“To amend the Internal Revenue Code of 1986 to improve the electronic filing process for employment taxes.”
No CRS summary available for this bill.
This section states the sense of Congress that (1) businesses and their third-party representatives should be able to file all employment tax forms and schedules, including amended returns, electronically; (2) the current prevalence and reliance on paper by both the Internal Revenue Service and private sector businesses for quarterly and annual employment tax return filings is not sustainable and must be addressed immediately; (3) the obstacles to electronic filing are both structural and behavioral; and (4) the Internal Revenue Service must streamline the process for filing employment returns electronically, making it as easy and efficient as possible, while the internal revenue laws must incentivize the use of electronic filing to help rapidly overcome longstanding taxpayer behaviors.
This section directs the Internal Revenue Service, not later than one year after enactment, to (1) make available to employers a fully automated electronic process for satisfying all filing and payment requirements—including amended returns—for taxes imposed under subtitle C of the Internal Revenue Code (i.e., employment taxes); (2) prioritize availability of such process for Form 941-X (adjusted employer’s quarterly federal tax return or claim for refund); and (3) implement necessary technical and business changes to ensure the process is fully automated on the front- and back-end and that electronic filing is the most convenient and efficient means of compliance.
This section establishes an electronic filing credit of $1,000 against applicable employment taxes (i.e., employer-share FICA taxes under IRC §3111(a)-(b) and equivalent railroad retirement taxes under IRC §3221) for employers required to file quarterly returns of subtitle C taxes. The credit applies (1) to the first calendar quarter for which both the return and payment are made electronically and (2) to one such calendar quarter elected by the employer in the following calendar year. The credit is limited to the employer's applicable employment taxes for the quarter (with excess carried forward to the next quarter); however, it is recaptured (increasing taxes by the credit amount) if the employer subsequently fails to file and pay electronically, with no further credits allowed (except in cases of extraordinary circumstances such as lack of broadband access or emergencies, or for third-party providers filing 99% of returns electronically). The credit excludes governmental entities (except certain §501(c)(1) organizations) and aggregates related employers under specified controlled-group rules. The provision applies to calendar quarters beginning after enactment.
This section establishes a $250 user fee for each paper submission of quarterly or annual returns required for taxes imposed by IRC chapter 21 (i.e., Federal Insurance Contributions Act [FICA] taxes on employers and employees) or chapter 23A (i.e., railroad unemployment repayment tax). The Secretary of the Treasury must grant exceptions where electronic filing is not feasible—including for employers not required to file quarterly returns, first and second paper filings (with notification of electronic requirement), those lacking broadband access due to rural or geographic barriers, emergencies causing hardship, recent identity theft or cybercrime victims, or other cases specified in regulations—and exempt third-party providers (e.g., payroll services) that electronically filed at least 99% of such returns in the prior year. The fee applies to returns for periods ending more than two years after enactment.