Social Security 
                                                                                  Administration 
                                                                                  Internal Revenue Service 
                 SSA/I     RS 
                                                                                  In  this  Issue  
                                                                                  IRS finalizes rules   to lower electronic filing threshold 
                                                                                  begin in 2024 

                                                                                  Prepare now for new reporting  threshold for     Form 
                                                                                  1099-K   
                                                                                  IRS issues memo on valuating digital assets 

                                                                                  The Taxpayer Advocate Service  advocates         for 
                                                                                  businesses 
 ReporterEmployee Retention Credit 
                                                                                  
                                                 A  Newsletter     for Employers 
 SECOND  QUARTER   2023  

IRS finalizes rules to lower electronic filing threshold begin in 2024 
 The IRS         finalized regulations  to reduce the threshold requirement for business information returns electronically 
from 250 to ten for returns filed after December 31, 2023,  In 2024, all business information returns will be aggregated to 
calculate if the 10-return threshold is reached. 

The final regulations reflect changes made by the Taxpayer First Act of 2019. The final regulations also withdraw 
regulations the IRS proposed in 2018 to amend the rules for determining whether information returns must be filed 
electronically. The final regulations will not apply until calendar year 2024,  

The aggregation of tax returns 
The electronic filing threshold applies to each type of information return individually. Under the final regulations, with a few 
exceptions, information returns required to be filed during the calendar year will be counted in the aggregate. 

The final regulations clarify, if  IRS systems do not support electronic filing for a specific type of tax return, the taxpayer will 
not be required to file that tax return electronically. 

Filing corrected information returns 
The final regulations require corrected information returns to be filed in the same manner as the original form, 
electronically or on paper. This will help the agency process corrected information returns more accurately and in a 
timelier manner.   

Waivers will still be granted 
Businesses can still request a waiver from the electronic filing requirement for undue hardship, using Application for a 
Waiver From Electronic Filing of Information Returns. 

                                                    SS                              A / I R S  R E P O R T E R • Second Quarter 2023
                                                                                    PAGE    2

The IRS grants these waivers on a case-by-case basis   – rather than on a                                        per-filer basis – to   allow the agency to address  
differences in filing requirements.  

The IRS must consider the taxpayer’s ability to comply  at a reasonable cost with the regulations’ requirements. To 
determine the reasonable cost, the  IRS requires taxpayers to provide two estimates of the costs incurred when converting  
to electronic filing. The final regulations have been modified to read: 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.  

IRIS  available for  filing  Form 1099  
The IRS opened its new 1099 filing portal, the Information Returns Intake System. IRIS is a free electronic filing service 
that can be used by businesses that have completed an application and received their IRIS Transmitter Control Code from 
the IRS.  

IRIS is available to all businesses, but the portal may be especially helpful to small businesses that file Forms 1099 on 
paper. IRIS accepts Forms  1099 only for tax year 2022 and later.  

Prepare now for new reporting threshold                                                     for Form 1099-K 
        New reporting threshold for Form 1099-K, payment card and third party network transactions, will start in tax  year  
2023. Make sure you are keeping good records.        

Find  out why you  might receive a Form 1099-K. More information available at                                           IRS.gov/1099k   . 

IRS issues memo on                valuating digital assets 
        The IRS released a Chief Counsel Advice memorandum that provides a closer look at how the IRS is 
approaching digital assets This memo addresses the requirement for a qualified appraisal for a charitable contribution 
deduction and provides a broader look into how the IRS definition of digital assets is evolving. 

Defining  digital assets  
The IRS previously defined digital assets as convertible virtual currency and cryptocurrency, Notice 2014-21, 2014-16 IRB 
938; Rev. Rul. 2019-24, 2019-44 IRB  1004   . 

Notice 2014-21 states that convertible virtual currency should be treated  as property and that general tax principles  
applicable to property transactions would apply.  

Rev. Rul. 2019-24 defines  cryptocurrency as a type of virtual currency that uses cryptography to secure transactions that 
are digitally recorded on a distributed ledger, such as a blockchain. Cryptocurrency units are generally referred to as coins 
or tokens. The distributed ledger technology uses independent digital systems to record, share, and synchronize 
transactions. These transaction details are recorded in multiple places at the same time, and there is no central data store 
or administration functionality.  

The Infrastructure Investment and Jobs Act that defines a digital asset for purposes of information reporting by brokers 
effective January 1, 2023.  Digital assets are defined in §6045(g)(3)(D) as “digital representations of value that are 
recorded on a cryptographically secured distributed  ledger.”   

                                                    SS                              A / I R S  R E P O R T E R • Second Quarter 2023
                                                                                    PAGE    3

The Taxpayer Advocate                    Service advocates for                                             businesses 
         The Taxpayer Advocate Service (TAS) is an independent organization within the IRS that ensures every taxpayer 
is treated fairly and understands their rights. Every year, TAS helps thousands of people and businesses with tax 
problems. Whether an organization   is trying to retain the nonprofit status or having EIN challenges, TAS’s                                    suite of 
business resources dedicated to challenges faced by businesses may be the help needed.                                              Learn more about TAS and its 
role as the voice of the taxpayer.  

Employee Retention  Credit  
         The Employee Retention Credit is a refundable tax credit for businesses that continued paying employees while 
shut down due to the pandemic or who had significant declines  in gross receipts.  
Eligible taxpayers can claim the ERC on an original or amended employment tax return during a qualifying period. 
To be eligible for the ERC, employers must have: 

   •	    sustained a  full or partial suspension of operations due to  orders from an appropriate governmental authority  due 
         to COVID-19 during 2020 or the first three quarters of 2021, 
   •	    experienced  a significant decline in gross receipts during 2020 or a decline in gross receipts during the first three 
         quarters of 2021, or 
   •	    qualified as a recovery startup business for the third or fourth quarters of 2021. 

Eligible employers can't claim the ERC on wages that they reported as payroll costs in obtaining Paycheck Protection 
Program  loan forgiveness or that they used to claim certain other tax credits.  
Qualifying for Employee Retention Credit 
The ERC is a refundable tax credit for businesses who continued paying employees while shut down due to the pandemic 
or who had significant declines in gross receipts.  
Eligible taxpayers can claim the ERC on an original or amended employment tax return during a qualifying period. 
To be eligible for the ERC, employers must have: 

   •	    sustained a  full or partial suspension of operations due to  orders from an appropriate governmental authority  due 
         to COVID-19 during 2020 or the first three quarters of 2021, 
   •	    experienced   a significant decline in gross receipts during 2020 or a decline in gross receipts during the first three 
         quarters of 2021, or 
   •	    qualified as a recovery startup business for the third or fourth quarters of 2021. 

Eligible employers can't claim the ERC on wages that they reported as payroll costs in obtaining Paycheck Protection 
Program  loan forgiveness or that they used to claim certain other tax credits.  
Avoiding ERC Scams  
The IRS continues to report third parties aggressively promoting Employee Retention Credit schemes. 
Filers should carefully review the ERC guidelines before claiming the credit and be wary of offers promising tax savings 
that are too good to be true.  
Many of these scams induce ineligible people to file a claim for the credit while charging the filer either large upfront fees 
or a fee that is contingent on the amount of their refund. 
The IRS has been warning about these schemes since last fall, but there continue to be attempts to claim the ERC made 
by ineligible filers. This is a valuable credit for those who qualify but claiming it improperly could result in taxpayers having 
to repay the credit along with potential  penalties and interest.  

                                                SS                              A / I R S  R E P O R T E R • Second Quarter 2023
                                                                                PAGE    4

Reporting ERC fraud  
Employers can report illegal tax-related ERC claims and activities by submitting a completed Form 14242, Report 
Suspected Abusive Tax Promotions or Preparers and any supporting materials to the IRS Lead Development Center in 
the Office of Promoter Investigations.  
Employers should also report instances of fraud and IRS-related phishing attempts to the IRS 
at  phishing@irs.gov  and  Treasury Inspector General for Tax Administration    at 800-366-4484.  

                                                                                                       SSA/IRS Reporter is published quarterly,   by the IRS Communications Office. 
                                                                                                                                Comments  may be sent   to Ron Bickerstaff   ,
                                                                                                                                Editor,  Ronald.Bickerstaff@irs.gov  
                                                                                                                            and Horis Carlton, Editor, Horace.Carlton@irs.gov 

                     Publication 1693 (Rev. 4-2023) Catalog Number 15060W Department of the Treasury Internal Revenue Service www.irs.gov