Failing to e-file corporate income tax returns when required to do so and in the manner required may result in failure to file penalties, missed elections, and missed refunds, so it’s important to keep abreast of IRS, state, and local tax authority e-file requirements and regulations as part of a proactive and comprehensive corporate tax planning and compliance strategy.
This article details when corporate taxpayers are required to e-file tax returns and shares best practices to ensure timely compliance.
Can you file Form 1120 electronically?
For returns required to be filed in calendar years beginning before Jan. 1, 2024, Form 1120, U.S. Corporation Income Tax Return, must be e-filed if the corporation has total assets of $10 million or more and is required to file at least 250 returns of any type during the calendar year ending with or within the corporation’s tax year.
In February 2023, the IRS finalized regulations amending the requirements for e-filing corporate income tax returns. The regulations lowered the return filing threshold and removed the asset threshold, therefore greatly expanding the number of corporations that are required to e-file beginning in 2024.
For returns required to be filed during calendar years beginning after Dec. 31, 2023, Form 1120 must be e-filed if the corporation is required to file at least 10 returns of any type during the calendar year ending with or within the tax year of the corporation. A waiver is available in cases of undue hardship. [Reg. §301.6011-5]
Determining the 10-return threshold
For purposes of determining whether the 10-return threshold is met, the corporation must be required to file at least 10 returns of any type, including:
- Income tax returns
- Excise tax returns
- Employment tax returns
- Information returns, e.g.:
- Forms W-2, Wage and Tax Statement
- All 1099 series forms, such as: 1099-MISC, Miscellaneous Income; 1099-NEC, Nonemployee Compensation; 1099-INT, Interest Income; and 1099-K, Payment Card and Third-Party Network Transactions
Therefore, for example, a corporation that must file a 2023 Form 1120 plus five 2023 Forms W-2 and five 2023 Forms 1099 must file its 2023 Form 1120 electronically during 2024.
Amended and superseding corporate returns also must be e-filed if the taxpayer was originally required to e-file their return.
Corporations that are not required to e-file may elect to do so if they can satisfy all electronic filing criteria.