To the surprise of many tax practitioners, the IRS recently announced an extension to the exemption for domestic withholding agents to file Form 1042 electronically.
According to Notice 2024-26, published in February 2024, domestic and foreign withholding agents were exempt from the requirement to e-file Form 1042, “Annual Withholding Tax Return for U.S. Source Income of Foreign Persons,” for the 2023 tax year, filed in calendar year 2024. This exemption was initially extended to the 2024 tax year for foreign withholding agents only, but it has since been extended to domestic withholding agents as well.
At a conference hosted by the Tax Reporting Group in Arlington, Virginia, on May 6, many tax professionals expressed surprise when Subin Seth of the IRS Office of Associate Chief Counsel (International) mentioned the extension of e-filing relief for domestic withholding agents in tax year 2024.
Seth noted that the IRS had posted an update about the extension on the Form 1042 website in March 2025. However, they did not issue an official Notice, which is their typical procedure for announcing such extensions. As a result, many U.S. withholding agents were unaware that they could have filed a paper Form 1042 for tax year 2024.
Others who have filed an extension to file their Form 1042, pushing the date from March 15 to September 15, should note that they now have the option to file a paper form.
This news comes as a relief for many withholding agents, some of whom had previously reported to the IRS that they faced implementation challenges with e-filing, as noted in Notice 2024-26.
To learn more about Form 1042 or other tax matters, please connect with us.
© Copyright CBIZ, Inc. All rights reserved. Use of the material contained herein without the express written consent of the firms is prohibited by law. This publication is distributed with the understanding that CBIZ is not rendering legal, accounting or other professional advice. The reader is advised to contact a tax professional prior to taking any action based upon this information. CBIZ assumes no liability whatsoever in connection with the use of this information and assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein. Material contained in this publication is informational and promotional in nature and not intended to be specific financial, tax or consulting advice. Readers are advised to seek professional consultation regarding circumstances affecting their organization.
“CBIZ” is the brand name under which CBIZ CPAs P.C. and CBIZ, Inc. and its subsidiaries, including CBIZ Advisors, LLC, provide professional services. CBIZ CPAs P.C. and CBIZ, Inc. (and its subsidiaries) practice as an alternative practice structure in accordance with the AICPA Code of Professional Conduct and applicable law, regulations, and professional standards. CBIZ CPAs P.C. is a licensed independent CPA firm that provides attest services to its clients. CBIZ, Inc. and its subsidiary entities provide tax, advisory, and consulting services to their clients. CBIZ, Inc. and its subsidiary entities are not licensed CPA firms and, therefore, cannot provide attest services.