§ 301.6011-15 - Required use of electronic form for withholding tax returns.

§ 301.6011-15 Required use of electronic form for withholding tax returns.

(a) Withholding tax returns required electronically.

(1) A withholding agent required to file an income tax return on Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons, under § 1.1461-1(b) of this chapter must file its return electronically if the withholding agent is required by the Internal Revenue Code or regulations to file at least 10 returns (as defined in paragraph (d)(5) of this section) during the calendar year in which the Form 1042 is required to be filed. Notwithstanding the previous sentence, a withholding agent that is an individual, estate, or trust is not required to file its Form 1042 electronically.

(2) The Commissioner may direct the type of electronic filing and may also exempt certain returns from the electronic requirements of this section through revenue procedures, publications, forms, instructions, or other guidance, including postings on the IRS.gov website. Returns filed electronically must be made in accordance with the applicable revenue procedures, publications, forms, instructions, or other guidance.

(b) Exclusions from electronic-filing requirements -

(1) Waivers. The Commissioner may grant waivers of the requirements of this section in cases of undue hardship. One principal factor in determining hardship will be the amount, if any, by which the cost of filing the return electronically in accordance with this section exceeds the cost of filing the return on paper. A request for a waiver must be made in accordance with applicable IRS revenue procedures, publications, forms, instructions, or other guidance, including postings to the IRS.gov website. The waiver request will specify the type of filing (that is, a return required under § 1.1461-1 of this chapter) and the period to which it applies.

(2) Exemptions. The Commissioner may provide exemptions from the requirements of this section to promote effective and efficient tax administration. A submission claiming an exemption must be made in accordance with applicable IRS revenue procedures, publications, forms, instructions, or other guidance, including postings to the IRS.gov website.

(3) Additional exclusion. If the IRS's systems do not support electronic filing, taxpayers will not be required to file electronically.

(c) Failure to file. If a withholding agent fails to file a withholding tax return electronically when required to do so by this section, the withholding agent has failed to file the return. See section 6651 for the addition to tax for failure to file a return. In determining whether there is reasonable cause for failure to file the return, § 301.6651-1(c) and rules similar to the rules in § 301.6724-1(c)(3) (undue economic hardship related to filing information returns electronically) will apply.

(d) Meaning of terms. The following definitions apply for purposes of this section:

(1) Magnetic media or electronic form. The terms magnetic media or electronic form mean any media or form permitted under applicable regulations, revenue procedures, or publications. These generally include electronic filing, as well as magnetic tape, tape cartridge, and diskette, and other media specifically permitted under the applicable regulations, procedures, publications, forms, or instructions.

(2) Withholding agent. The term withholding agent means a withholding agent as defined in § 1.1441-7(a) of this chapter.

(3) Withholding tax return. The term withholding tax return means a Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons, along with all other related forms, schedules, and statements that are required to be attached to the Form 1042, including amended and superseding returns.

(4) Special rule for partnerships. Notwithstanding paragraph (d)(5) of this section, a withholding agent that is a partnership with more than 100 partners (as determined under § 301.6011-3(d)(6)) is required to file a return described in paragraph (a) of this section electronically.

(5) Calculating the number of returns. For purposes of this section, a withholding agent is required to file at least 10 returns if, during the calendar year in which the Form 1042 is required to be filed, the withholding agent is required to file at least 10 returns of any type, including information returns (for example, Forms W-2, Forms 1099, Forms 1042-S), income tax returns (for example, Form 1042), employment tax returns, and excise tax returns.

(e) Special rule for returns filed by financial institutions. For rules that require withholding agents that are financial institutions to file returns electronically, see § 301.1474-1.

(f) Applicability date. The rules of this section apply to withholding tax returns required to be filed for taxable years ending on or after December 31, 2023.

[T.D. 9972, 88 FR 11773, Feb. 23, 2023]