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© 2018 American Payroll Institute, Inc. APA Comments on Proposed Regulations to Amend the Rules for Determining Whether Information Returns Must Be Filed Electronically Ato PA offered several recommendations to the IRS in reference its request for comments on its Proposed Rules for Filing Requirements for Information Returns Required on Magnetic Media (Electronically) [https://www.americanpayroll.org/docs/ default-source/government-relations/18g-aggregated-info- returns-apa-comments.pdf 83 F.R. 24948, 5-31-18 https:// www.gpo.gov/fdsys/pkg/FR-2018-05-31/pdf/2018-11749. pdf]. If finalized, the regulations would increase the number of information returns required to be filed electronically. Proposed changes The proposed regulations would require that all information returns, regardless of type, be taken into account to determine whether a business meets the 250-return threshold that determines whether information returns must be filed electronically. The information returns subject to the regulation include Forms 1042-S, 1094 series, 1095-B, 1095-C, 1098, 1098-E, 1098-T, 1099 series, 5498, 8027, and W-2 series. The current regulation counts each form type separately before electronic filing is required. In the proposed rule, employers would count the number of forms together, which would increase the number of employers required to file electronically. The IRS explained the rule change in the notice by stating that advances in tax preparation software and the availability of tax return preparers and third-party filers make filing electronically easier. According to the IRS, 98.6% of all information returns are already filed electronically. However, about a third of the 100 million Forms 1099-MISC, Miscellaneous Income, filed annually are on paper, which accounts for 75% of all paper return filings. The agency is seeking to cut the cost of processing paper returns. APA comments and recommendations The problem in aggregating the forms for many employers is that different employer departments, such as accounts payable and payroll, manage the various forms. Each department may have separate electronic systems and electronic communication capabilities, which makes the number of forms harder to tally. If the new rules are adopted, businesses and department managers will need to: • Learn about the new requirements, • Compile data from different departments, • Outsource or purchase new or updated software systems, • Train employees on new processes and procedures that include internal communication on the number of forms to be filed and an understanding of the IRS’s filing system, and • Obtain security clearance for filing with the IRS. All of this must be completed by January 1, 2019, which is less than five months away. APA offered several recommendations to ease the burden of the proposed change for businesses: outreach, additional time to comply, and improved IRS electronic filing options. In addition to stories in the media on the new requirements, APA recommended that the IRS send letters to businesses that would otherwise have met the aggregated threshold based on past filings. APA asked the IRS to push the effective date back to January 1, 2020, to accommodate the time it will take for businesses to fully comply. According to the U.S. Small Business Administration, 99.7% of all U.S. firms are small businesses. APA recommended that the IRS create a free, direct-to-the-IRS, e-filing service for Forms 1099-MISC to accommodate smaller businesses and departments that lack the resources to obtain necessary software or to engage third parties to help them file through the IRS’s Filing Information Returns Electronically (FIRE) system. This will increase accuracy and provide cost savings for businesses and the IRS in the same manner that the Social Security Administration has a free e-file service for Forms W-2. APA members still find it difficult to register and create new accounts using the IRS’s two-factor authentication process, Secure Access. This is especially true when business representatives must travel to IRS tax centers to prove their identity as part of the authentication process. APA recommended that the IRS improve its “help with registration” section on its website and include the same information in agency outreach. APA Participates in Georgia’s First Child Support Employer Symposium Asymposium PA attended Georgia’s first child support employer in June at the request of Tanguler Gray, Director of the Division of Child Support Services (DCSS), Georgia Department of Human Services (DHS). The purpose of the symposium was to share information on child support and the resources available to employers in Georgia. Of the state’s more than 400,000 child support cases, 53% are managed through wage withholding. Georgia would like to increase this August 2018 – A Supplement to Payroll Currently, Issue 8, Volume 26