Breaking: IRS Removes Washington DC and Pennsylvania from CF/SF

In a surprise QuickAlerts announcement, the IRS has stated that there is an error in Publication 1220 and that DC and PA should not be listed among the states that participate in combined federal/state filing or CF/SF.

From the QuickAlert:

“The current version of Publication 1220, (rev. 10-2022) Specifications for Electronic Filing of Forms 1097, 1098, 1099, 3921, 3922, 5498, and W-2G, contains incorrect information. Part A Sec. 12 Combined Federal/State Filing (CF/SF) Program – Removed District of Columbia (11) and Pennsylvania (42) from Table 1: Participating States and Codes. District of Columbia and Pennsylvania were prematurely added to Publication 1220 and won’t be participating in the Combined Federal/State Filing (CF/SF) Program until Tax Year 2023.”

IRS QuickAlert -1/19/2023

The good news is that any employer, transmitter or software provider that have made changes to accommodate the CF/SF codes can shelve these changes until next year when this is expected to go into production. The announcement makes sense in that Pennsylvania has not provided guidance for this year with regard to whether direct state filing is required for 1099s.

Considering Pennsylvania is one of the few states that has a proprietary format for filing direct to state, we are hopeful participation in CF/SF will simplify reporting and that there will be some clarity around whether direct to state reporting is required for Tax Year 2023.

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.

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