Global compliance technology solutions and services provider Sovos has been approved by the IRS as a Modernized e-File (MeF) Business Provider for 1042 returns, in compliance with updated IRS e-filing requirements.
Starting with tax year 2023 filings and beyond, financial institutions or businesses filing 10 or more information returns can no longer submit Form 1042 on paper, making e-File the only acceptable option. Sovos has launched a HUB page that further clarifies the issues and provides guidance to organizations facing this change.
These new requirements hold significant implications for the wider tax information reporting industry including increased risk for failure to file the annual 1042 timely. By failing to file timely this may lead to penalties along with a Tier One audit focus from the IRS. While some e-commerce providers already offer options for electronically filing 94x form series, most have yet to receive IRS approval to file Form 1042 electronically. As of tax year 2022, Sovos now stands as one of the first providers approved for 1042 MeF filings.
“The switch to requiring e-File only for 1042 has flown under the radar a bit but is about to become a big concern for businesses needing to file their returns,” said Steve Sprague, chief product & strategy officer, Sovos. “The process for registering to file your own returns is a lengthy and arduous one and most organizations are already behind in the process. Using Sovos to file 1042 returns is the most seamless and efficient way to ensure compliance with IRS standards.”
Sovos’ technology suite and industry expertise enable businesses to confidently navigate the ever-changing landscape of regulatory requirements. Although the new electronic filing requirements do not require 94x returns to be filed electronically, Sovos leverages its advanced technology and expertise for electronic filings for all federal withholding tax returns.
“The industry has been grappling with the challenges posed by electronic filing requirements, particularly for 1042 returns,” said Wendy Walker, solution principal, Sovos. “With Sovos’ approval as an IRS Modernized e-File Business Provider, we emerge as the go-to solution for businesses seeking comprehensive tax filing services. This solidifies our commitment to excellence and underscores the trust our clients can place in us.”