Guide to 2022 Updates for Form 1099

Are You Compliant with Reporting Regulations?

It’s 1099 season and we’re here to help.

The IRS is one of the most challenging entities that you need to deal with as an Accounts Payable professional, because the rules and regulations are always changing!

Here’s your guide for the 2022 tax season:

Changes Affecting 2022 Form 1099 Filing

Good news – the changes are not as drastic as in previous years.

Electronic Filing Anticipated Changes:

• The Taxpayer First Act of 2019, enacted July 1, 2019, authorized the Dept of Treasury & the IRS to reduce the 250-return requirement.
• If those regulations are finalized (which can be at any time), they will be effective tax year 2022 and beyond, lowering the electronic filing requirement to 100 or more information returns.
• The 100-form threshold is an aggregate number of many types of information returns (1099s, 1098s, 1042s, and more)

The New IRIS (Information Return Intake System) will launch in January 2023 for online 1099 e-filing for tax year 2022:

• This will allow for a small or large volume of returns (FIRE System was for large volumes only).
• File electronically without software.
• Choose an electronic filing option.

Anyone can file electronically but if you have 250 or more information returns, you MUST file them electronically.

It all starts with the W-9

If you pay vendors, you must keep your records up-to-date, and make sure you have all your checks and balances in place.

Let’s start with the Form W-9:

1. This is a required form.
2. You need to get this every time you onboard a vendor.
3. This should be part of your vendor management process.

What’s the purpose of a W-9?:

1. Solicits payee information – legal name, tax classification, taxpayer identification number (TIN)
2. Validations: B-Notices, Foreign Indicia, EIN beginning with “98”
3. Certifies information provided - TIN is correct, payee is a US entity or persons, FACTA code is correct
4. Requirements - originals are not required for W-9, you only need updated forms if the vendor advises information has changed or the IRS tells you the information is unreliable.

Did you know that one wrong return equals two separate penalties? And the IRS will find a way to charge interest on everything they can.

All the more reason to make sure you’re compliant.

Why Is TIN Matching & Understanding Form W-9 Tax Classifications Critical?

From IRS.gov/payments/information-return-penalties

 

The IRS charges separate penalties for failing to:

• File a correct information return on time.
• Provide correct payee statements.

Information Return Penalties:

• They charge penalties for each information return you fail to correctly file on time and each payee statement you fail to provide.

Interest on a Penalty:

• They charge interest on penalties.
• The date they begin to charge interest varies by the penalty type and amount. Interest increases the amount you owe until you pay your balance in full.

Avoiding Penalties for Non-Compliance

Here are 5 ways to avoid penalties:

1. Require a W-9 before issuing any payments. Make it company policy and enforce it!
2. Complete a TIN match / verification - Do not create the new vendor without obtaining a successful TIN match
3. Ensure the tax classification on your vendor is correct
   • Is an information return required?
   • If so, which one? Form 1099-MISC or Form 1099-NEC?
4. Understand what is reportable on a Form-1099
5. Know the due dates and how your organization must file!

• Monitor IRS.gov for updates to the new regulations for e-filing

This is just a quick overview of all the changes for 2022. For more in depth information, check out the recording of the webinar, 2022 Updates for Form 1099: Are You Compliant with Reporting Regulations?

Here’s to an easy, breezy 1099 filing!