New 1099 Filing Rules: What Businesses Need to Know
By Bob Marsh
The recently enacted changes to Form 1099 reporting are reshaping compliance for businesses of all sizes. Under the new rules, the IRS has tightened requirements on how information returns are filed, shifting more entities away from paper and toward mandatory e-filing.
Key Highlights
- Lower Threshold for Mandatory E-Filing Businesses that file 10 or more information returns in aggregate (e.g., 1099-NEC, 1099-MISC, W-2s, 1098s) must now e-file. This is a significant reduction from the prior 250-form threshold.
- Aggregate Rule Applies Across Forms The IRS no longer looks at each type of return separately. If the combined total of all information returns meets or exceeds 10, e-filing is mandatory.
- Paper Filing Still Allowed for Small Filers Businesses with fewer than 10 returns in total may still file on paper, but e-filing is encouraged for speed and accuracy.
- Corrected Returns The e-file mandate applies not only to original filings but also to corrected returns.
- Filing Platform: IRS FIRE vs. IRIS The IRS now offers the Information Returns Intake System (IRIS), a free online service that allows direct filing of Forms 1099. While the older FIRE system remains in place, IRIS is intended to simplify the process for small and mid-sized businesses.
Why It Matters
The reduced filing threshold will capture many more small and mid-sized businesses, including sole proprietors, landlords, and professional service providers who previously avoided e-filing. The shift also increases the IRS’s ability to cross-check income reporting and detect errors more quickly.
Action Steps For Businesses
- Evaluate Your Filing Volume – Count all information returns across form types.
- Register Early – If you’re new to e-filing, register with the IRS IRIS platform or through your payroll/tax software provider.
- Verify Recipient Data – Ensure contractor and vendor information (name, TIN, address) is accurate to avoid mismatches and penalties.
- Plan for Deadlines – Most 1099 forms are due January 31 to recipients and to the IRS. Late filings trigger penalties.
Bottom Line
Compliance just became more complex for smaller filers. Don’t assume you’re exempt—if your total filings exceed 10, e-filing is mandatory. Proactive planning now will help you avoid January headaches and unnecessary penalties.