ELECTRONIC FILING MEMORANDUM - W2s & 1099s
FOR 2023 FILING YEAR
IMPORTANT - PLEASE READ
As you are all aware, the IRS mandated that all payors with 10 or more information returns file electronically for the tax year 2023. This mandate was a long time in the works and is actually good for those of you who resisted filing electronically and filed by paper. Please note that this does not apply to employment returns 940/941/943/944/945.
We have always promoted e-filing as it saves so much time. Our software allows you to batch file your clients in 1 upload which only takes a minute or two to generate. The time savings is enormous. This is not like e-filing 1040s where you have to upload each client one at a time. Plus you no longer need to generate the red paper Copy A or a 1096.
The mandate also required the IRS to provide a free system for all to handle the printing of Recipient copies and the e-filing of them. The IRS even states in their documents that It was developed for small filers.
In order to meet the deadline given by Congress, the IRIS system (Information Return Intake System) was hastily implemented at the very end of the 2022 filing year which was the last week in January of 2023. Literally nobody used it.
Our take on the new IRIS system is as follows. It is a new system that I am sure is filled with bugs. It can only accept up to 100 records at a time for e-filing. And just try to get any support from the IRS which you are all familiar with.
IRIS is a separate system from the FIRE system (Filing information returns electronically) and was developed using different technology. The FIRE system is highly proven, extremely stable, and has been around for many many years. Currently there are no plans to phase out the FIRE system.
You have to be careful when talking to IRS representatives. Most of them are not knowledgeable of the FIRE system running concurrently, so they have been telling callers that they must use the IRIS system. This advice is 100% incorrect and should not be listened to.
When the IRIS system comes back online in January, we will offer the ability to upload a formatted CSV file in their approved format. Unfortunately since the system is now down, we cannot download any of their templates. You can try it out but there is absolutely no benefit in using it.
There are drawbacks to the new IRIS system.
1. You can only e-file 100 records at a time. This is a major inconvenience. With FIRE, you can upload millions of records in 1 batch upload.
2. Limited format printouts. I believe there is only one. And I doubt the format will properly fit in a standard double window envelope like our print format does.
3. Recipient information cannot be saved from year to year.
4. You can only upload 1 client at a time
5. When the online system is down for maintenance, no work can be performed
6. No client management features whatsoever. No additional reporting capabilities. No export capabilities.
When filing information returns electronically you need to keep in mind that there are 2 agencies involved, the IRS and Social Security (SSA). You will need to have online accounts setup with both.
IRS If you previously had a TCC (transmitter control code) for the FIRE system, it needed to be reauthenticated by April 1, 2023. If you did not do it by then, your access to the FIRE system was restricted. All you had to do was reapply for a TCC and they would assign you the same number as before. It is not too late if you have not yet done it.
If you need to apply for a new TCC it is also not too late. It takes about 3 weeks to go through their system so you should do it as soon as the new year rolls around.
We previously sent out a letter on how to apply. To do so is very simple. You will need to have 2 pieces of information prior to starting the application. You need to setup an account on ID.me and you will need the PIN you setup for your e-services account. If you need to setup an ID.me account, we suggest you do it on your cell phone.
To start an application for a TCC:
1. Go to irs.gov
2. In the search box at the top, type in IR TCC FIRE
3. Select the link for the first result returned
4. Scroll to the middle of the page and select the link for IR APPLICATION FOR TCC
5. You will be brought to the login screen for ID.me. Enter your credentials and then the code sent to your phone
6. On the next screen, select INDIVIDUAL. Do not select Firm or Organization.
7. Then select the button for NEW APPLICATION
8. Select the 4th choice in the drop down - IR Application for TCC FIRE
9. For the business structure they have a weird requirement. If you are a Sub S corporation with 1 shareholder they require you to setup another Responsible Official (RO). Most people have difficulty with this as you probably don’t have anyone who will do this for you. If that is an issue for you, put your structure down as a Single Member LLC. The application will be fine.
10. Fill out the remaining information. Don’t pay attention to the structure of the EIN field. It is poorly designed so make your EIN fit.
11. Complete the remainder of the form. You will need to enter at least 1 RO - Responsible Official. Check off the box that they are a contact also.
12. After the form is submitted, please be patient. It will be processed and you will be sent your TCC in the mail. You can check online periodically in your e-services account to see if the TCC was assigned to you. Give it a couple of weeks.
13. The TCC application is a one time process. That number will stay with you forever and never needs to be renewed.
After you get your TCC you may need to setup an account in the FIRE system at www.fire.irs.gov. If you had an existing FIRE account from last year you can use that.
SSA And now for what happened with Business Services Online at the Social Security Administration. On March 26,2023 they implemented a new login system which required identity authentication using ID.me. The difference between identity authentication with FIRE and the SSA/BSO website is that SSA/BSO requires you to verify your identity each time you access it. FIRE does not require this.
So for now we had to disable our automatic login feature on the SSA/BSO website. When uploading your file, you need to go through a series of screens to get to the one where you upload it. We are currently working on a routine to help automate that process a little. Note that the login to ID.me cannot be automated.
For those of you who had SSA/BSO accounts last year, you need to go to www.ssa.gov/bso. In the bottom left under the Employers section, select the link for Login. You will be taken to the ID.me login screen. Once you login there, you will be brought back to the SSA/BSO website and your prior information should be there. You will need to request services. Select the link on the left for that and select the employer suite. You also need to select that you will be reporting wages. Just select the option that you will be “uploading formatted wage files”. Do not request any services that perform verification, it only makes the application process longer. After about 2 weeks, they will send you a letter stating that the services you requested have been authorized.
If you have never had an account with BSO, click the Create link in the Employer section on the BSO home page.
OUR SERVICE BUREAU
If for some reason you do not receive your TCC or SSA/BSO ID in time for the January 31st deadline, our service bureau is here to assist you. It is also possible that you do not want to deal with the e-filing of forms or applying for the necessary ID numbers and accounts.
Our service bureau will file it for you. Just call us and make arrangements to send us your data files from the W-2/1099 Filer program. We charge a nominal fee of $50 for each type of form filed. The quantity does not matter.
We also have the ability to print and mail your recipient copies. Our fees for that are very nominal. Please contact us for a quote at 800-264-3155. The forms we produce are pressure sealed and very professional looking.
Remember that we are always available to assist you. If you have any trouble with getting your credentials setup just give us a call and we will hold your hand.