Winter is coming up quick. And there are more than a few year-end deadlines Finance must meet to guarantee IRS compliance and avoid pricey penalties.
For the Accounts Payable portion of your team, it’s all about those precious 1099s and other information returns.
To start preparing A/P now, finance leaders can pass along this comprehensive timeline and other important details. Here’s what your team needs to know to crush year-end deadlines.
E-filing prep and practices
This year-end, more companies will likely make the switch to e-filing with IRS’s Filing Information Returns Electronically (FIRE) System for many information returns. Since the new Taxpayer First Act lowered the e-filing threshold for 2021 and beyond, most companies will soon have to e-file 1099s. That makes getting on board and adapting now a smart move.
If A/P is e-filing information returns, they should know the dates for both the FIRE Test System and the FIRE Production System. (IRS always advises using the Test System to verify your information returns are good to go before filing begins. You’ll want to make sure A/P takes advantage of this, especially since it also demonstrates your company’s good-faith effort for compliance.)
The schedule for this year is:
- Dec. 6, 2019 – Jan. 1, 2020: FIRE Test System down for updates.
- Dec. 6, 2019 – Jan. 7, 2020: FIRE Production System down for updates.
- Jan. 2, 2020: FIRE Test System available for test file submission.
- Jan. 8-10, 2020: FIRE Production System controlled launch.
- Jan. 10, 2020: FIRE Production System available for file submission.
But! Before you do anything else, ask A/P to verify all your FIRE accounts are set. IRS recently enhanced its systems for more security, and all accounts must now have a valid 10-digit PIN and a valid secret phrase. A PIN is needed to complete any filings, from initial submissions to replacements and corrections later.
And remind your team be careful: If they enter an incorrect PIN three times, the FIRE account will be locked out for 24 hours and they won’t be able to submit files. (They can find more details about PINs in Section 2 of Publication 1220.)
Filing due dates
After testing comes filing. Here are the critical year-end deadlines for A/P this time:
- Jan. 31, 2020: 1099-MISCs with nonemployee compensation (NEC) in box 7 due.
- Feb. 28, 2020: all other paper 1099s due.
- March 16, 2020: 1042-Ss due, whether paper or electronic.
- March 31, 2020: other electronic 1099s due.
Advise A/P to take a look at this year’s General Instructions for Certain Information Returns for more details.
Aside from federal year-end deadlines, some states have their own 1099 filing rules for A/P. And they vary. Generally, states fall into one of four groups, say the tax pros at CheckMark:
- states in IRS’s Combined State/Federal Filing Program for 1099s
- states that require 1099-MISC filing if they report withholding
- states with separate 1099-MISC filing or unclear requirements, and
- states with no 1099-MISC filing requirements.
To verify whether you have any extra filing to do, A/P should see which group your state falls in, then reference your state agency’s website.