IRS opens online portal where businesses can file 1099 forms

The Internal Revenue Service unveiled a long-awaited online portal Wednesday where businesses will be able to file their 1099 information returns for free.

The Information Returns Intake System portal was originally expected to be available on Jan. 9, but needed a little extra testing first (see story). The IRS hopes the IRIS portal will enable the agency to reduce the millions of pieces of paper it needs to deal with each year as it continues to work on catching up on its backlog from last year.

The system was actually ready on Jan. 3, but was not widely advertised so the IRS could do a controlled launch to test it out with a limited number of filers to “ensure the filing experience is favorable,” said Kyle Kampschroer, the project manager for IRIS, and an IRS Small Business/Self-Employed division exam case revenue agent, during a press conference.

“The IRS is excited to offer any business, especially small companies, a great new way to electronically file their 1099s for free,” said IRS acting commissioner Doug O’Donnell in a statement. “This simplifies filing for those issuing 1099s and helps recipients receive information timely. The launch of IRIS can help reduce the millions of paper Forms 1099 we project will be filed in 2023 and demonstrates our commitment to finding useful and innovative ways of reducing paperwork on the business community and others issuing 1099s. This is part of the larger effort underway to make improvements and transform operations at the IRS.”

Businesses will be able to use IRIS to create, upload, edit and view information and download completed copies of 1099-series forms for distribution and verification. Through IRIS, businesses can e-file both small and large volumes of 1099-series forms by either keying in the information or uploading a file with the use of a downloadable template. For now, IRIS accepts Forms 1099 only for tax year 2022 and later. The IRS is encouraging any business, especially those that now file on paper, to switch to e-filing through the platform and share in various benefits, including e-file security standards to safeguard information.

“Available to any business of any size, IRIS should be especially helpful to those that currently send their Forms 1099 to the IRS on paper,” said IRS Small Business/Self-Employed exam case program manager Mike Maltby during the press conference. “Filers can use the new IRIS platform to create and submit key information, or upload a file with the use of a downloadable template. “The information entered can then be reviewed and edited if needed prior to submitting. A completed 1099 can also be downloaded for distribution to the recipient, so it provides service from the point of creating the 1099 through downloading it to provide to the recipient and then submitting it online to the IRS. Currently, IRIS accepts Forms 1099 only for tax year 2022 and later.”

The portal will automatically detect filing errors and provide alerts for missing information. Filers can submit automatic extensions and make corrections to information returns filed through the platform.

The IRS said it would acknowledge receipt of the 1099 as quickly as 48 hours.

The system will preserve issuer information from year to year, and prior years filed through this platform, which can be convenient for 1099 filers. Enrollment for the IRIS filing platform is now open and filers can begin the enrollment process immediately. The IRS said its existing Filing Information Returns Electronically (FIRE) system will remain available for bulk filing of Form 1099 series and the other information returns through at least the 2023 filing season. For more information about IRIS visit www.irs.gov/iris. 

The IRS tested out the system during the controlled launch period earlier this month. “We narrowly shared access to it so that we could control and closely monitor its behavior in the live environment, and we referred to this time period as a controlled launch,” said Kampschroer. “And throughout this control launch, it allowed us to make enhancements to the portal, which we believe will help to ensure the filing experience is favorable. In other words, we took extra precautions here to help ensure our customers will have a good experience using IRIS.” 

The IRS is likely to be hit with a deluge of Form 1099-K’s when the new lower threshold for reporting transactions takes effect, requiring third-party services like Venmo, PayPal, eBay, Etsy and others to report transactions amounting to $600 or less. The IRS decided to temporarily delay the requirement from the American Rescue Plan Act last month, but it would have taken effect this month (see story).

The IRS hopes the new system will help it catch up on its backlog and reduce any further backlogs from the 1099-K filings. “We believe IRIS has a number of benefits that will assist in reducing future backlogs because folks will choose to use Iris to file in lieu of using paper,” said Kampschroer. “I really can’t speak much to the 1099-K arena. My focus here really is on IRIS and what it can do. One thing I can say is that IRIS is an excellent tool if you do find yourself having to issue a 1099 to do that.”

Meanwhile, House Republicans, who passed a bill earlier this month to abolish the IRS and set up a nationwide sales tax system, unveiled a kind of online portal of their own on Wednesday for IRS whistleblowers. The online form is for IRS personnel who want to submit information confidentially to the tax-writing House Ways and Means Committee about any inappropriate behavior or mishandling of taxpayer information at the agency, The House Ways and Means Committee’s new chairman, Jason Smith, R-Missouri, announced the portal and also sent a letter Wednesday to O’Donnell and all IRS employees informing them of the creation of this direct line of communication between agency personnel and the committee.

“The IRS has a disturbing track record of violating the trust of the American taxpayer — whether it’s leaking confidential taxpayer information, targeting Americans for their political beliefs, or just failing to perform its most basic customer service responsibilities,” Smith said in a statement Wednesday. “Unfortunately, it has become clear that relying on the IRS to be forthcoming about its failures or outright abuses of taxpayer confidence is insufficient to ensure much needed, aggressive oversight of the agency. The American people are demanding accountability, and they deserve answers. By providing IRS personnel with a safe, secure, and confidential way to provide information that might be vital to protecting taxpayers, the Ways and Means Committee is delivering on our commitment to hold government accountable.”