And you and your finance staffers will be directly impacted.
Specifically both Accounts Payable and Payroll will need to do certain critical tasks differently over the course of the next couple of years, especially when it comes to the most critical and often harried time of the finance calendar: year-end.
Here’s a rundown of four compliance changes coming as well as a timetable for when each becomes effective.
Compliance change #1: Lower e-file thresholds
If your company isn’t currently e-filing your information returns – both W-2s and 1099s – you will be soon!
This new law slashes the threshold for mandatory e-filing. Instead of the 250 return benchmark (W-2s or 1099s), you must abandon paper returns if you have:
- 100 returns in calendar year 2021, and then just
- 10 returns from calendar year 2022 and on.
Which will mean by that point in time pretty much everyone will fall into the e-filer camp.
Compliance change #2: New E-Services verification
And when your company does sign up on IRS E-Services for e-filing, it will take a little longer than it has in the past.
In the interest of greater security, the new law will require IRS to verify individuals who apply to open an e-Services account before they can use any of its tools.
So if you’re setting up a new account anytime after Dec. 28, 2019, you’ll want to factor in a little extra time.
Compliance change #3: Internet platform for 1099 filing
The Taxpayer First Act requires IRS to create an online platform for businesses to prepare and file Forms 1099.
The new platform will help your team:
- prepare and file 1099s
- prep 1099s for distribution to recipients other than IRS, and
- maintain a record of completed, filed and distributed 1099s.
For an idea of what it will look like, your A/P team will want to talk to their Payroll counterparts.
The new law directs IRS to develop the platform with a similar user interface and functionality to SSA’s Business Services Online.
Payroll can give the rest of your team an idea of what it’s like to use that kind of system and maybe even show them.
You’ve got a little while before you and your team will see this one – IRS has been charged with implementing this new platform by Jan. 1, 2023.
Compliance change #4: All tax-exempt organizations must now e-file
Information return filing will also look different for many tax-exempt organizations.
The Taxpayer First Act expands e-filing of the Form 990 series and Form 8872 to all tax-exempt organizations, instead of just the largest and the smallest ones.
This is the most immediate change. It’s effective for tax years beginning after July 1, 2019, though certain organizations will receive transition relief.