IRS poised to allow e-filing of Form 941-X

The IRS and the National Taxpayer Advocate have been going at each other hammer and tongs over the mountains of paper forms the agency still processes. The NTA, for example, has suggested placing bar codes on paper forms to speed the process, which the IRS has roundly rejected, even though the Social Security Administration allows bar codes on W-2s.

However, after years of digging out of pandemic-related paperwork, the IRS may just have had a eureka moment.

What’s ahead for paperless filing

You can still file on paper, if you choose. The IRS, however, will not process your paper return as it has been—by painstakingly transcribing the figures on your return into a computer. Earlier this year, it kicked off a new scanning process for Form 940.

But scanning still entails an IRS employee touching paper.

The IRS’ paperless initiative takes this one step beyond scanning payroll returns. It says by next winter’s filing season, you should be able to e-file Forms 941-X and 945-X and amended Form 940. This should speed up your tax refunds considerably.

Payroll Handbook D

According to draft versions of Forms 8453-EMP and 8879-EMP, sometime next year (without more detail) the IRS will make amended payroll returns available through Modernized e-File. MeF accepts files in the XML format only.

Presumably, the e-filing process for amended returns will follow the procedure for e-filing your 941s. You can e-file your 941s directly with the IRS after purchasing IRS-approved software and scanning and attaching Form 8453-EMP. Or you can allow an IRS-authorized e-file provider to do it for you by completing Form 8879-EMP.

Also coming to a smartphone near you: The IRS says you should be able to file amended payroll returns through your smartphone beginning next year. You might want to think twice about this option, however, since smartphones aren’t nearly as secure as computers.

Digital communications

The IRS receives about 125 million pieces of correspondence, notice responses and nontax forms each year and has only a limited capacity to accept those forms digitally.

Back in May at PayrollOrg’s annual Congress, Paul Mamo, assistant deputy commissioner for Services and Enforcement, commented on the IRS’ electronic initiatives, including a document upload tool and online accounts.

The IRS has made good on the upload tool. By the 2026 filing season, the IRS says all paper documents—correspondence, nontax forms and notice responses—will be processed digitally.

Is filing on paper really more secure than e-filing?

For understandable reasons, the IRS doesn’t disclose how many times a day its computer systems are subject to hacking and phishing attempts. Speculating can only make you anxious and makes going back to paper filing seem reasonable.

The IRS is like any giant business with offices around the country. Sometimes it has to ship paper returns from one campus to another. And this is a problem, according to the Treasury Inspector General for Tax Administration.

TIGTA reports the IRS isn’t including the required tracking document, Form 3210, with these packages. The IRS has agreed to take these steps:

  • It will remind employees to include the form with shipments of large volumes of tax information.
  • It will issue a notice to remind employees to include the taxpayers whose information is shipped on the form.
  • It will send periodic emails to the Submission Processing Files functions to ensure Form 3210 reviews are being performed.
  • It revised its data breach response plan to reflect that lost shipments associated with a business aren’t automatically categorized as low risk.