TREASURY REGULATIONS

(a) Returns of electing small business corporation required electronically. (1) An electing small business corporation required to file an electing small business return on Form 1120-S, U.S. Income Tax Return for an S Corporation, under § 1.6037-1 of this chapter must file its Form 1120-S electronically if the small business corporation is required by the Internal Revenue Code and regulations to file at least 10 returns during the calendar year.

(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 section 6037) 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. An exemption will be allowed for filers for whom using the technology required to file in electronic form conflicts with their religious beliefs. 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 an electing small business corporation fails to file a return on magnetic media when required to do so by this section, the corporation is deemed to have 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 on magnetic media) 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, diskette, and other media specifically permitted under the applicable regulations, procedures, publications, forms, instructions, or other guidance.

(2) Corporation. The term corporation means a corporation as defined in section 7701(a)(3).

(3) Electing small business corporation return. The term electing small business corporation return means a Form 1120S, “U.S. Income Tax Return for an S Corporation,” along with all other related forms, schedules, and statements that are required to be attached to the Form 1120S, and all members of the Form 1120S series of returns, including amended and superseding returns.

(4) Electing small business corporation. The term electing small business corporation means an S corporation as defined in section 1361(a)(1).

(5) Calculating the number of returns. For purposes of this section, a corporation is required to file at least 10 returns if, during the calendar year ending with or within the corporation's taxable year, the corporation is required to file at least 10 returns of any type, including income tax returns, employment tax returns, excise tax returns, and information returns (for example, Forms W-2, Forms 1099, but not including schedules required to be attached to an S corporation return). In the case of a short-period return, a corporation is required to file at least 10 returns if, during the calendar year in which the corporation's short taxable year ends, the corporation is required to file at least 10 returns of any type, including information returns (for example, Forms W-2, Forms 1099, but not including schedules required to be attached to an S corporation return), income tax returns, employment tax returns, and excise tax returns.

(e) Example. The following example illustrates the provisions of this section. In the example, the corporation is a calendar-year taxpayer.

(1) In 2023, Corporation S, an electing small business corporation, is required to file one 2022 Form 1120-S, U.S. Income Tax Return for an S Corporation, two Forms W-2, Wage and Tax Statement, two Forms 1099-DIV, Dividends and Distributions, one Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, and four Forms 941, Employer's Quarterly Federal Tax Return. Because S is required to file 10 returns during the calendar year 2023, S is required to file its 2023 Form 1120-S electronically.

(2) [Reserved]

(f) Applicability date. The rules of this section apply to electing small business corporation returns required to be filed during calendar years beginning after December 31, 2023.