Form 1099: IRS Update Will Help You Prevent Glitches When E-Filing

The IRS has updated its specs for e-filing Form 1099. If you’re using any independent contractors, you’ll need this info as you head into year-end.

This latest round of updates was contained in Publication 1220.

The publication contains pertinent details for e-filing more than just Form 1099. You’ll also want to get up to speed with the specs for the following returns:

• 1097
• 1098
• 3921
• 3922
• 5498, and
• W-2G.

The section titled “What’s New for Tax Year 2024” lists five changes. Here’s a recap.

5 Changes for E-Filing

First, the IRS reviewed the recently revised regulations that mandate e-filing.

Publication 1220 includes an example of how forms filed through different platforms can add up to 10 returns, which is the threshold for required electronic filing. You might have only one independent contractor working at the company, but when you combine that person’s Form 1099 with other relevant returns, you can quickly meet the e-filing threshold.

Second, as explained in the publication, starting in tax year 2024 if you need more time to send copies of statements to recipients, you can use Form 15397, Application for Extension of Time to Furnish Recipient Statements. That form allows you to request a one-time, 30-day extension.

Note: If you need more time to file with the IRS, use Form 8809, Application for Extension of Time to File Information Returns.

Third, when you file your returns electronically, you should keep copies of file status emails and the associated files for the information returns for three years from the due date. In two situations, the document retention period is four years, as Publication 1220 spells out.

Having the information you need to interact with the IRS is crucial.

Fourth, the IRS notes that the test system has a limit. It’s 125 test files per year.

Note: The IRS currently has two platforms running for the electronic filing of information returns. They are:

• Filing Information Returns Electronically (aka FIRE), and
• Information Returns Intake System (aka IRIS).

Fifth, one state has a new code for combined federal/state filing (CF/SF). The code for Rhode Island is 44.

Here’s the complete list of codes for states participating in the CF/SF program:

• Alabama 01
• Arizona 04
• Arkansas 05
• California 06
• Colorado 07
• Connecticut 08
• Delaware 10
• District of Columbia 11
• Georgia 13
• Hawaii 15
• Idaho 16
• Indiana 18
• Kansas 20
• Louisiana 22
• Maine 23
• Maryland 24
• Massachusetts 25
• Michigan 26
• Minnesota 27
• Mississippi 28
• Missouri 29
• Montana 30
• Nebraska 31
• New Jersey 34
• New Mexico 35
• North Carolina 37
• North Dakota 38
• Ohio 39
• Oklahoma 40
• Pennsylvania 42
• Rhode Island 44
• South Carolina 45
• Wisconsin 55

Other Form 1099 Developments

In addition to releasing the e-filing specs, the IRS also issued the requirements for preparing substitute versions for paper forms, such as Form 1099-MISC, 1099-NEC and similar information returns.

Those details can be found in the July 2024 revision of Publication 1179, General Rules and Specifications for Substitute Forms 1096, 1098, 1099, 5498, and Certain Other Information Returns.

Dozens of forms are covered by the specs found in Publication 1179.

In the “What’s New” section of the publication, the IRS stated it’d removed the filer copy and the instructions for the filer on the forms. It’s part of an effort to reduce filer burden.

Also, the form exhibits — that you can view at the end of the publication — include 2024 versions of the forms. There are dozens of forms. One example is Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding.

Caution: The IRS provided a reminder not to mix e-filing and paper filing.

If you e-file, don’t file the same returns on paper, the IRS said.