Final Rules Issued About Filing Returns on Magnetic Media

These regulations provide that a plan administrator (or, in certain situations, an employer maintaining a plan) required by the Internal Revenue Code or regulations to file at least 250 returns during the calendar year that includes the first day of the plan year must use magnetic media to file certain statements, returns, and reports under IRC sections 6057, 6058, and 6059. Magnetic media is defined as electronic filing or other media specifically permitted under applicable regulations, revenue procedures, publications, forms, instructions, or other guidance on the IRS.gov Internet website.

Filers of the Form 5500 and Form 5500-SF are already required to file the returns electronically through EFAST2. In addition, many filers of the Form 8955-SSA already voluntarily file electronically with the IRS and also are required to file the Form 5500 and Form 5500-SF electronically through EFAST2. The IRS and the Treasury Department have determined that taxpayers should be able to comply at a reasonable cost with the requirement to file statements, returns, and reports on magnetic media.

The determination of whether a filer is required to file at least 250 returns is made by aggregating all returns, regardless of type, the filer is required to file, including for example, income tax returns, information returns required for non-profits under section 6033, other information returns, excise tax returns, and employment tax returns.

Electronic filing requirements may be waived in cases of undue economic hardship. The principal factor in determining hardship will be the amount, if any, by which the cost of filing the registration statements or notifications on magnetic media in accordance with this section exceeds the cost of filing the registration statements or notifications on paper or other media.

The final regulations address comments made regarding proposed regulations last year. The IRS confirms that the Filing Information Returns Electronically (FIRE) system is an acceptable electronic system to file the Form 8955-SSA. The final rules also include clarification about the application of the e-file mandate to one-participant plans.

The regulations apply to employee retirement benefit plan statements and notifications required to be filed under section 6057 for plan years that begin on or after January 1, 2014, but only for filings with a filing deadline (not taking into account extensions) on or after July 31, 2015. For employee retirement benefit plan returns and reports required to be filed under sections 6058 and 6059, the regulations apply for plan years that begin on or after January 1, 2015, but only for filings with a filing deadline (not taking into account extensions) after December 31, 2015.

Text of the final regulations is here.