Preparing for the IRS Transition to IRIS: What You Need to Know

The Internal Revenue Service (IRS) is phasing out its long-standing electronic filing platform known as the Filing Information Returns Electronically (FIRE) system. Starting with tax year 2026, all electronic filings of information returns such as Forms 1099, 1098, 1042-S, and 5498 must be submitted through a new system: the Information Returns Intake System (IRIS).

This change represents one of the most significant updates to the IRS’s electronic filing infrastructure in more than four decades. For businesses, tax professionals, and software developers, it’s not just a platform switch; it’s a complete transformation in how information is prepared, validated, and submitted.

What is IRIS?

IRIS is a modern electronic filing system designed to meet today’s data processing and compliance needs. Officially launched in January 2023, it aims to replace the outdated FIRE system by offering more robust, scalable, and accurate filing capabilities.

Unlike its predecessor, IRIS uses structured XML formats, real-time data validation, and offers an Application-to-Application (A2A) API for automated, high-volume filings. These features allow for greater accuracy, quicker error detection, and improved scalability for future IRS needs.

Key Goals of IRIS:

• Enhance data accuracy through schema-based submissions
• Accommodate both low- and high-volume filers
• Provide real-time acknowledgment and error feedback
• Build a scalable infrastructure for future enhancements

FIRE vs. IRIS: What’s Changing?

The transition from FIRE to IRIS isn’t just cosmetic. It brings fundamental changes in submission formats, validation procedures, and correction workflows. While FIRE used flat files based on IRS Publication 1220, IRIS relies on structured XML and real-time data checks. These improvements are intended to reduce errors and streamline the filing process.

Steps to Prepare for the Transition

To ensure a smooth switch to IRIS, businesses and tax professionals should begin preparations now. Here are the critical areas to focus on:

1. Select Your Filing Method

IRIS supports two primary modes of filing:

• Web Portal: Designed for small-volume filers. Users can upload CSV files or manually enter data.
• Application-to-Application (A2A) API: Suitable for high-volume filers who want to integrate directly with the IRS system using secure APIs.

To use the A2A method, organizations must apply for a new IRIS-specific Transmitter Control Code (TCC) and complete the Assurance Testing System (ATS) process to validate their integration.

2. Ensure Your Data is XML-Ready

IRIS uses a structured XML format, which requires more precise data input. Fields such as names, TINs (Taxpayer Identification Numbers), and addresses must adhere to specific formatting rules. Inaccurate or incomplete data can lead to immediate rejections or delays.

3. Prioritize TIN Matching

One of the biggest shifts with IRIS is real-time TIN validation. If the payer TIN does not match IRS records, the submission is rejected instantly. Recipient TIN mismatches can still be filed but will be marked as “Accepted with Errors,” which may lead to future penalties or notices. Verifying TINs before filing helps avoid these issues.

4. Understand the Correction Workflow

Unlike FIRE, where corrections were made using a separate flat file, IRIS assigns a unique Record ID to each submission. Corrections must reference this ID and resubmit the full corrected record. Importantly, returns submitted via FIRE must be corrected through FIRE, and those submitted through IRIS must be corrected via IRIS.

5. Learn the New Status Codes

IRIS introduces more detailed status messages compared to FIRE’s basic “Accepted” or “Rejected” responses. One notable status is “Accepted with Errors,” which means the form is on file but contains issues like formatting errors or TIN mismatches. These should be corrected promptly to avoid complications.

6. Account for State Filing Requirements

Even as IRIS becomes the standard for federal filings, many states will continue to require the 1220 flat file format for the near future. This means that organizations may need to manage filings in both formats during the transition period.

Looking Ahead: Why Early Preparation Matters

The IRS plans to make IRIS the exclusive electronic filing method beginning in 2027 for tax year 2026 returns. While that may seem far off, preparing early allows filers to adapt to new systems, test their data against stricter validation rules, and avoid last-minute surprises.

By understanding the requirements and planning your transition now, you can ensure that your filings remain accurate, compliant, and timely, no matter how the IRS evolves its technology in the years ahead. Learn more here:

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