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1099s: IRS FIRE System Adding Greater Security

IRS Adds Multi-factor Authentication

As is widely known, organizations with 250 or more 1099s must file them electronically. To do so, they first must register on the IRS FIRE (Filing Information Returns Electronically) System site and apply for a Transmitter Control Code (TCC), which is necessary to file 1009s and other tax forms via the FIRE System. To obtain a TCC, they complete IRS form 4419.

Now, the IRS is adding greater security to its Information Return Application TCC. The improved security will involve multi-factor authentication (MFA). The IRS plans to deploy the new system on September 26th of this year for new registrants. It’s a result of the 2019 Taxpayer First Act, which requires the IRS to improve its taxpayer service and modernize its technology, including greater security.

In the FIRE application process, new registrants will have to authenticate their identities as they create a new account through the IRS Secure Access Account. Then, they access the Information Returns (IR) Application for TCC. The new application for a TCC replaces IRS form 4419. Keep an eye on IRS.gov and fire.irs.gov.

Initially, this newly added layer of security is only for new registrants. However, existing registered filers will gain enhanced protection next year. The current plan is to move existing filers to the more secure system in the fall of 2022. They will have to validate their identities through the IRS Secure Access process, then will to create new usernames and passwords for the IR Application for TCC.

Change to the 250 Threshold for E-Filing?

In another move, the IRS also recently proposed regulations lowering the threshold for e-filing tax forms. The e-filing threshold would move from 250 forms to 100 for the calendar year 2022, then down to ten for returns filed after 2022.

According to a report in Accounting Today, in 2019, 30 percent of all 1099-MISC forms were filed on paper. But the IRS is having trouble handling its work volume, particularly paper filings. Converting more paper forms to electronic format is in line with the Taxpayer First Act of 2019. Mid- and large-size organizations generally have been well above the 250 forms threshold. The change will primarily affect smaller businesses.

To keep abreast, check out InvoiceInfo.com. And to learn how to easily and securely collect W-9s and W-8s to ease your 1099 payment reporting, contact us.

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