Time-Sensitive Update: Potential Issues E-filing Form 1099 by January 31
New IRS Requirement Regarding E-filing Forms W-2 and 1099
On December 18, 2023, we published New Rules for Filing Forms W-2 and 1099 to explain new IRS regulations concerning the electronic filing of certain tax information returns.
To recap, starting this filing season, the IRS mandates that taxpayers filing 10 or more information returns of any type, primarily W-2 and 1099, must do so electronically.
Possible Difficulty Using the Online “FIRE” System
Reports have emerged that some taxpayers are encountering problems complying with the new rules. This issue may be most prevalent among taxpayers who had previously filed their 1099s using the online "File Information Returns Electronically" (FIRE) system and must now obtain a new Transmitter Control Code (IR-TCC). The TCC is a five-digit alphanumeric code that identifies an authorized transmitter of information returns to the IRS through the online FIRE filing system.
For any TCC issued before September 26, 2021, taxpayers must have acted on the IR-TCC before August 1, 2023, to transition to the new secure access program and validate their identity. If no action was taken, a new TCC must be obtained. The primary problem is that obtaining a new TCC can take some time. In fact, according to the IRS website, it can take up to 45 days.
Taxpayers who have dealt with this issue already have noted that the timeline to obtain the code has not been excessive. However, as the January 31 filing deadline approaches, if you need but have not received your IR-TCC, it may be time to consider an alternative plan to electronically file required tax information forms.
Note that ONLY 1099 NEC forms are due to the IRS by January 31, making those the primary concern at this point. Other Form 1099s (MISC, PATR, etc.) must be mailed to the recipient by January 31, but if they are electronically filed, they DO NOT have to be filed with the IRS until March 31.
What Are the Alternatives?
If you are not going to get your IR-TCC in time, you may have to use another online program to electronically file the required information returns. Please see this blog article Important: 2023 Federal Form 1099 reporting if you have or wish to have Herbein assist in electronically filing your tax information forms with the IRS and complete the template using the link in the article. Also, let your Herbein advisor know if Herbein is merely uploading the data that you have checked and verified OR if you want Herbein to check and verify the information. Finally, as part of the process, you will need to sign an authorization form allowing Herbein to electronically file the forms on your behalf.
The January 31, 2024 deadline for electronically filing Form 1099-NEC is less than a week away.
Therefore, it is important to work on a plan to get your Form 1099-NEC forms filed now. Penalties are up to $310 per individual return, so if you issue 20 1099 NECs and are late, your penalty could be as high as $6,200. Also, you have time to get the other 1099 forms to the government, but do not wait to issue copies to your patrons or lessors.
If you have questions regarding this article or using Herbein to electronically file your 1099-NEC forms, contact Kim Vandergrift or Lindsey Akers from the Herbein ODAAS team.
Article contributed by Barry D. Groebel
