov</a> website.
* * * * *
(g) Applicability date. The rules of this section apply for
information returns required to be filed during calendar years
beginning after [Date of publication of the Treasury decision adopting
these rules as final regulations in the Federal Register].
0
Par. 20. Section 301.6011-3 is amended by:
0
1. Revising the section heading.
0
2. Revising paragraphs (a), (b), and (d)(1).
0
3. Redesignating paragraph (d)(5) as (d)(6) and adding new paragraph
(d)(5).
0
4. Revising newly redesignated paragraph (d)(6).
0
5. 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, 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 <a href="http://IRS.gov">IRS.gov</a>
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 grant waivers of the
requirements of this section in cases of undue hardship. The 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 <a href="http://IRS.gov">IRS.gov</a> website. The waiver 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.
* * * * *
(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 the applicable number of
returns if, during the calendar year in which the partnership's short
taxable year ends, the partnership is required to file at least the
applicable number of 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
[[Page 39929]]
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 9 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 for
partnership returns required to be filed during calendar years
beginning after [Date of publication of the Treasury decision adopting
these rules as final regulations in the Federal Register].
0
Par. 21. Section 301.6011-5 is amended by revising 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 <a href="http://IRS.gov">IRS.gov</a>
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 grant waivers of the
requirements of this section in cases of undue hardship. The 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 <a href="http://IRS.gov">IRS.gov</a> website. The waiver 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.
* * * * *
(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, 2022, X
was required to file one Form 1120, U.S. Corporation Income Tax Return,
6 Forms W-2, Wage and Tax Statement, 3 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 2022, the calendar year that ended within its taxable
year ending September 30, 2023, X is required to file its Form 1120
electronically for its taxable year ending September 30, 2023.
(2) [Reserved]
(f) Applicability date. The rules of this section apply for
corporate income tax returns required to be filed during calendar years
beginning after [Date of publication of the Treasury decision adopting
these rules as final regulations in the Federal Register].
0
Par. 22. Section 301.6011-10 is added to read as follows:
[[Page 39930]]
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
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 is deemed to have
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 for
unrelated business income tax returns required to be filed during
calendar years beginning after [the date of publication of the Treasury
decision adopting these rules as final regulations in the Federal
Register].
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 its return electronically if the issuer is
required to file at least 10 returns (as defined in paragraph (d)(4) of
this section) during the calendar year.
(2) Returns filed electronically must be made in accordance with
applicable revenue procedures, publications, forms, instructions, or
other guidance.
(3) The Commissioner may provide an exemption from the electronic
requirements of paragraph (a) of this section through revenue
procedures, publications, forms, instructions, or other guidance.
(b) Other returns for tax-advantaged bonds. The Commissioner may
prescribe by revenue procedure that additional forms for tax-advantaged
bonds (as defined in Sec. 1.150-1(b) of this chapter) required under
the Internal Revenue Code, regulations, or other administrative
guidance published by the Internal Revenue Service must be filed
electronically if the issuer is required to file at least 10 returns
during the calendar year.
(c) Undue hardship. The Commissioner may grant waivers of the
requirements of this section in cases of undue hardship. The 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 <a href="http://IRS.gov">IRS.gov</a> website. The waiver will specify the
type of filing (that is, a return for credit payments on Form 8038-CP)
and the period to which it applies.
(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) 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 tax credit payment to issuers of such
bonds similar to the credit provided with respect to interest on
qualified bonds.
(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.
(4) Calculating the number 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.
(e) Applicability date. The rules of this section apply for tax-
advantaged bond returns required to be filed after the later of
December 31, 2021 or [Date of publication of the Treasury decision
adopting these rules as final regulations in the Federal Register].
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 calendar years after 2021.
(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 <a href="http://IRS.gov">IRS.gov</a>
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) Undue hardship. The Commissioner may grant waivers of the
requirements of this section in cases of undue hardship. The 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 <a href="http://IRS.gov">IRS.gov</a> website. The waiver 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.
(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 is
deemed to have failed to
[[Page 39931]]
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) 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, 2022, 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
2021 taxable year, and 10 Forms W-2, Wage and Tax Statement, which
reported wages paid to employees during the 2021 taxable year. Because
X is required to file 11 returns during calendar year 2022, X is
required to file the 2021 Form 4720 electronically.
(2) [Reserved]
(f) Applicability date. The rules of this section apply for excise
tax returns required to be filed during calendar years beginning after
[Date of publication of the Treasury decision adopting these rules as
final regulations in the Federal Register].
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 <a href="http://IRS.gov">IRS.gov</a>
website. Returns filed electronically must be made in accordance with
applicable revenue procedures, publications, forms, or instructions.
(b) Undue hardship. The Commissioner may grant waivers of the
requirements of this section in cases of undue hardship. The 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 <a href="http://IRS.gov">IRS.gov</a> website. The waiver 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.
(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 is
deemed to have 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, 2022, 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 2022, X is required to file its Form 5227 electronically
for its taxable year ending December 31, 2022.
(2) [Reserved]
(f) Applicability date. The rules of this section apply for Split-
Interest Trust returns required to be filed during calendar years
beginning after [Date of publication of the Treasury decision adopting
these rules as final regulations in the Federal Register].
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
[[Page 39932]]
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 with revenue
procedures, publications, forms, instructions, or other guidance,
including postings on the <a href="http://IRS.gov">IRS.gov</a> website, if the material advisor 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 or other
machine-readable form through revenue procedures, publications, forms,
instructions, or other guidance, including postings on the <a href="http://IRS.gov">IRS.gov</a>
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) Undue hardship. The Commissioner may grant waivers of the
requirements of this section in cases of undue hardship. The 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 <a href="http://IRS.gov">IRS.gov</a> website. The waiver 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.
(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 is deemed to have 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. For purposes of this
section, a material advisor is required to file at least 10 returns if,
during the calendar year ending with or within the material advisor's
taxable 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.
(e) Example. The following example illustrates the provisions of
this section:
(1) During the calendar year ending December 31, 2022, Material
Advisor X was required to file one Form 8918, Material Advisor
Disclosure Statement, one Form 1040, U.S. Individual Income Tax Return,
and 10 Forms 1099-NEC, Nonemployee Compensation. Because Material
Advisor X is required to file 12 returns during the calendar year 2022,
X is required to file its Form 8918 electronically or in other machine-
readable form, in accordance with revenue procedures, publications,
forms, instructions, or other guidance, including postings on the
<a href="http://IRS.gov">IRS.gov</a> website, during its calendar year ending December 31, 2022.
(2) [Reserved]
(f) Applicability date. The rules of this section apply for
Material Advisor Disclosure Statements required to be filed for taxable
years ending on or after [the date of publication of the Treasury
decision adopting these rules as final regulations in the Federal
Register].
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 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 <a href="http://IRS.gov">IRS.gov</a>
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 grant waivers of the
requirements of this section in cases of undue hardship. The 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 <a href="http://IRS.gov">IRS.gov</a> website. The waiver 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.
(c) Failure to file. If a withholding agent fails to file a
withholding agent income tax return electronically when required to do
so by this section, the withholding agent is deemed to have 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,
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
[[Page 39933]]
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 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 [Date of publication of the Treasury decision adopting
these rules as final regulations in the Federal Register].
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))
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 <a href="http://IRS.gov">IRS.gov</a>
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 grant waivers of the
requirements of this section in cases of undue hardship. The 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 <a href="http://IRS.gov">IRS.gov</a> website. The waiver 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.
(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 is deemed to have 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, 2022, 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 calendar year, X is required to file its Form 1120-POL
electronically for its taxable year ending December 31, 2022.
(2) [Reserved]
(f) Applicability date. The rules of this section apply for income
tax returns required to be filed during calendar years beginning after
[Date of publication of the Treasury decision adopting these rules as
final regulations in the Federal Register].
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 is deemed
to have 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.
[[Page 39934]]
(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 for any
returns under section 6033 required to be filed during calendar years
beginning after [Date of publication of the Treasury decision adopting
these rules as final regulations in the Federal Register].
0
Par. 30. Section 301.6037-2 is amended by revising the section heading,
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 <a href="http://IRS.gov">IRS.gov</a>
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 grant waivers of the
requirements of this section in cases of undue hardship. The 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 <a href="http://IRS.gov">IRS.gov</a> website. The waiver will specify the
type of filing (that is, a return required under section 6037) 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.
* * * * *
(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 2022, Corporation S, an electing small business corporation,
is required to file one 2021 Form 1120-S, U.S. Corporation Income Tax
Return, 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 2022, S is required to file its 2022 Form
1120-S electronically.
(2) [Reserved]
(f) Applicability date. The rules of this section apply for
electing small business corporation returns required to be filed during
calendar years beginning after [Date of publication of the Treasury
decision adopting these rules as final regulations in the Federal
Register].
0
Par. 31. Section 301.6057-3 is amended by:
0
1. Revising paragraphs (a), (b), and (d)(1);
0
2. Revising the heading of paragraph (d)(4);
0
3. Revising paragraph (d)(4)(i);
0
4. In paragraph (e), designating the example as paragraph (e)(1).
0
5. Revising newly designated paragraph (e)(1) and adding paragraph
(e)(2); and
0
6. Revising paragraph (f).
The revisions and addition read as follows:
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 <a href="http://IRS.gov">IRS.gov</a> website. Returns filed
electronically must be made in accordance with 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. The principal factor
in determining hardship will be the amount, if any, by which the cost
of filing the registration statements or notifications electronically
in accordance with this section exceeds the cost of filing the
registration statements or notifications 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 <a href="http://IRS.gov">IRS.gov</a> website. The waiver will specify the
type of filing (that is, a registration statement or notification under
section 6057) and the period to which it applies.
* * * * *
[[Page 39935]]
(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 2023, 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 2023
calendar year, P must file the 2023 Form 8955-SSA for Plan B
electronically.
(2) [Reserved]
(f) Applicability date. The rules of this section apply for
registration statements and other notifications required to be filed
under section 6057 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.
0
Par. 32. Section 301.6058-2 is amended by:
0
1. Revising the section heading.
0
2. Revising paragraphs (a), (b), and (d)(1);
0
3. Revising the heading of paragraph (d)(3); and
0
4. Revising paragraphs (d)(3)(i), (d)(3)(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 <a href="http://IRS.gov">IRS.gov</a> 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. The 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 returns 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 <a href="http://IRS.gov">IRS.gov</a> website. The waiver 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.
(e) Example. The following example illustrates the provisions of
paragraph (d)(3) of this section:
(1) In 2023, 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 2023 calendar year, the 2023 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, 2022, but only for filings with a filing deadline (not
taking into account extensions) after July 31, 2022.
0
Par. 33. Section 301.6059-2 is amended by:
0
1. Revising the section heading;
0
2. Revising paragraphs (a), (b), (d)(1);
0
3. In paragraph (d)(3), revising the paragraph heading and paragraph
(d)(3)(i);
0
4. Removing paragraph (e) and redesignating paragraph (f) as paragraph
(e); and
0
5. Revising newly designated 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.
[[Page 39936]]
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 <a href="http://IRS.gov">IRS.gov</a> 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. The 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 reports 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 <a href="http://IRS.gov">IRS.gov</a> website. The waiver will specify the type of
filing (that is, an actuarial report required under section 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, 2022, but only for filings with a filing
deadline (not taking into account extensions) after July 31, 2022.
0
Par. 34. Section 301.6721-1 is amended by:
0
1. Revising paragraph (a)(2)(ii).
0
2. In paragraph (b)(5), revising the introductory text.
0
3. In paragraph (b)(5), designating Examples 1 through 4 as paragraphs
(b)(5)(i) through (iv).
0
4. Revising newly designated paragraphs (b)(5)(iii) and (b)(5)(iv).
0
5. Adding paragraphs (b)(5)(v) and (b)(5)(vi).
0
6. Adding paragraph (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 the applicable number of returns (determined under
regulations prescribed under section 6011(e)(5) with respect to the
calendar year during which such returns are required to be filed), 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
th
[…truncated; see source link]Indexed from Federal Register on July 23, 2021.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.