Hardship Waivers for Form 1042 Electronic Filing — Key Considerations

With the IRS's continued emphasis on electronic filing, withholding agents required to file Form 1042 electronically may need to evaluate whether a hardship waiver is appropriate in limited circumstances.

As noted in Issue Number 2026-03 (released January 27), a withholding agent may request a waiver from the electronic filing requirement. The request must be submitted before March 16 (since March 15 is a Sunday) and may be sent via fax, delivery service, or standard mail. See Requesting a waiver from the electronic filing requirement of Form 1042 for explicit details.

What the IRS Expects in a Waiver Request

A hardship waiver request is not automatic and must be well-supported. At a minimum, the submission should address:

1. Efforts to Comply — The withholding agent should outline the actions already taken to meet the timely filing requirement, including attempts to prepare for or transition to electronic filing.
2. Future Compliance Plan — The request should explain how the organization intends to comply with the electronic filing mandate going forward. This demonstrates that the hardship is temporary rather than a permanent avoidance of the requirement.
3. Explanation of Undue Hardship — The withholding agent must clearly describe the specific hardship preventing electronic filing for the current filing season. General inconvenience is insufficient — the explanation should be factual and concrete.
4. Incremental Cost Analysis — The IRS expects detail regarding the additional costs associated with electronic filing. The request should quantify those incremental costs and explain why they rise to the level of undue hardship.

Practical Considerations

Waiver requests must be submitted in advance of the March 15 deadline. Organizations facing legitimate operational or financial barriers should ensure their submission clearly documents both current constraints and a roadmap to future compliance.