When Do I Have to E-File 1099 Forms?

Businesses and other payers use the Form 1099 series to report various payments made to non-employees and for other specific financial transactions to the Internal Revenue Service. These forms ensure that individuals and entities correctly report their income. Common examples include Form 1099-NEC for nonemployee compensation and Form 1099-MISC for miscellaneous payments like rent or prizes.

Electronic filing, or e-filing, is the process of submitting this tax information directly to the IRS over the internet. Due to regulatory changes aimed at improving processing efficiency, understanding when e-filing is required is an important part of annual tax compliance.

The Electronic Filing Threshold

For tax returns required to be filed on or after January 1, 2024, the threshold for mandatory electronic filing has been lowered. This change stems from regulations authorized by the Taxpayer First Act of 2019. Businesses, individuals, and other entities that file 10 or more information returns in total during a calendar year are now required to file them electronically with the IRS.

This 10-form limit is a departure from the previous rule, which set the electronic filing mandate at 250 or more returns of the same type. The updated regulation means that many small businesses must transition to electronic submission methods.

The IRS has developed online portals to facilitate this transition, such as the Information Reporting Intake System (IRIS), which allows for the e-filing of 2022 and later tax year forms. This system provides a direct, no-cost way for smaller businesses to comply with the updated requirements.

Calculating Your Total Form Count

The requirement to e-file is based on an aggregation of nearly all information returns an entity files within a calendar year. The 10-form threshold is not determined on a per-form basis; instead, a filer must sum up the total quantity of all specified information returns they issue to determine if they must e-file.

To correctly calculate the total, you must add together the counts of various forms. The list of forms that must be aggregated includes the most common types that small businesses file. These include:

• Forms W-2 (Wage and Tax Statement)
• The entire Form 1099 series (such as NEC, MISC, DIV, and INT)
• Form 1098 (Mortgage Interest Statement)
• Form 3921 (Exercise of an Incentive Stock Option)

For example, a business that has five employees and hires two independent contractors during the year would issue five Forms W-2 and two Forms 1099-NEC. Since the combined total is seven forms, this business would not be required to e-file. If that same business also had to file three Forms 1099-INT for interest payments, its total count would become 10, triggering the mandatory e-filing requirement for all of its information returns.

Penalties for Failure to E-File

Failing to file information returns electronically when required can lead to financial penalties. The penalties are for failing to use the proper filing method as mandated by the IRS and are assessed on a per-form basis.

The penalty structure is tiered based on how long it takes the filer to submit the correctly formatted electronic return after the deadline. For the 2025 filing season, if the correct filing occurs more than 30 days late but before August 1st, the penalty is $130 per form. Filings submitted after August 1st, or not at all, are subject to a penalty of $330 per form. The IRS also sets annual maximum penalty amounts, which differ for small and large businesses. Corrected returns do not count toward the 10-form threshold, but they must be filed in the same format as the original return.

Requesting a Waiver from the E-Filing Requirement

In certain situations, a filer may obtain a waiver from the electronic filing requirement by demonstrating “undue hardship.” This standard requires showing that complying with the e-filing mandate would impose a significant burden on business operations. A business’s first request for a waiver from the electronic filing requirement will be automatically granted.

For subsequent requests, examples of undue hardship include a business operating without internet access or a situation where the cost of necessary software is prohibitive. Other grounds could involve a catastrophic event like a fire or natural disaster, or the serious illness of the individual responsible for filing.

To request a waiver, the filer must submit Form 8508, Request for Waiver From Filing Information Returns Electronically, to the IRS. This form must be submitted at least 45 days before the due date of the returns for which the waiver is being requested. On Form 8508, the filer must provide business details, specify the types and number of forms they intend to file, and provide a detailed explanation of the hardship.