The Internal Revenue Service (IRS) regularly releases updates to its publications to provide clarity, modifications, and necessary changes that taxpayers, businesses, and professionals should be aware of. The IRS Publication 1220 has some crucial modifications for the Tax Year 2023. Let’s dive into these new 1099 filing changes and understand their implications:
Introduction of the IRIS Taxpayer Portal
The IRS launched a brand-new platform called the Information Returns Intake System (IRIS) Taxpayer Portal on January 23, 2023 for 1099 filing.
The IRIS platform offers a comprehensive solution for users to electronically file information returns and automatic extensions of time. The system provides a seamless experience where users can create, edit, view, upload forms, and even print recipient copies, all under one roof. This should streamline the Form 1099 filing process for many users.
One significant aspect to note is that the IRIS system will have its own Transmitter Control Code (TCC). Existing TCCs associated with the FIRE system are incompatible with IRIS. To avoid complications, users should ensure they don’t file copies of forms submitted in the FIRE system in IRIS to avoid duplications. You can learn more about IRIS 1099 filing on the official IRIS webpage.
E-filing Threshold Adjustments
On February 21, 2023, the IRS and the Department of the Treasury introduced final regulations that effectively reduced the threshold for electronic filing (e-file) of returns and other documents.
Beginning in January 2024 (for the Tax Year 2023 and beyond), any filer submitting 10 or more information returns TOTAL during a calendar year is mandated to e-file those returns. Additionally, if the original return was required to be submitted electronically, any corrected information returns also must be e-filed. However, these corrected returns won’t count towards the total when determining the need to e-file.
When determining if e-filing is required, filers must determine their total amount of the following form types:
- Form 1042-S
- Form 1094 series
- Form 1095-B
- Form 1095-C
- Form 1097-BTC
- Form 1098
- Form 1098-C
- Form 1098-E
- Form 1098-Q
- Form 1098-T
- Form 1099 series
- Form 3921
- Form 3922
- Form 5498 series
- Form 8027
- Forms W-2
- Form W-2G
Important Note: This updated e-filing form count threshold is for all filing types, not just 1099 filing.
The prior threshold stood at 250 returns. Additional details on these regulations can be found on the IRS and Treasury’s respective web pages on e-filing and the FIRE system.
Impact on Small Businesses and Freelancers
Given the significant reduction in the e-filing threshold from 250 returns to just 10, smaller businesses and freelancers may feel the impact the most. Many who previously relied on paper filing due to the higher threshold may now need to adapt to the electronic system.
It’s essential for these entities to familiarize themselves with the e-filing process, explore available platforms, and potentially seek guidance to ensure accurate and timely submissions. The introduction of the IRIS system, as mentioned earlier, could serve as a beneficial tool for these groups, making the transition smoother.
Additions to Part A. Sec. 5 – Additional Resources
The IRS has added the Information Returns Intake System (IRIS) and the Publication 5717 (IRIS Taxpayer Portal User Guide) for enhanced guidance on 1099 filing.
Expansion of the Combined Federal/State Filing Program
The Combined Federal/State Filing (CF/SF) Program saw the inclusion of the District of Columbia (42) and Pennsylvania (11) to its list of participating states. This change will have implications for filers from these states, making the 1099 filing process even more streamlined.
Clarifications on the Use of TCC
The IRS has provided further clarity regarding the Transmitter Control Code (TCC) usage in Part B. Sec. 1.
A TCC utilized to file forms such as 1097, 1098, 1099, 3921, 3922, 5498, and W-2G has a limit. It can only be used to submit up to 1,000 files per year. If users surpass this limit, they can request an additional TCC through the IR Application.
These updates are essential for taxpayers, professionals, and businesses as they prepare for their tax obligations in the coming year. Keeping abreast of these changes ensures smoother compliance and fewer complications during the filing season. With the nuances of tax compliance growing more intricate, using a dedicated platform like BoomTax can save time and avoid unnecessary complications. Whether you’re looking to e-file your 1099 forms, bulk import data, or just get clarity on the diverse 1099 forms and their respective requirements, BoomTax has you covered.
BoomTax, The Boom Post, and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors prior to engaging in any transaction.