“The COVID-19 pandemic highlighted the need for individuals, businesses, and governments to minimize paper processing,” said Wendy Walker, solution principal, Sovos.
BOSTON (PRWEB) November 16, 2021
Sovos 1099 Pro today announced a full range of software and service options to support businesses of every size to prepare for an expected number of significant 1099 reporting obligations. The IRS issued proposed regulations in July that included a reduction in the required electronic filing threshold for businesses from 250 information returns to 100 returns for the 2021 tax reporting season. The new requirements will change the way businesses determine the number of returns required to be filed electronically. As a result, small businesses and self-employed filers should be prepared for last-minute electronic 1099, W-2 and ACA filing requirements for the 2021 tax reporting season.
“The COVID-19 pandemic highlighted the need for individuals, businesses, and governments to minimize paper processing,” said Wendy Walker, solution principal, Sovos. “The IRS and state tax agencies have stepped up efforts to increase electronic submissions of returns, forms and schedules over the last year and despite the uncertainty for the 2021 filing season, businesses inevitably will need to produce and electronically file tax information to most authorities.”
IRS eFile Threshold Change
A provision in The Taxpayer First Act of 2019 lowers the required e-file threshold from 250 forms to 100 forms for all information returns, including all series of Forms 1099,1098,1042-S, W-2, 5498, 3921, 3922, 1094 and 1095 (ACA) to drive further digitization of tax return data. The legislation also provides a further decrease from 100 forms to 10 forms for tax year 2022. The implications of this are that thousands of smaller filers who may have traditionally filed their information returns on paper will now be required to file their returns electronically beginning with 2021 returns.
It is expected that new regulations will also change the way filers determine the threshold for electronic filing purposes. Instead of applying the threshold based on each information return, it will be required that all information returns filed be counted for purposes of determining whether to file electronically. For example, if a filer has 25 Forms W-2, 25 Forms 1095-C and 80 Forms 1099-NEC, the filer is now over the 100 form aggregate threshold and would need to file each of those returns electronically. When the complexity of electronically filing various information returns across different agencies and portals is factored in, the ramifications for small filers become clear.
To complete electronic filing, each organization will need to apply for a unique Transmitter Control Code (TCC), which the IRS uses to identify their organization when information is filed. As the regulations are not final, and the deadline to apply for a TCC for this filing year was November 1, 2021, most organizations will need to seek advice from their financial advisors, apply for an exception from the requirement to file electronically via Form 8508, or seek out a third party solution provider like Sovos 1099 Pro.
About Sovos 1099 Pro
Since 1989, Sovos 1099 Pro, Inc. has produced industry-leading tax reporting software for 1099 informational returns, W-2, 1042-S, ACA 1095 and FATCA 8966 forms. Sovos 1099 Pro software imports data from Excel or text files and provides customers with the option of in-house processing or professional outsourcing of their printing, federal and state electronic filing, and corrections reporting. Additionally, Sovos 1099 Pro provides similar SaaS-based reporting services through efilemyforms.com and a robust suite of payee verification services called TINCHECK. Sovos 1099 Pro’s hosting and data processing facilities are SOC I Type II certified.
Sovos was built to solve the complexities of the digital transformation of tax, with complete, connected offerings for tax determination, continuous transaction controls, tax reporting and more. Sovos customers include half the Fortune 500, as well as businesses of every size operating in more than 70 countries. The company’s SaaS products and proprietary Sovos S1 Platform integrate with a wide variety of business applications and government compliance processes. Sovos has employees throughout the Americas and Europe, and is owned by Hg and TA Associates. For more information visit http://www.sovos.com and follow us on LinkedIn and Twitter.