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Washington, D.C. – Congressman Jim Renacci, Ways and Means, Tax Policy Sub-Committee Senior Member introduced legislation today that would enable the IRS to create an online portal for businesses to electronically submit Form 1099s.

Now that we have a new tax code, we need to make sure the tax administrators have updated tools to make filing simpler and more efficient.  The “Creating an Online Platform for Instant 1099 Submissions Act” was designed with two goals in mind. To make it easier for businesses to file 1099 forms, while also getting tax administrators the data they need in real time.   Not only will this give the IRS more time to seek out tax fraud, but it also has no cost according to the non-partisan Joint Committee on Taxation.

“As a CPA, removing the chance of error is vital. We have to give the IRS the tools it needs to keep up with the times.  Utilizing this technology will help the agency in its goal of being efficient and effective." 

Background:

The government requires businesses to report the annual payments made to their workers each year.  With regard to employees, businesses are required to submit W-2s to the Social Security Administration to document wages paid.  The SSA then shares this employee income data directly with the IRS.  For years the SSA has provided an online platform for businesses to upload W-2s directly to the SSA.  However, no such technology exists for reporting non-employee payments documented via 1099 submissions.  Given that the SSA’s W-2 portal is praised by businesses for being both free and easy to use, it's time to enable the IRS to launch analogous technology for 1099 submissions.

A 1099 is used by businesses to report independent contractor earnings, and self-employment income, among other payments.  Simply stated, it's used to report payments beyond the scope of employee wages.  Currently, no user-friendly, free, electronic means exists for businesses to get 1099s directly to the IRS in real time.  Instead, it’s common for 1099s to be prepared electronically, printed, mailed to the IRS, and then manually transcribed into the IRSs electronic records.  All of these extra steps take time and cost money.

The online 1099 portal created by this bill would provide a free mechanism for businesses to use to file their 1099s.  The bill also reduces the chances of identity theft and tax fraud.  This is because the IRS will have more time to review 1099s if they're transmitted directly to the agency, electronically. This extra time can then be used cross reference data from the 1099s with the corresponding individual returns, thereby decreasing the odds of fraud through increased scrutiny.

The “Creating an Online Platform for Instant 1099 Submissions Act” requires the Secretary of the Treasury to create an online portal allowing for electronic submissions of Form 1099s through a user-friendly interface.  The final product is expected to be similar to the Business Services Online Suite of Services provided by the Social Security Administration. The portal would allow businesses to upload their Forms 1099s directly to the IRS in real time, rather than having to print and mail this vital documentation. The bill also requires the online portal to be available by January 1, 2020, just in time for the 2020 filing season.

The Renacci Report

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