IRS Updates Guidance on Availability of Exemptions from E-Filing Requirements

(Parker Tax Publishing January 2024)

The IRS issued a notice addressing the availability of administrative exemptions from the requirement file certain returns and other documents in electronic form. The notice, which modifies Notice 2023-60 and obsoletes Notice 2010-13, also addresses the availability of information about the procedure to request a waiver of the requirement to e-file Forms 1120, 1120-S, 1120-F, and 1065; in addition, the notice provides information about resources pertaining to failed attempts to e-file Forms 1120, 1120-S, and 1120-F using IRS filing systems. Notice 2024-18.

Background

The Taxpayer First Act (TFA) (Pub. L. 116-25) amended Code Sec. 6011(e) by amending Code Sec. 6011(e)(2) and adding Code Sec. 6011(e)(5) to authorize the IRS to issue regulations that decrease the number of returns a filer may file without being required to file returns and other documents electronically. Under this authority, the IRS issued final regulations in February 2023 (T.D. 9972) (Updated Electronic Filing Regulations) that require any person who must file at least 10 returns during a calendar year to file the returns electronically (electronic filing requirement). In addition, as described below, the Updated Electronic Filing Regulations allow certain waivers of and administrative exemptions from the electronic filing requirement. The Updated Electronic Filing Regulations generally apply beginning on January 1, 2024.

In Notice 2010-13, the IRS provided the procedure for corporations, S corporations, and tax-exempt organizations to request a waiver of the requirement to file electronically Form 1120, U.S. Corporation Income Tax Return; Form 1120-F, U.S. Income Tax Return of a Foreign Corporation; Form 1120-S, U.S. Income Tax Return for an S Corporation; Form 990, Return of Organization Exempt From Income Tax; Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Trust Treated as a Private Foundation; and returns, amended returns, and superseding returns in the Form 1120 series and Form 990 series.

Notice 2024-18

In Notice 2024-18, the IRS addresses the availability of administrative exemptions from the electronic filing requirements. This notice also addresses the availability of information about the procedure to request a waiver of the requirement to file electronically Forms 1120, 1120-S, 1120-F, and 1065. In addition, Notice 2024-18 provides information about resources pertaining to failed attempts to electronically file Forms 1120, 1120-S, and 1120-F using IRS filing systems. Lastly, the notice obsoletes Notice 2010-13 and modifies Notice 2023-60, as released in August 2023 but not published in the Internal Revenue Bulletin.

The Updated Electronic Filing Regulations provide for certain administrative exemptions from the electronic filing requirement. Reg. Sec. 301.6011-2 (general electronic filing requirement), Reg. Sec. 301.6011-3 (for partnership returns), Reg. Sec. 301.6011-5 (for corporate income tax returns), and Reg. Sec. 301.6037-2 (for S corporation returns), as amended by the Updated Electronic Filing Regulations, provide for an administrative exemption from the electronic filing requirement for filers of the returns or other documents described in those regulations for whom using the technology required to file electronically conflicts with their religious beliefs (religious exemption).

According to the IRS, most filers claiming the religious exemption who file information returns subject to the general electronic filing requirements prescribed by Reg. Sec. 301.6011-2 (for example, Forms 1099 and Forms W-2) have the option to notify the IRS that they qualify for a religious exemption in advance of filing returns and other documents. Filers are encouraged to notify the IRS in advance that they are claiming a religious exemption by filing a Form 8508, Application for Waiver from Electronic Filing of Information Returns, in accordance with the form's instructions.

Filers of Forms 1120 and 1120-F under Reg. Sec. 301.6011-5 (for corporate income tax returns), Form 1120-S under Reg. Sec. 301.6037-2 (for S corporation returns), and Form 1065 under Reg. Sec. 301.6011-3 (for partnership returns), claiming the religious exemption must not file Form 8508. Instead, those filers must file returns and other documents in paper form following the paper filing requirements provided by applicable IRS revenue procedures, publications, forms, instructions, or other guidance. Filers of Forms 1120, 1120-S, 1120-F, and 1065, who qualify for a religious exemption must print in bold letters "Religious Exemption" at the top of page 1 of the return they file in paper form. Filers who qualify for the religious exemption for the Forms 1120, 1120-S, 1120-F, and 1065, are not subject to the electronic filing waiver procedure that is available to other filers, which requires advance application and approval from the IRS before filing in paper form.

In addition, certain provisions of currently applicable regulations and the Updated Electronic Filing Regulations authorize the IRS to grant certain waivers of the requirement to file electronically certain returns and other documents in cases of undue hardship (hardship waiver). The procedures for seeking a hardship waiver (if applicable) of the electronic filing requirement may be found in applicable IRS revenue procedures, publications, forms, instructions, or other guidance, including postings to the IRS.gov website.

Finally, certain provisions of the Updated Electronic Filing Regulations authorize the IRS to provide other administrative exemptions from the electronic filing requirement to promote effective and efficient tax administration. If the IRS provides other administrative exemptions, a submission claiming the administrative exemption must be made in accordance with applicable revenue procedures, publications, forms, instructions, or other guidance, including postings to the IRS.gov website.

Notice 2024-18 obsoletes Notice 2010-13. The procedure to request a waiver of the requirement to file electronically Forms 1120, 1120-S, and 1120-F described in Notice 2010-13 now is available in applicable revenue procedures, publications, forms, instructions, or other guidance, including postings to the IRS.gov website. Any updates to the procedure to request a waiver will be made available in the same way. Additionally, because Code Sec. 6033, as amended by the TFA, requires any organization with an obligation to file a return under Code Sec. 6033 to file the return in electronic form, the procedure to request a waiver of the electronic filing requirement as described in Notice 2010-13 no longer applies to Form 990 and Form 990-PF series returns. Finally, Notice 2010-13 provided instructions regarding timely filing of Forms 1120, 1120-S, 1120-F, 990, and 990-PF on the IRS's Modernized e-File (MeF) system after attempts to file electronically on the MeF system are rejected. In place of Notice 2010-13, instructions regarding timely filing and for correcting returns that are rejected during attempts to file electronically using the IRS electronic filing systems may be found in IRS publications specific to each IRS electronic filing system; for example, Publication 4164, Modernized e-File (MeF) Guide for Software Developers and Transmitters (currently available at: https://www.irs.gov/pub/irs-pdf/p4164.pdf), and Publication 5717, Information Returns Intake System (IRIS) Taxpayer Portal User Guide (currently available at: https://www.irs.gov/pub/irs-pdf/p5717.pdf).

Notice 2024-18 also modifies Notice 2023-60 to update the correct procedure for filers of Forms 1120, 1120-S, 1120-F, and 1065 to use to notify the IRS that they claim a religious exemption from the electronic filing requirement.

For a discussion of the electronic filing requirements, see Parker Tax ¶250,130.

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

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