IRS aims to cut back on some 1099 paperwork with new portal
The Internal Revenue Service is trying to trim back its paperwork by introducing a new online process for how small businesses can create 1099 forms from scratch and file those forms to the IRS completely electronically.
The IRS says its new online portal, which is available for free, requires no special software and provides alerts about potential mistakes in the process. It's likely to be used by small-volume paper filers that don't generate many 1099s.
Taxpayers need to keep an eye out for 1099 forms that report their income earned in 2022, if they've picked up work as an independent contractor, freelancer or doing gig work.
A 1099-NEC is issued when a company pays a freelancer or contract worker who is not on the regular payroll as an employee during the year. The NEC stands for "nonemployee compensation."
IRS officials said this new system also can be used by businesses when they submit 1099s to report interest or dividends that have been paid, as well as for the 1099-MISC form, which reports payments other than nonemployee compensation made by a trade or business to others.
Peter Mills, senior manager for Tax Policy & Advocacy with the American Institute of CPAs, said broader e-filing capabilities from the IRS are essential and have been advocated by accountants for years.
The online portal should reduce preparation time by businesses and processing time by the IRS, he said. It will be be particularly helpful to smaller businesses that currently send their 1099 forms on paper to the IRS.
"Eliminating paper will be particularly important as IRS continues to draw down its processing backlog of returns, correspondence and adjustments," Mills said.
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The online system is known as the "Information Returns Intake System" or IRIS.
Most filers who apply to use the system can go through the process fairly quickly, according to the IRS, possibly within just a few days, this tax season.
“The IRS is excited to offer any business, especially small companies, a great new way to electronically file their 1099s for free,” IRS Acting Commissioner Doug O’Donnell said in a statement.
O'Donnell stressed that the system can help reduce the millions of paper 1099s that the IRS expects will be filed in 2023.
The IRS said: "Filers can use the platform to create, upload, edit and view information and download completed copies of 1099-series forms for distribution and verification." Also, corrections by businesses also can be made in the system as necessary.
Currently, the IRIS system accepts Forms 1099 only for tax year 2022 and later.
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This article originally appeared on Detroit Free Press: IRS aims to cut back on some 1099 paperwork with new portal