Extra! Extra! This just in: there’s news out of Washington that will likely affect most productions shooting around the United States. So, what’s the skinny, you ask? Let’s dive in.
This tax change applies to you if your business generates more than ten 1099s in a tax year. If you have more than ten 1099s for 3rd party vendors (e.g. camera rental company, etc.) then you'll want to take action by these deadlines if you intend to eFile them yourself. If Cast & Crew is your payroll service provider, we will handle the electronic filing of 1099s for you for production employees and their associated loan outs.
In an effort to help businesses benefit from faster processing times, reduced paperwork, and improved accuracy in their tax filing processes, the Department of the Treasury and the Internal Revenue Service have made some changes in the way returns are filed and will also require specific filers to switch to eFile starting with tax year 2023.
Here for a good time, not a long time? No problem. Here’s a short summary:
- If you file 10 or more 1099son behalf of a business entity, you must:
- Promptly request a TCC using the IRS Application (start here)
- Utilize the TCC to electronically file information returns via the FIRE system
- Submit all returns electronically
- Dates to remember:
- August 1, 2023: Deadline for submitting the IRS Application for TCC
- September 25, 2023: Application deadline for FIRE TCC holders who previously submitted applications before September 26, 2021
If you’re a fan of details, we have those too. Here’s a deeper look at the new requirements, breaking down everything you’ll need to know:
What’s going on?
In plain terms, the IRS has implemented significant changes to the tax information filing process, and you’ll need to get going on this process right away in order to avoid issues and penalties. (Don’t worry. We have the info you need.)
Starting in tax year 2023, business entities submitting 10 or more 1099 forms to file must request the IR Application for TCC tool from the IRS to file electronically. This request must be made before August 1, 2023. Once you receive your new TCC code from the government, you’ll need this to electronically file (or refile) all vendor 1099s.
So, what does that mean for me?
If your business fits the new criteria (and it’s very likely it will), you’ll need to request access from the IRS that will be used to electronically file information returns through the Filing Information Returns Electronically (FIRE) system, an online portal provided by the IRS for transmitting information.
If you file 10 or more returns on behalf of a business entity, you must:
- Promptly request a TCC using the IR Application
- Utilize the TCC to electronically file information returns via the FIRE system
- Submit all returns electronically
We highly recommend requesting this code as soon as possible to avoid logjams and delays toward the end of the filing window.
What is a TCC?
Transmitter Control Codes are 5-digit codes issued by the IRS that serve as identifiers for businesses and organizations when they file tax information returns electronically. Once you receive your TCC, it will be used in conjunction with FIRE.
The TCC plays a crucial role in the eFiling process, as it ensures that tax information returns are transmitted accurately to the IRS. It helps identify the business or organization responsible for transmitting the electronic returns and allows the IRS to track and process the returns efficiently.
What are the new filing requirements?
In short, the new regulations:
- Decrease the threshold for mandatory electronic filings from 250 returns per business to 10
- Require filers to aggregate information returns covered by the regulation to determine if they meet the 10-return threshold for eFiling (previously, the 250-return threshold was applied separately to each information return type)
- Eliminate the eFiling exception for income tax returns of corporations that report total assets under $10 million at the end of their taxable year
- Require partnerships with over 100 partners to eFile information returns, and those with a minimum of 10 returns of any type during the year must also eFile their partnership return
T.D. 9972 applies to filers of partnership returns, corporate income tax returns, unrelated business income tax returns, withholding tax returns, certain information returns, registration statements, disclosure statements, notifications, actuarial reports, and certain excise tax returns. All businesses and organizations that are required to file 10 or more Forms 1097, 1042-S, 1098, 1099, 3921, 3922, 5498, 8027, 8955-SSA, or W-2G for any calendar year must obtain a TCC and file their returns electronically using the TCC and the FIRE system.
How do I get my TCC?
The TCC is obtained through the IR Application for TCC, an online tool that allows businesses, fiduciaries, and state and federal agencies to request a TCC for electronic filing. It automates the application process, speeds up application processing, and provides a consistent experience across electronic filing products. It streamlines the way you obtain a TCC, log in, validate your identity, create a PIN, and provide necessary information. Once again, we suggest you use this tool to request your code as soon as possible.
Important deadlines to keep in mind
Mark these dates on your calendar:
- August 1, 2023: Deadline for submitting the IR Application for TCC
- September 25, 2023: Application deadline for FIRE TCC holders who submitted applications before September 26, 2021
- 2024: Certain filers will be required to switch to eFiling practices
FIRE TCC holders who submitted their applications before September 26, 2021, need to submit a new application by September 25, 2023. The application process for the IR Application for TCC should be completed before August 1, 2023. Starting from August 1, 2023, any FIRE TCC without a completed application will no longer be eligible for eFile.
How do new FIRE TCC applicants apply for a FIRE TCC?
- Access the IR Application for TCC on the FIRE page
- Log into the application
- Validate your identity or create a new ID.me account
- Create a 5-digit PIN for signing the application
- Complete the online application with the required information
What do I need to complete my application using the IR Application for TCC?
- Business legal name and employer identification number (EIN)
- Business physical location and mailing address
- Business structure (e.g., corporation, LLC, sole proprietor)
- Business telephone number
- Form type(s) for electronic filing
- Authorized user details (social security number, title, telephone number, date of birth)
Once your application is complete, follow these five steps:
- Read and agree to the Terms of Agreement and Penalty of Perjury statement
- Use your 5-digit PIN to sign the application
- The TCC will be mailed to the first Responsible Official (RO) listed on the application and can also be viewed online
- Share the TCC, EIN, and legal business name for contacts to create their FIRE accounts
- Start filing information returns electronically
It’s worth noting that these revised regulations offer hardship waivers to individuals who'd face difficulties in meeting the eFiling requirements. Also, administrative exemptions are available to ensure a smooth and productive tax administration process, aiming for effectiveness and efficiency.
Understanding the changes to the TCC application process is crucial for businesses required to file tax information electronically. By adhering to the updated regulations and applying for a new TCC, you can ensure a smooth transition and avoid any disruptions in eFiling. Stay compliant and take advantage of the convenience and efficiency offered by electronic filing systems like FIRE. We understand that this change may require some adjustments, but we’re here to simplify the process.
If you have any questions or need further assistance, reach out to your tax department or the IRS directly.
