More on Electronic Filing of 1099 Requirements

On December 29, we posted regarding the new requirement to electronically file Form 1099 for the 2023 year.  Beginning with this filing season, the IRS has mandated that taxpayers filing 10 or more information returns of any type, but primarily W-2 and 1099, must do so electronically.  Several of our large business and cooperative clients have run into an additional hurdle to overcome.

Those taxpayers that had previously filed their 1099s using the online FIRE system, must obtain a new Transmitter Control Code (IR-TCC).  The TCC is a five-digit alphanumeric code which identifies an authorized transmitter of information returns to the IRS online FIRE filing system.   For any TCC issued before September 26, 2021, taxpayers must have taken action in IR-TCC prior to August 1, 2023 to transition to the new secure access program to validate their identity.   If no action was taken a new TCC must be obtained.

The primary problem is that it can take some time to obtain your new TCC.  In fact per the IRS’ website, it can take up to 45 days.  Those clients who have dealt with this issue already have noted that the timeline to get the code has not been excessive.  However, as we run up on the deadline, it may be time to consider Plan B.  ONLY 1099 NEC forms are due to the IRS by January 31.  Thus, those are the primary concern at this point.  If you are not going to get your code, you may have to use another online program or contact your tax preparer to use their system and electronically file.  Other Form 1099s (MISC, PATR, etc) must be mailed to the recipient by January 31, but if they are electronically filed DO NOT have to be filed with the IRS until March 31.

As we approach the end of the month, if you do not have your TCC get it as soon as possible.  Then, work on a plan to get your NEC forms filed.  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.  You have time to get the other 1099 forms to the government, but do not wait to issue copies to your patrons or lessors.