Corporations required to file returns electronically are those that meet specific criteria set forth by the IRS. According to the regulations and guidelines:
- General Requirement:
- Corporations with $10 million or more in total assets and that file at least 10 returns during the calendar year are required to file their corporate income tax returns electronically. This includes Form 1120, U.S. Corporation Income Tax Return, and other related forms in the Form 1120 series, including amended and superseding returns (Subsection 301.6011-5(a)(1)).
- Controlled Group of Corporations:
- All members of a controlled group of corporations must file their corporate income tax returns electronically if the aggregate number of returns required to be filed by the controlled group is at least 10 during the calendar year (Subsection 301.6011-5(a)(2)).
- Specific Forms and Returns:
- The requirement to file electronically also extends to various other forms and returns, such as Form 1120S (U.S. Income Tax Return for an S Corporation) and Form 1120F (U.S. Income Tax Return of a Foreign Corporation) (IRS FAQ B1).
- Threshold for Filing Electronically:
- The threshold for mandatory electronic filing has been reduced over time. For calendar years after 2021, the threshold is generally 10 returns (Subsection 6011(e)(5)(A)(iii)).
- Special Rules for Partnerships:
- Partnerships with more than 100 partners are required to file their returns electronically, regardless of the number of returns filed (Subsection 301.6011-2(c)(3)).
- Exemptions and Waivers:
- The IRS may grant waivers in cases of undue hardship or provide exemptions to promote effective and efficient tax administration. Exemptions may also be allowed for filers for whom using the required technology conflicts with their religious beliefs (Subsection 301.6011-5(b)).
- Penalties for Non-Compliance:
- Failure to file electronically when required is deemed a failure to file the return, which can result in penalties (Subsection 301.6011-5(c)).
In summary, corporations with significant assets and those filing a substantial number of returns are generally required to file electronically, with specific provisions for controlled groups and partnerships. The IRS provides mechanisms for exemptions and waivers under certain conditions.
Sources:
Publication 4163 (12/2023)
Publication 4164 (10/2023)
§ 6011. General requirement of return, statement, or list
§ 301.6011-2. Required use of electronic form.
§ 301.6011-5. Required use of electronic form for corporate income tax returns.
IRM Part 21. Customer Account Services. Chapter 7. Business Tax Returns and Non-Master File Accounts. Section 4. Income Taxes/Information Returns
