Do You Need a TCC for W-2 and 1099 Filing? Explained

Filing information returns with the Internal Revenue Service has become more complex recently, especially for small businesses, CPAs, and payroll providers. One of the most essential requirements is understanding the transmitter control code, often called a TCC. This unique identifier is required to file information returns electronically, such as W-2s, 1099s, and other forms.

The IRS lowered the electronic filing threshold starting with 2023 and beyond. If you must file 10 or more informational returns in a calendar year, you must file electronically. This rule applies across all forms, including W-2, 1099 NEC, W-2G, and other returns. Many filers must apply for a TCC through the IRS FIRE system or the newer Information Returns Intake System, IRIS, to comply.

This article provides step-by-step instructions on when a TCC is required, how to apply, and what happens if you do not meet the filing requirements. We will explain the differences between FIRE TCC and IRIS TCC, how responsible officials and authorized users are added, and what deadlines you must meet. By the end, you will understand how to electronically file information returns confidently and stay compliant with IRS rules.

What is a Transmitter Control Code (TCC)?

A transmitter control code, or TCC, is an identifier that the Internal Revenue Service issues to organizations that electronically file information returns. The code links each legal business or third-party transmitter to the IRS system to properly track, verify, and record electronic returns. Think of the TCC number as a digital signature that connects your filings directly to your business account.

The TCC serves several vital purposes for businesses and authorized users:

• Authentication: The code verifies that the applicant is an authorized transmitter and that the legal business name and employer identification number match IRS records.
  
  
• Tracking: The TCC helps the IRS file information returns accurately and ensures that each electronic return is connected to the correct filer.
  
  
• Security: The system protects sensitive taxpayer data by requiring filers to log in with a unique TCC before they can electronically file forms.
  
  
• Compliance: The IRS encourages transmitters to apply for a TCC because it ensures that returns must be filed electronically when the 10-return threshold is reached.

There are two main types of TCC codes, depending on the filing system you use:

1. FIRE TCC: Used with the IRS FIRE system (Filing Information Returns Electronically) and required for forms such as 3921, 3922, 5498, W-2G, and most 1099 forms.
   
   
2. IRIS TCC: Used with the Information Returns Intake System, which allows filers to e-file forms 1099 electronically through a user-friendly intake system portal.

Both systems require that you complete the IR application and sign the application electronically. Once approved, your TCC code will appear in your application summary and must be used whenever you electronically file information returns.

Who Needs a TCC for W-2 and 1099 Filing

The IRS requires a TCC when businesses or transmitters reach the electronic filing threshold. Beginning with tax year 2023, any filer filing 10 or more information returns in a year must file electronically. A TCC is required to meet this requirement.

The 10-Return Rule

• The 10-return rule applies to the combined total of all forms filed, not just one type of form.
  
  
• W-2s, 1099 NEC, 1099 MISC, W-2G, 3921, 3922, and 5498 forms all count toward this total.
  
  
• Even if you file exactly 10 informational returns, the IRS requires you to e-file those returns electronically.

Groups That Must Apply

• Small businesses that issue more than 10 tax-year information returns must obtain a TCC to file their forms electronically.
  
  
• CPAs and tax professionals who prepare returns for multiple clients must apply for a TCC for their own company so they can file electronically on behalf of others.
  
  
• Payroll providers that process filings for many businesses need a TCC code because their filing volume exceeds the threshold.
  
  
• Nonprofits and financial institutions, such as banks, often issue many forms and must, therefore, electronically file information returns using a valid TCC.

Who Does Not Need a TCC

• Businesses that file fewer than 10 information returns in a calendar year can still submit their returns on paper without applying for a TCC.
  
  
• Companies that hire a third-party transmitter to file electronically do not need their own TCC since the service provider uses its system and TCC number.
  
  
• Organizations that require approval must submit a waiver by submitting returns that exceed the 10-return threshold.

IRS Electronic Filing Requirements and Thresholds

The IRS requires that most businesses electronically file information returns if they meet the 10-return threshold. This rule applies to different forms, including W-2s and the 1099 series.

How the Count Works

• If a business files 3 W-2s and 8 Forms 1099-NEC in the same year, the total is 11, and all must be filed electronically.
  
  
• A filer submitting 9 Forms 1099-MISC in a tax year is under the limit and may still submit paper returns.
  
  
• The threshold applies to all informational returns filed in a single tax year, so you must combine counts for each form type.

Benefits of Electronic Filing

• Returns filed electronically are processed more quickly, which helps keep IRS account records current.
  
  
• Electronic returns are less likely to be rejected for formatting errors than paper filings.
  
  
• Filing information returns electronically reduces the risk of IRS penalties and ensures compliance with filing rules.

Consequences of Non-Compliance

• Businesses that fail to file electronically when required may face penalties of hundreds of dollars per return.
  
  
• Repeated non-compliance may cause the IRS to place compliance flags on your account, affecting future interactions.
  
  
• Processing delays are more likely with paper filings, which may lead to transcript issues or late penalty notices.

FIRE vs. IRIS Systems: Understanding the Difference

The Internal Revenue Service provides two electronic filing systems, each requiring a TCC. These systems cannot be used interchangeably, so you must choose the one that fits your needs.

FIRE System Overview

• The IRS FIRE system, which stands for Filing Information Returns Electronically, is designed for businesses that handle many filings yearly. The system requires specific file formats, often CSV files, that must follow IRS Publication 1220 guidelines.
  
  
• FIRE supports most 1099 forms, 3921, 3922, 5498, and W-2G, but does not support Form 1099-DA.
  
  
• To use FIRE, filers must create a FIRE system account, log in, and submit their returns using their assigned FIRE TCC number.

IRIS System Overview

• The Information Returns Intake System, or IRIS, is designed for small- to medium-sized businesses and offers a more user-friendly approach.
  
  
• This system allows users to electronically file 1099 forms directly through an online intake system portal without needing complex software.
  
  
• To use IRIS, you must obtain an IRIS TCC and then log in to access fillable forms or upload return data through the portal.
  
  
• IRIS supports all 1099 forms, including the newer 1099-DA, and is available for returns filed for the tax year 2022 and later.

Choosing the Right System

• The FIRE system is better suited for experienced or high-volume filers needing bulk information return processing.
  
  
• The IRIS system works best for businesses that prefer a more straightforward interface with step-by-step instructions and built-in error checks.
  
  
• Filers cannot use a single TCC for both systems, so if you plan to use both, you must submit a new IR application and obtain separate TCC codes.

How to Apply for a TCC

The IRS requires filers to complete an application for TCC before they can electronically file information returns. The process involves setting up accounts, verifying identity, and submitting business information.

Prerequisites Before Applying

• You must provide a valid employer identification number because the IRS uses this number to link your TCC application to your legal business name.
  
  
• Each responsible official must create an ID.me account and complete the verification process so the IRS can confirm their identity.
  
  
• The application asks for details about your business, such as the legal business name, mailing address, and a user email for each authorized contact.
  
  
• The application requires at least two responsible officials unless the filer is a sole proprietor or an S-Corp, who may submit only one.
  
  
• You may also add authorized users and authorized delegates so that multiple individuals can manage and file information returns on your business's behalf.

Step-by-Step Application for FIRE TCC

1. Begin by visiting the IRS IR application portal and selecting the FIRE option to access the correct system.
   
   
2. Log in using your ID.me credentials and follow the system prompts to start your application for TCC.
   
   
3. To avoid application delays, enter your legal business name and employer identification number exactly as they appear in IRS records.
   
   
4. Add the required responsible officials, contacts, and any authorized delegates who will support the filing process.
   
   
5. Select the forms you intend to file, such as 1099 NEC, W-2G, 3921, 3922, or 5498, so the IRS understands your filing scope.
   
   
6. Please carefully review the information you have entered, sign the application using your 5-digit PIN, and click submit to complete your request.
   
   
7. Once submitted, an application summary is generated, and your TCC number should be issued within 45 days.

Step-by-Step Application for IRIS TCC

1. Visit the same IRS IR application portal, but choose the IRIS option to begin the process for this system.
   
   
2. Log in with your ID.me credentials, then enter your legal business name, EIN, and other required business information.
   
   
3. Select the 1099 forms you will electronically file using the IRIS intake system so the IRS can configure your account correctly.
   
   
4. Assign responsible officials and authorized users who can access the account and file returns on behalf of the business.
   
   
5. Review your application details, sign the application electronically, and click submit to finalize the request.

Processing Timelines and Approval

• Standard processing for a TCC takes about 45 days, so you should apply well before your filing deadline.
  
  
• Once approved, the TCC number is usually available within 48 hours, and you can use it to file information returns electronically.
  
  
• The IRS will send an official approval letter to your business address, and the TCC can also be viewed in the application summary online.

Deadlines and Ongoing Requirements

Applying for a TCC must be done early enough to ensure you are ready to meet IRS filing deadlines. Once a TCC is obtained, it must be kept active and updated.

Critical Application Deadlines

• The IRS recommends submitting your TCC application by November 1 of the year before the filing season, so there is enough time for processing.
  
  
• For example, if you need to file information returns for the 2024 tax year, you should apply for your TCC no later than November 1, 2024.
  
  
• Applications submitted after November 1 may not be processed in time, which could force you to request a waiver or risk non-compliance.

Information Return Deadlines

• Most 1099 forms and Form W-2G must be filed electronically with the IRS by March 31 of the following year, while recipient copies are due by January 31.
  
  
• Form 1099-NEC has an earlier deadline; it must be filed with the IRS and recipients by January 31.
  
  
• Certain forms, such as 1099 B, 1099 DA, and 1099 S, are due by March 31 for IRS filing, with recipient copies required by mid-February.

TCC Maintenance Requirements

• A TCC remains valid year to year, so businesses do not need to renew it annually as long as it is used regularly.
  
  
• If a TCC is not used for three consecutive years, the IRS will delete it, and you will need to reapply for a new TCC.
  
  
• To keep your account accurate, any changes to your legal business name, structure, or responsible officials must be updated in the IRS application system.

Penalties for Non-Compliance

The IRS imposes penalties on businesses that do not electronically file information returns when required. The penalty amounts increase depending on how late the filing is corrected.

Penalty Structure

• If you correct your filing within 30 days of the due date, the penalty is $60 per return, with a maximum of $683,000 for large businesses and $239,000 for small businesses.
  
  
• If you correct the error more than 30 days late but before August 1, the penalty rises to $130 per return, with a maximum of $2,049,000 for large businesses and $683,000 for small businesses.
  
  
• If you fail to file electronically by August 1 or never file, the penalty is $340 per return, with a maximum of $4,098,500 for large businesses and $1,366,000 for small businesses.
  
  
• If the IRS determines that the filer intentionally disregarded the requirement to file electronically, the penalty is at least $680 per return, and there is no maximum limit.

How Penalties Appear in IRS Systems

• Penalty assessments are shown on the Business Master File transcript, which records IRS actions against your account.
  
  
• The account transcript will include penalty codes, balances due, and payments applied.
  
  
• Compliance indicators may also appear on your account, signaling to the IRS that your business has had filing issues in prior tax years.

Relief Options

• You may qualify for penalty relief if you demonstrate reasonable cause, such as a system outage, natural disaster, or other event outside your control.
  
  
• First-time penalty abatement may apply if your business has a clean compliance history with the IRS in prior years.
  
  
• The IRS may also grant administrative relief in certain circumstances if you submit a formal request explaining the situation.

Waiver Option: Form 8508 Explained

The IRS recognizes that not every filer can meet electronic filing requirements. For this reason, businesses may request a waiver by submitting Form 8508, also known as the Application for a Waiver from Electronic Filing of Information Returns.

When to Request a Waiver

• A waiver should be requested if the software or transmission services cost would create an undue financial burden on the business.
  
  
• Businesses without reliable internet access or appropriate computer systems may apply for a waiver because they cannot electronically file information returns.
  
  
• Organizations facing temporary or unexpected events, such as natural disasters or staffing shortages, may also submit Form 8508 to avoid penalties.

Application Process

• To ensure the IRS has time to process your request, you must complete Form 8508 at least 45 days before the due date for your information returns.
  
  
• The application requires you to explain your hardship in detail, such as showing cost estimates demonstrating why e-filing is not feasible.
  
  
• Supporting documentation, such as financial statements or technical reports, strengthens the request and increases the likelihood of approval.
  
  
• Once approved, the waiver applies only to the specified forms and tax year, and a new request must be filed for each year relief is needed.

Scope and Limitations

• An approved waiver allows you to file specific returns on paper, but does not automatically extend to other forms or future years.
  
  
• If you originally filed returns, you cannot switch to paper corrections without a separate waiver for those corrected forms.
  
  
• The IRS expects you to keep a copy of your approved waiver for your records, although you do not need to attach it when filing your returns.

Common Issues and Troubleshooting

Many filers encounter problems when applying for a TCC or submitting returns electronically. Understanding these issues in advance can help you avoid delays.

Application Problems

• Some applicants fail ID.me verification because their documents are blurry or do not match IRS records. Clearing government-issued identification and retrying on a different device can resolve the issue.
  
  
• An EIN mismatch occurs when the employer identification number does not match the legal business name on IRS records. You must contact the IRS Business and Specialty Tax Line to correct this.
  
  
• Businesses sometimes misunderstand the roles of responsible officials, contacts, and authorized delegates, which can delay approval. Reviewing IRS guidance before applying helps clarify each role.

FIRE System Issues

• Files are often rejected because they do not match the specifications outlined in Publication 1220. Testing your CSV file in the FIRE test system before filing can prevent these errors.
  
  
• A newly issued FIRE TCC may not be recognized immediately, since the system requires up to 48 hours after approval before the code becomes active.
  
  
• Login problems can occur if the fire system account is not correctly set up, which may require resetting credentials through the IRS portal.

IRIS System Issues

• Some users cannot access the IRIS portal due to browser incompatibility. Switching to Chrome, Firefox, or Edge often resolves these login issues.
  
  
• Filers may experience rejections when submitting Form 1099-DA if the cost basis or other digital asset information is incomplete. Reviewing form instructions before uploading data helps avoid errors.
  
  
• In some instances, users may see a locked padlock icon or an access error, which usually indicates a session timeout that requires logging back in.

Processing and Penalty Problems

• Filers who submit TCC applications after the November 1 deadline risk not having approval in time, which may force them to request a waiver or file late.
  
  
• Some businesses receive penalty notices even when they believed they filed correctly. Reviewing your account transcript and verifying your TCC was active during the filing period can clarify whether errors occurred.

Practical Scenarios and Edge Cases

Real-world examples help demonstrate when a TCC is required and how different types of organizations handle electronic filing.

Small Business Under 10 Returns

• A consulting firm that issues 8 Forms 1099-NEC does not need a TCC because it remains under the 10-return threshold. However, it should monitor future growth since additional contractors could push it above the limit.

CPA Filing for Multiple Clients

• A CPA who files hundreds of returns for many small businesses must apply for a TCC for their own company. This single TCC allows them to file electronically for all clients under one account.

Nonprofit Organization

• A nonprofit that issues 15 Forms 1099-MISC and 1099-NEC must obtain a TCC because it exceeds the threshold. The organization may find the IRIS system easier to use due to its user-friendly interface.

Bank with High-Volume Reporting

• A community bank that files 2,000 Forms 1099-INT requires a FIRE TCC to process a high volume of information returns. The bank may also use IRS TIN matching to reduce errors before filing.

Gig Economy Platform

• A rideshare company that issues 10,000 Forms 1099-NEC must obtain a TCC to meet electronic filing requirements. Large platforms often rely on the FIRE system for bulk submissions and may designate multiple authorized delegates to handle corrections.

Successor or Merged Businesses

• When one company acquires another, the successor may file consolidated returns using a TCC if IRS requirements are met. These include filing a statement explaining the merger and ensuring both pre-acquisition and post-acquisition amounts are reported accurately.

Staying Compliant Year-Round

Maintaining compliance with IRS requirements is not a one-time task. Once you obtain a TCC, you must monitor your filing process throughout the year to avoid mistakes and penalties.

Monthly Compliance Tasks

• You should review the number of information returns you expect to file to determine whether the 10-return threshold will apply.
  
  
• Verify that taxpayer identification numbers and recipient data are accurate to prevent rejections when you electronically file information returns.
  
  
• Check that your responsible officials and authorized users still have access to the system and update their user email addresses if needed.

Quarterly Compliance Tasks

• Confirm that the legal business name, mailing address, and other details in your TCC application remain correct. If changes have occurred, submit updates in the IRS application summary.
  
  
• Assess whether your business needs to add responsible officials or authorized delegates to cover filing responsibilities adequately.
  
  
• Review state and federal filing requirements to ensure that your business meets all deadlines, not just those set by the Internal Revenue Service.

Annual Compliance Tasks

• Plan for IRReview099 NEC, W-2G filing calendar, and other information returns.
  
  
• Test yourself to plan for IRS deadlines and system access before January to confirm that your FIRE or IRIS accounts are active and ready for submissions.
  
  
• Retain records of returns filed electronically, including confirmation numbers and CSV file uploads, as proof of compliance if the IRS requests verification.
  
  
• If your TCC has not been used in the past three years, reapply before filing season to avoid delays.

Frequently Asked Questions

Do I need a TCC for W-2 and 1099 filing?

Yes, a TCC for W-2 and 1099 filing is required if you must file 10 or more information returns in a tax year. The Internal Revenue Service lowered the threshold beginning with tax year 2023, which means more businesses must file information returns electronically. A transmitter control code (TCC) ensures that your legal business is authorized to e-file information returns through the FIRE or IRIS systems.

What is a Transmitter Control Code (TCC)?

A transmitter control code TCC is a unique identifier issued by the IRS that allows businesses, CPAs, or third-party transmitters to file information returns electronically. It connects your legal business name and employer identification number with the IRS system. When you file electronic returns, the TCC code verifies your account, tracks your submissions, and protects the integrity of filing information returns electronically through the FIRE system or the Information Returns Intake System.

What is the difference between a FIRE TCC and an IRIS TCC?

A FIRE TCC is used for the IRS FIRE system, also called Filing Information Returns Electronically, and is typically required for high-volume filers who must process forms such as W-2G, 3921, 3922, and 5498. An IRIS TCC applies to the Information Returns Intake System, which allows you to e-file forms in the 1099 series. Each system requires its own TCC application, and the two codes cannot be used interchangeably.

How do I apply for a TCC with the IRS?

You can apply for a TCC by accessing the new IR application on the IRS website. After you log in using ID.me, you must enter your legal business name and employer identification number and add responsible officials. The system requires you to verify your information, sign the application with your five-digit PIN, and click submit. The IRS encourages transmitters to apply early, since the approval process can take up to 45 days.

Can I use a third-party transmitter instead of my own company TCC?

You may use a third-party transmitter to file information returns electronically. In that case, the third party uses its own TCC code, fire system, or iris system account to submit returns on your behalf. This option is standard for sole proprietors or small businesses that prefer not to manage the TCC application process directly. However, your company must keep accurate records and review the application summary from the filer.