Can Corporate Tax Returns Be Filed Electronically?

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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.

Voluntary e-filing

Corporations that are not required to e-file may elect to do so if they can satisfy all electronic filing criteria.

Which IRS forms can’t be filed electronically?

Certain corporate returns are ineligible for e-filing as standalone documents. Therefore, taxpayers filing those forms are excluded from the electronic filing requirement. However, these forms can be e-filed if they are part of a consolidated return.

The following corporate return types must be filed on paper as standalone filings:

• 1120-C, Cooperative Association
• 1120-FSC, Foreign Sales Corporations
• 1120-H, Homeowners Associations
• 1120-IC-DISC, Interest Charge Domestic International Sales Corporation
• 1120-ND, Nuclear Decommissioning Trusts
• 1120-REIT, Real Estate Investment Trust
• 1120-RIC, Regulated Investment Companies
• 1120-SF, Settlement Funds

The IRS’s e-file system for corporate returns can process current year returns as well as returns for the prior two tax years. [IRS Pub. 4163]

Can I request a waiver of the e-filing requirement?

The IRS may grant a waiver from the electronic filing rules if the corporation can show that hardship would result if it were required to e-file its return. A corporation interested in requesting a waiver of the mandatory e-filing requirement must file a written request, and request one in the manner prescribed by the Ogden Submission Processing Center. Notice 2010-13 provides procedures for filers to request a waiver of the requirement to e-file due to undue hardship. [Instructions to Form 1120]

All written requests for waivers should be mailed to:

Internal Revenue Service
Ogden Submission Processing Center
Attn: Form 1120 e-file Waiver Request Mail Stop 1057
Ogden, UT 84201

If using a delivery service, requests for waivers should be mailed to:

Internal Revenue Service
Ogden Submission Processing Center
Attn: Form 1120 e-file Waiver Request Mail Stop 1057
1973 N. Rulon White Blvd.
Ogden, UT 84404

What happens if my corporation fails to e-file Form 1120 when required?

Failing to e-file a corporate income tax return when required to do so may result in an IRS determination that the taxpayer failed to file the return. Consequences for failure to file include §6651 additions to tax, resulting in monetary penalties unless the taxpayer can show that its failure to file was due to reasonable cause. Further, any elections made on the return would be deemed invalid.

Returns are considered e-filed on the date of the electronic postmark given by the electronic return transmitter. If the electronic postmark is timely, the return is considered timely filed even if not received by the IRS until after the deadline. [Reg. §301.7502-1(d), §301.6011-5(c); Tax Prep Guide – Form 1120]

Best practices for e-filing corporate tax returns

Review IRS Pub. 4557, Safeguarding Taxpayer Data, a Guide for Your Business, to determine your firm or company’s data privacy and security needs and implement any safeguards necessary to protect your systems and client information.

Beware of refund statute expiration deadlines

Ensure that your company is aware of all deadlines for claiming refunds. Generally, a claim for refund must be filed within three years from the date the return was filed or two years from the time the tax was paid, whichever is later. This is especially important if your company has acquired another company during the year.

Review carryovers and carryforwards

Review the prior year return to ensure that any carryovers, carryforwards, and other important data such as depreciation have correctly transferred into the next year’s return. For newly acquired companies, obtain a copy of the prior year returns to ensure that your company picks up and continues any carryovers, carryforwards, depreciation of assets, etc.

File by the deadline

The deadline to file federal corporate income tax returns and Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns, is April 15 for calendar-year filers, unless the date falls on a Saturday, Sunday, or legal holiday, in which case taxpayers must file by the next business day. Extensions can be filed using Form 7004. Returns granted an extension are due Oct. 15 for calendar year filers.