Introduction On July 23, 2021, the IRS issued a notice, REG–102951–16, that includes proposed amendments to the rules for the electronic filing of withholding tax returns. The amendments reflect changes made by the Taxpayer First Act of 2019 (TFA). Under these proposed regulations, a new section under IRC section 6011(e) will be added, Treas. Reg. sec. 301.6011- 15, that will require electronic filing of Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons, for certain withholding agents that meet the specified criteria within the regulations. In addition, the regulations will amend Treas. Reg. sec. 301.1474-1 to require withholding agents that are financial institutions to file Form 1042 electronically. See IRS.gov/form1042 for latest information about developments related to Form 1042 and its instructions, including developments regarding the electronic filing of Form 1042. What's new The IRS now provides taxpayers the ability to file Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons, via Modernized e-File (MeF). The Modernized e-File (MeF) status page provides information about the availability of the MeF system for external use and the most current MeF system status. General information and resources About Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons International withholding issues toolkit About Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding U.S. withholding agent program About Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities Information for withholding taxes on how to participate in electronic filing Form 1042 schemas and business rules Process for e-file waiver coming soon: For tax year 2022, filing season 2023, it is not necessary to request a waiver of the requirement to file electronically if a Taxpayer cannot file Form 1042 electronically. A taxpayer can choose to file Tax Year 2022 Form 1042 electronically. If a taxpayer prefers to file electronically but needs additional time to become familiar with the XML schemas , consider requesting an extension to file Form 1042. See About Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns. Treasury regulations on required withholding tax e-file Section 6011(e), which was most recently amended by the Taxpayer First Act of 2019, enacted July 1, 2019, authorizes the IRS and Treasury to issue regulations that could require electronic filing of Form 1042 in certain cases. Once final regulations are issued additional guidance will be provided explaining the changes to the electronic filing rules. See IRS.gov/form1042 for recent developments regarding Form 1042.
