The IRS recently released Publication 1220 for the tax year 2021. Here’s what you need to know.
What is Publication 1220?
IRS Publication 1220 is a document released yearly that lays out the specifications for the electronic filing of the following forms (you can see the full list on page 9 of the publication itself):
- 1097
- 1098
- 1099
- 3921
- 3922
- 5498
- W-2G
If your business – whether it be a corporation, partnership, employer, estate, and/or trust – is required to file 250 or more information returns in a calendar year, you must file electronically using the FIRE (Filing Information Returns Electronically) System by way of a TCC (Transmitter Control Code). While it’s not required, all businesses that have fewer than 250 are also encouraged to e-file their forms and keep that data safely stored so as to discourage fraudsters.
Updates for Tax Year 2021
Since the original document is a 163-page PDF, we thought we would break down some of the biggest updates to Publication 1220 for the tax year 2021.
First and foremost, let’s talk about Form 1099-NEC. When the IRS released Publication 1220 for the tax year 2020 in October of that year, the newly revamped 1099-NEC was not included in the IRS 1099 CF/SF (Combined Federal and State Filing) Program. But that changes this tax season, as the NEC is now eligible for e-filing.
Before we get ahead of ourselves, let’s talk about the conditions of this change. There are still 36 states plus the District of Columbia (as of December 2021) that have their own direct reporting requirements for the 1099-NEC that cannot be met through CF/SF. And there are a number of states – Alaska, Florida, Nevada, New Hampshire, South Dakota, Texas, Washington, and Wyoming – that do not participate in the CF/SF program at all but mandate direct reporting instead.
It’s also important to note that state-based electronic filing requirement updates must also be met, in addition to IRS guidance. Unfortunately, tax experts are anticipating another confusing year as it pertains to the 1099-NEC form filing, as many states have yet to release specific guidance for the tax year 2021, and others releasing their requirements just before the new year.
You can find all of Publication 1220’s updates line by line on page 11 of the online document – though many are deadline updates, formatting error corrections, field descriptions, and the like.
Deadlines
This year, information returns are due to the IRS on Monday, February 28, 2022, for those filing paper documents and Thursday, March 31, 2022, for those filing electronically. See this IRS link for more due dates and resources regarding information return filing and backup withholding deadlines.
Get Your Taxes Straight with the Help of eFile360
Filing 1099s, especially Form 1099-NEC, has created huge headaches for thousands of organizations across the country, but eFile360 wants to help ease some of that burden. We are the most cost-effective e-filing service for IRS forms, with an all-inclusive offering starting at just $3.50 per recipient. Last tax season, thousands of businesses struggled to correctly file their 1099s, and the boom in gig work and the freelance industry didn’t help either.
For help with your electronic filing needs, sign up for a free eFile360 account today.