Filing Information Returns Electronically (FIRE)

Filing Information Returns Electronically (FIRE), or the Internet filing is available until December 21, 2023. With the help of the Internet file transfer, you can now use payroll, commercial, or in-house developed software. This is to submit an XML file of up to 150 MB over the Internet.

Also, the Web Forms allows the user to complete a detailed return easily, by following step-by-step instructions.

Some advantages of using Web Forms are:

• The user can file up to 100 slips: original, amended, or canceled.
• To be able to create an electronic information return containing slips and a summary, that can be saved and imported at a later date within the Web Forms.
  • Note: Previously saved .wbf files cannot be imported into Web Forms.
• The Summary totals are also calculated for you.
• It also allows you to print your slips and your summary.
• The user can use the application to validate the data in real-time.

Read More : Process for Filing 1099s and 1096s in Sage 50

Reduction in the Electronic Filing Threshold Beginning Tax Year

2023-Calendar Year-2024

The Final regulations for the Taxpayer First Act, provision 2301, were issued on February 21, 2023, by the Department of the Treasury and the Internal Revenue Service. Treasury Decision (TD) 9972 puts into place the rules for filing returns and other documents electronically (e-file). These regulations help by reducing the 250-return threshold to generally require electronic filing by filers of 10 or more returns within a calendar year starting 2024, tax year 2023. However for tax year 2022, the number of returns stays at 250.

To determine if the user can meet the 10 or more threshold to electronically file, you need to:

• To be able to Identify how many information returns of any type are covered by TD 9972, the user needs to file during a calendar year.
• If 10 or more, the user MUST file electronically.

For Example: For the calendar year 2024, for the tax year 2023, filing season, Company W, is required to file 4 Forms 1099-NEC, Nonemployee Compensation, and 4 Forms 1099-DIV, Dividends and Distributions, 2 Form W-2, Wage Statement, for a total of 10 returns. As Company W is needed to file 10 returns as calculated during the calendar year 2024, for tax year 2023, filing season, Company W should electronically file all its tax year 2023, Forms 1099-NEC and 1099-DIV with the IRS, and Forms W-2 along with the Social Security Administration.

As a part of the threshold reduction, the correct information returns must be filed electronically if the original return has been submitted electronically. Corrected

information returns are usually not counted when calculating the aggregate to determine if you need to file electronically.

For Example. After electronically filing 10 Forms 1099-DIV and 1099-INT, Company W files 2 corrected Forms 1099-DIV and 4 corrected Forms 1099-INT. Because Company W electronically filed its original tax year 2023, Forms 1099-DIV and 1099-INT, Company W must electronically file its corrected tax year 2023, Forms 1099-DIV and 1099-INT.

In case you face a hardship that prevents you from complying with the threshold reduction, you can submit Form 8508, Application for a Waiver from Electronic Filing of Information Returns. If you are new to electronic filing, you might want to think about using the new 1099 Taxpayer Portal which provides a no-cost option for electronic filing of the Form 1099 series returns.

IR-TCC application for FIRE

The August 1, 2023, deadline to initiate the user’s application to claim your Transmitter Control Code- TCC that has been acquired before September 26, 2021, which is also known as a legacy TCC and has passed.

If you have not completed your application by the deadline:

• You might want to use your existing TCC to transmit or retrieve your Filing Information Returns Electronically (FIRE) System file status information for tax years 2021 and 2022, until November 26, 2023. You can take screenshots of your file status information to be able to retain your records.
• At the start of January 2024, you will no longer be able to electronically file by using your legacy TCC. However, there is an Exception: In case you are a non-U.S. customer filing Form 1042-S and are not able to complete your application by August 1, 2023, your Form 1042-S TCC will remain available for filing.
• The user has 90 days from the initial saved date to sign and complete an application that was saved by August 1, 2023. You should also request all form types required. If you delete a saved application to start over, you face the risk of your ability to claim your existing TCC(s).
• If you are a non-U.S. filer you need to check What are you required to do to complete an IR Application for TCC? To determine the requirements to complete an application.
• In case you own a large entity/government agency that comprises several offices, departments, divisions, and more, it is advised that you add a minimum of one Responsible Official (RO) from each group to provide equal access to the application for updates and authorized user changes. An application can have as many ROs as needed.
• If you determine your FIRE TCC information needs to be updated, complete your IR Application sooner rather than later to ensure you can communicate with the IRS, or update your existing IR Application for TCC.
• You must provide the legal business name, employer identification number (EIN), and TCC to all users who e-file information returns or need to access the FIRE system to support your business. Such information will be required to create the FIRE Account that will be associated with your business.
• The New filers who require a TCC for the FIRE system must complete an IR Application for TCC. You need to Allow at least 45 days for the processing to take place. IRS also offers another e-filing option for information returns, the Information Returns Intake System (IRIS). IRIS has two options available for the process of filing, both require separate TCCs. The first IRIS e-filing method is the Taxpayer Portal which allows issuers and transmitters of information returns to file free online directly with the IRS, without the requirement of special software. The second IRIS e-filing method is Application to Application (A2A), special software is required using Extensible Mark-up Language (XML) format. To use IRIS, you are required to complete an IRIS Application for TCC. You can also refer to IRS.gov/iris for further details.
• Both FIRE and IRIS need their own TCC, as these are not interchangeable.

What do you need to do to complete an IR application for TCC?

For this, you need to Validate your identity using the latest IRS authentication process if you have not already done so. The IRS now offers a sign-in option with ID.me, an IRS technology provider. ID.me is an account created, maintained, and secured with the help of a private technology provider.

Starting June 2, 2023, the IRS will no longer support the use of the existing IRS usernames to be able to access e-Services. If you do not have an ID.me account, you need to create a new account to access the service. 

The IR TCC application needs a Social Security number (SSN) or individual tax identification number (ITIN) for system access and individual authentication. The IRS is aware of foreign individuals who are acting on behalf of their foreign employer for, e.g., Foreign Entities, Foreign Financial Institutions, Qualified Intermediaries, and more. They might not be able to obtain an ITIN or SSN to complete the IR TCC application and continue to explore other ways for taxpayers to authenticate their identities, including a government-sponsored option. While the solution is being developed, existing non-U.S. entities with existing Form 1042-S TCCs will remain active and available. Keep in mind that no additional actions are needed at this time. 

It is at this transition period, that the non-U.S. entities with an existing Form 1042-S TCC will not be able to update the established TCC information. This will also not prohibit you from filing; nevertheless, you are required to continue accessing the FIRE system using the EIN, TCC, and legal business name as it is currently displayed on the FIRE system.

The user will also be prompted to create a 5-digit PIN to sign the application if you have not already done so. You can Complete the online application.

Note: Until the application is stuck in ‘Completed’ status, you need to select ‘Individual’ on the ‘Select Your Organization’ page.

What is an Information Return?

These are the returns that record other than tax returns that the IRS needs to document certain financial transactions.

The following forms can be filed electronically using the FIRE system.

• Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding
• Form 1097-BTC, Bond Tax Credit
• Form 1098, Mortgage Interest Statement
• Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes
• Form 1098-E, Student Loan Interest Statement
• Form 1098-F, Fines, Penalties and Other Amounts
• Form 1098-T, Tuition Statement
• Form 1098-Q, Payments from Qualified Education Programs (Under Sections 529 and 530)
• Form 1099-A, Acquisition or Abandonment of Secured Property
• Form 1099-B, Proceeds from Broker and Barter Exchange Transactions
• Form 1099-C, Cancellation of Debt
• Form 1099-CAP, Changes in Corporate Control and Capital Structure
• Form 1099-DIV, Dividends and Distribution
• Form 1099-G, Certain Government Payments
• Form 1099-INT, Interest Income
• Form 1099-K, Merchant Card, and Third Party Network Payments
• Form 1099-LS, Reportable Life Insurance
• Form 1099-LTC, Long-Term Care and Accelerated Death Benefits
• Form 1099-MISC, Miscellaneous Income
• Form 1099-NEC, Nonemployee Compensation
• Form 1099-OID, Original Issue Discount
• Form 1099-PATR, Taxable Distributions Received From Cooperatives
• Form 1099-Q, Payments from Qualified Education Programs
• Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. and IRA Contribution Information
• Form 1099-S, Proceeds From Real Estate Transactions
• Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA
• Form 1099-SB, Seller’s Investment in Life Insurance Contract
• Form 3921, Exercise of an Incentive Stock Option Under Section 422(b)
• Form 3922, Transfer of Stock Acquired Through an Employee Stock Purchase Plan Under Section 423(c)
• Form 5498, IRS Contribution Information
• Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips
• Form 8955-SSA, Annual Registration Statement Identifying Separated Participants With Deferred Vested Benefits
• Form 8596, Information Returns for Federal Contracts
• Form W-2 G, Certain Gambling Winnings
• The following forms are filed through the Affordable Care Act Information Return (AIR) system.
  • Form 1094-B, Transmittal of Health Coverage Information Returns
  • Form 1095-B, Health Coverage
  • Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns
  • Form 1095-C, Employer-Provided Health Insurance Offer and Coverage

Also Read : Excise Tax the Ultimate Guide for Small Businesses

Conclusion

So, there you have it friends, this is all we have at the moment about Filing Information Returns Electronically (FIRE). However, if you still have doubts about the same be sure to log on to www.accountingadvice.co

Frequently Asked Questions(FAQs)