How to File 1099s Through the IRS FIRE System

Filing information returns can feel overwhelming, especially with changing requirements from the Internal Revenue Service. Businesses, tax professionals, and payroll providers must now e-file most forms, including Form 1099, through approved electronic systems. Learning how to file 1099s using the IRS FIRE system is essential in staying compliant and avoiding costly mistakes.

The FIRE system, short for Filing Information Returns Electronically, has long been the IRS platform for transmitting large volumes of returns such as 1099 NEC, 1099 INT, 1099 DIV, and W-2G. It provides a secure process to file information returns electronically, confirm acceptance, and correct errors when needed. While the newer information returns intake system, also called IRIS, is gradually being introduced, FIRE remains the primary option for many filers until the complete transition takes effect in the coming tax years.

This step-by-step guide explains the entire process, from applying for a transmitter control code (TCC) through the IR application for TCC to uploading files in the proper format. You will also learn deadlines, penalties, extension of time options, and practical filing methods. Whether you must file just a few forms or are responsible for managing hundreds of returns, this article will help you determine the right system, prepare your applications, and confidently file electronically.

What Is the IRS FIRE System?

The Filing Information Returns Electronically, also called the IRS FIRE system, is the Internal Revenue Service’s platform for submitting certain information returns electronically. It was created to give businesses, tax professionals, and payroll providers a secure way to file forms directly with the IRS without relying on paper submissions. By using this system, filers can transmit forms such as 1099 NEC, 1099 INT, 1099 DIV, and W-2G, along with other approved information returns, faster and more accurately than mailing paper copies.

Forms Supported by the FIRE System

The FIRE system supports multiple types of information returns. Common examples include:

• The 1099 series, including 1099 NEC, 1099 INT, and 1099 DIV, is used to report contractor payments, interest income, and dividend distributions.
  
  
• Form W-2G reports gambling winnings paid to individuals.
  
  
• Form 1042-S is used to report payments made to foreign persons.
  
  
• Form 5498 provides information about IRA contributions.
  
  
• Additional form types are listed in IRS Publication 1220, including forms for specialized transactions.

Why the FIRE System Matters

The IRS requires many businesses to file information returns electronically if they meet the annual threshold for returns filed. Paper filing is only permitted in limited cases, such as when a waiver has been approved. Filing electronically offers several advantages:

1. The filer receives immediate confirmation that the IRS has received the return.
   
   
2. Errors can be identified quickly and corrected before they create compliance issues.
   
   
3. Submissions are automatically transmitted in the proper format, reducing the risk of rejection.
   
   
4. Businesses can save time and money compared to printing and mailing paper forms.
   
   
5. Filing through FIRE helps ensure compliance with final regulations established by the Treasury and the IRS.

FIRE vs. IRIS

The IRS has also introduced the information returns intake system, or IRIS, which provides a modern, web-based option for filing. While FIRE has long been the standard, IRIS was designed to make it easier for smaller businesses to file information returns without requiring specialized software. Both systems are available now, but the IRS has announced that the intake system will eventually replace FIRE as the primary filing method in future tax years. Businesses applying for a transmitter control code through the IR application for TCC should know whether they intend to use FIRE or IRIS, since separate TCCs may be required for each system.

Who Needs to Use the FIRE System?

The IRS requires many businesses and organizations to file information returns electronically if they meet the filing threshold. Starting with tax year 2023, any filer that submits 10 or more information returns in a calendar year must file those returns electronically. This change, outlined in the final regulations from the Treasury, replaced the previous threshold of 250 returns.

Several types of filers are required to use the FIRE system or another approved intake system:

• Businesses that pay contractors, employees, or vendors must file multiple Forms 1099 or W-2G. If they reach the 10-return threshold, these organizations must file electronically.
  
  
• Certified Public Accountants and other tax professionals who file for multiple clients. These filers must obtain a transmitter control code (TCC) through the IR application for TCC to transmit returns in bulk.
  
  
• Payroll and service providers that prepare and transmit large numbers of information returns electronically for their clients.
  
  
• Nonprofit organizations that issue payments for services, grants, or prizes must file information returns with the IRS.
  
  
• Financial institutions, such as banks and investment companies, file Forms 1099-INT or 1099-DIV to report interest and dividend income.
  
  
• Gig economy platforms that pay contractors or drivers across different states must meet electronic filing requirements.

Failing to file information returns electronically when required may result in penalties, even if the paper returns are submitted on time. Businesses should carefully determine whether they meet the filing threshold each tax year to avoid compliance risks.

Key Benefits of Filing Electronically with FIRE

Although electronic filing is now required for most filers, the IRS FIRE system offers benefits beyond simple compliance. Using the FIRE platform to file information returns provides several advantages:

• Electronic filing gives businesses immediate confirmation that the IRS has received their files, which helps reduce uncertainty and improve recordkeeping.
  
  
• The system allows faster processing of information returns compared to paper filing, which can take weeks to be recorded by the IRS.
  
  
• Built-in error checks help identify issues with the file format, ensuring the submission is accepted in the proper format required by IRS Publication 1220.
  
  
• Businesses save on postage, printing, and staff time by avoiding the manual preparation of paper returns.
  
  
• Many states participate in the Combined Federal/State Filing program, allowing eligible filers to transmit federal and state returns simultaneously.
  
  
• Filing information returns electronically also supports environmentally friendly business practices by reducing paper use.

These benefits make the FIRE system a practical solution and a compliance requirement for companies that need to file electronically every calendar year.

IRS Filing Deadlines and TCC Timelines

Filing deadlines are an essential part of compliance when using the FIRE system. Different form types have different filing deadlines for electronic filing, and businesses must also provide copies to recipients by specific dates.

Common IRS Deadlines

• Form 1099-NEC must be filed electronically with the IRS by January 31, and recipient copies must be delivered by January 31.
  
  
• Most other Forms 1099, such as 1099 INT and 1099 DIV, must be filed electronically by March 31, while recipient copies are due January 31.
  
  
• Forms 1099 B and 1099 S must be filed electronically by March 31, with recipient copies due by February 15.
  
  
• Form 5498 has a later deadline, with electronic filing due by May 31.

Transmitter Control Code Timeline

Anyone who plans to file through the FIRE system must apply for a transmitter control code using the IR application for TCC. Important timing considerations include:

• Applications must be submitted before the filing season by November 1 of the calendar year.
  
  
• The IRS may take up to 45 days to process an application, so businesses should apply online as early as possible.
  
  
• A transmitter control code becomes active 48 hours after approval and is required to upload files through the FIRE system.

Extensions of Time

Filers who cannot meet the electronic filing deadline may request an extension of time by submitting Form 8809. This extension can be filed electronically through the FIRE system or submitted on paper. Still, it only extends the due date for IRS filing, not the deadline for sending copies to recipients. Missing deadlines without an approved extension can increase penalties based on how late the returns are filed. Businesses should track deadlines carefully and ensure their transmitter control code is active before filing electronically.

Penalties for Late or Incorrect Filing

The Internal Revenue Service imposes penalties when businesses fail to file information returns on time, submit them in the wrong format, or neglect to e-file when required. These penalties increase depending on how late the filing is and whether the business qualifies as a small or large filer.

• If returns are filed within 30 days of the deadline, the IRS charges a penalty of $60 per return. This lower penalty applies only when mistakes are corrected quickly.
  
  
• If returns are filed between 31 days after the deadline and August 1, the penalty increases to $130 per return, which can add up quickly for businesses with large filing volumes.
  
  
• If returns are filed after August 1 or not filed at all, the penalty rises to $330 per return, reflecting the IRS’s stricter stance on extended delays.
  
  
• If the IRS determines that a filer intentionally disregarded the requirement to file, the penalty becomes $660 per return, and there is no maximum limit on the total penalty.

Small businesses with average annual gross receipts of $5 million or less face maximum penalties ranging from $245,000 to $1,130,000, depending on how late the filing occurs. Large businesses face higher caps, and intentional disregard penalties have no limit. In addition, filers who must file electronically but choose paper instead without an approved waiver may face the same “failure to file” penalty, even if the paper forms were submitted on time.

Step-by-Step Guide to Filing Through FIRE

Filing through the FIRE system involves several essential steps, including obtaining a transmitter control code (TCC) and submitting your electronic files in the proper format.

Step 1: Apply for a Transmitter Control Code (TCC)

Businesses must apply online through the IR application for TCC before they can use the FIRE system. The process requires ID.me verification and submitting detailed business, personnel, and form information. Responsible officials and authorized contacts must be listed; at least two are needed for most companies.

Step 2: Complete and Submit the Application

During the application process, you will provide your business structure, the form types you plan to file, and whether you will file only for your business or as a transmitter for other companies. Once the details are entered, responsible officials must sign electronically using their PINs to confirm that the information is accurate.

Step 3: Receive and Activate Your TCC

After the IRS processes the application, which can take up to 45 days, the transmitter control code will be mailed to the first responsible official listed on the application. The code also becomes available online and is activated in the FIRE system 48 hours after the effective date.

Step 4: Set Up FIRE System Access

Once you have your TCC, you can register accounts on the FIRE Production System for live filing and the FIRE Test System for practice submissions. You will need your TCC, employer identification number, and legal business name to complete registration, as they appear on your application.

Step 5: Prepare and File 1099 Returns

Electronic files must meet the proper format requirements outlined in IRS Publication 1220. The IRS accepts only plain text files that follow specific record layouts. The following options are available to prepare compliant files:

• Businesses may purchase commercial software approved for IRS filing that automatically generates files in the correct layout.
  
  
• Companies may hire a payroll provider or other service provider to prepare and transmit returns through the FIRE system on their behalf.
  
  
• Large organizations with technical staff may develop custom in-house software that meets the IRS specifications for file creation.

Once files are uploaded through the FIRE system, the IRS confirms receipt and provides a status report. Accepted returns will be marked as “Good,” while rejected files must be corrected and resubmitted to ensure compliance.

Advanced Features and Filing Scenarios

The FIRE system also offers features that help filers handle more complex needs, such as multi-state reporting and error correction.

Combined Federal/State Filing Program

The Combined Federal/State Filing program allows businesses to submit federal and state information returns in a single transmission. This feature reduces the filing burden and eliminates the need to submit the same forms separately to state agencies. To use this program, filers must include state codes in their returns and follow the formatting rules described in Publication 1220.

Submitting Test Files

The IRS strongly recommends that new filers or software users submit test files before filing live data. Test files confirm the submission meets the required format and helps avoid rejection during the filing season. The FIRE Test System allows up to 125 test files annually; results are usually available within two business days.

Correcting Errors in Filed Returns

If errors are discovered after a return has been accepted, the FIRE system allows corrections using two methods. One-transaction corrections are used for incorrect payment amounts or distribution codes. Two-transaction corrections are required when details like the taxpayer identification number or payee name are wrong. Using the right correction code ensures that the original and corrected returns are correctly recorded.

Record Retention and Compliance Tracking

Businesses should keep FIRE confirmation emails and related records for at least three years after filing. Certain documents, such as backup withholding records or Form 1099 C, should be retained for four years. IRS transcripts can also be used to verify whether returns were accepted, to confirm correction history, and to monitor potential penalty assessments.

Practical Filing Examples

Real-world scenarios can help businesses understand how to apply the IRS FIRE system in different situations. The following examples show how organizations of various sizes and industries might determine their filing method and use a transmitter control code to stay compliant.

• A small consulting firm pays 12 independent contractors during the calendar year. Because the firm must file more than 10 Forms 1099-NEC, it is required to file electronically. The business should apply online for a TCC using the IR application for TCC and prepare files in the proper format before the January 31 deadline.
  
  
• A Certified Public Accountant manages filings for 25 different clients. Some clients need only two or three Forms 1099, while others require more than 50. By obtaining a transmitter control code (TCC), the CPA can electronically file all information returns for multiple businesses in one system, reducing workload and ensuring that each original return is accepted.
  
  
• A nonprofit organization awards grants to 15 recipients and pays 10 vendors during the same tax year. Because the total number of Forms 1099-NEC exceeds the threshold of 10, the nonprofit must file electronically through the FIRE system. Using a service provider or payroll firm may help streamline the process.
  
  
• A regional bank reports thousands of transactions annually, including Form 1099-INT for interest and Form 1099-DIV for dividends. The bank can use custom software to create files in the proper format and submit them directly through the FIRE system. Submitting test files before the filing season helps confirm that the upload process works correctly.
  
  
• A gig economy platform pays 10,000 drivers across several states. The business can take advantage of the Combined Federal/State Filing program to transmit both federal and state returns at the same time. Because of the volume, the company may use automated systems to create, upload, and correct files as needed.

These examples show how businesses of all sizes must file forms electronically when they meet the IRS threshold. Whether using commercial software, a service provider, or in-house systems, each filer must ensure that information returns are transmitted in the proper format, accepted by the IRS, and corrected if errors are found.

Frequently Asked Questions

Who is required to file information returns electronically?

Any business that must file 10 or more information returns in a calendar year is required to file electronically. This threshold applies across all form types, including Forms 1099 NEC, 1099 INT, 1099 DIV, and W-2G. The Internal Revenue Service enforces these final regulations to ensure timely reporting. Filers who do not comply may face penalties, even if paper forms are submitted by the deadline.

How do I apply online for a transmitter control code (TCC)?

To apply online for a transmitter control code (TCC), businesses must complete the IR application for TCC on the IRS taxpayer portal. The application requires details about the employer, responsible officials, and types of forms to be filed. Once submitted, the Internal Revenue Service processes the application, usually within 45 days, and issues a code that allows the filer to register and use the FIRE system.

What is the proper format for uploading returns to the FIRE system?

The IRS requires that electronic files uploaded through the FIRE system follow the technical specifications in Publication 1220. Files must contain plain text and the correct transmission structure, including T, A, B, and C records. Excel formats, scanned copies, Word files, and PDFs are not accepted. Businesses can use approved software, hire a service provider, or create custom programs to generate files in the proper format for acceptance.

Can the IRIS system be used instead of FIRE?

The IRIS system, also called the information returns intake system (IRIS), provides a modern option for e-filing information returns. Unlike the FIRE system, IRIS allows businesses to register and file online with less technical expertise. A filer may need a separate IRIS transmitter control code to use this intake system. Although FIRE remains widely used, the Internal Revenue Service plans for IRIS to become the primary system in future tax years.

What should businesses do if their files are rejected?

If files uploaded to the FIRE system are rejected, the filer must review the error messages, correct the file, and electronically file it again. Common issues include formatting errors, incorrect employer identification numbers, or missing data. The IRS marks corrected submissions as accepted once they meet the proper format. Businesses can avoid repeated errors by using approved software, carefully following Publication 1220, and submitting test files before the official filing season.