Great news! The IRS has introduced IRIS (Information Returns Intake System), an easy-to-use online platform for free filing of 1099s with the IRS and your state. It lets taxpayers electronically file their Form 1099 series without any fees, and there’s no need to submit Form 1096, the usual summary of your 1099s, when using IRIS.
Source: IRS Publication 5717
- Enablement of Electronic Preparation and Filing: The system facilitates the electronic preparation and filing of Forms 1099 series at no cost for service providers or software purchases. Users can input data through manual entry or by uploading a .csv file.
- Download and Distribution: Users have the ability to download and print the recipient copy (copy B) of Forms 1099 for distribution to payees.
- Record Maintenance: The system maintains comprehensive records of completed, filed, and distributed Forms 1099, providing a convenient reference.
- Error Reduction Measures: Prior to submission, the system conducts basic validation checks on data, contributing to a potential decrease in errors.
- Bulk Filing Capability: Each submission allows for the filing of up to 100 forms, streamlining the process for users handling multiple forms.
- Combined Federal-State Filing Program (CF/SF): This feature enables users, where applicable, to fulfill state reporting requirements within the system for specific states.
- Other significant features include the system’s ability to ask for extensions automatically and to submit specific corrected returns if needed.
Who must e-file?
In February 2023, the IRS implemented significant changes to electronic filing requirements, effective from 2024 onward. Formerly, filing electronically was mandatory only if you had to submit 250 or more returns of a similar type (e.g., 1099s, Forms W-2). However, the new regulations have drastically decreased this threshold from 250 to 10 returns.
Yes, you read that correctly – 10 returns now constitute the threshold. This marks a substantial reduction. If you file 10 or more returns in 2023, electronic filing is compulsory. Notably, the new threshold considers the combined total of all your returns. For instance, if you have 5 W-2s and 5 1099-NECs, totaling 10 information returns, electronic filing becomes mandatory.
To clarify, using the IRIS portal for e-filing is not obligatory. You still have the option to use your existing software or opt for payroll companies for filing, as before. However, with e-filing becoming more of a requirement, the IRS now offers the IRIS portal as a free alternative.
Who can participate?
Basically, any entity with an Employer Identification Number (EIN) that requires filing Forms 1099 can now electronically file via IRIS starting from the 2022 calendar year and beyond. The IRIS portal accommodates all 1099 forms, including the popular 1099-MISC and 1099-NEC forms.
How to set up access to this portal?
- Visit www.irs.gov/iris.
- Click on the “Sign in to IRIS” button under “What you Need.”
- Sign in or create an account to start the application process. Note: A responsible official from your company needs to initiate and submit the IRIS Application.
- Complete and submit an IRIS Application for Transmitter Control Code (TCC). This code identifies you (the transmitter). It’s a requirement for anyone filing returns electronically.
- Once your application reaches “Complete” status and TCCs are issued, access the Taxpayer Portal to submit information returns.
It’s essential to note that the processing of applications may take up to 45 calendar days. For those planning to use this system in the upcoming tax season, it’s recommended to initiate the TCC application as soon as possible (right now!). The deadline for e-filing most 1099 Series forms falls on March 31, while 1099-NEC forms must be e-filed by January 31. Considering these approaching dates, starting the application now is highly recommended.
Once individuals acquire their TCC, accessing the portal becomes straightforward. Upon login, users will encounter the dashboard, presenting choices to upload a CSV file or manually input their 1099 form details. Detailed guidelines for utilizing the portal can be found in IRS Publication 5717.
Combined Federal-State Filing Program (CF/SF)
Approximately 30 states engage in this program, allowing individuals to report withholdings and payments for a maximum of two states within the portal. You can find the comprehensive list of participating states on page 15 of IRS Publication 5717.