Executive summary: New FIRE TCC code applications required for 2022 information returns
Taxpayers planning to file information returns electronically next year who were assigned a transmitter control code (TCC) before Sept. 26, 2021 now have until Aug. 1, 2023 to submit a new Information Returns Application for Transmitter Control Code (IR-TCC) or they will not have access to the IRS’ Filing Information Returns Electronically (FIRE) system after the deadline and could face penalties for failing to file information returns electronically as required.
As year-end approaches and businesses gear up to file tax information returns (such as forms 1099) early next year, the IRS has published reminders that effective September 25, 2022, taxpayers filing certain information returns electronically who were previously assigned a transmitter control code (TCC) before Sept. 26, 2021 must submit a new Information Returns Application for Transmitter Control Code (IR-TCC) application using the new IR-TCC system before Aug. 1, 2023 or they could be deactivated in the Filing Information Returns Electronically (FIRE) system and will not be able to file information returns electronically as required and may be subject to penalties.
In August 2022, the IRS phased out the use of Form 4419, Application for Filing Information Returns Electronically (FIRE)) which was previously used to apply for a new or update an existing TCC code. The new IR-TCC is part of the IRS’ broader goal to reduce paper filings. The change is relevant for all companies filing information returns electronically via the IRS Filing Information Returns Electronically (FIRE) system, including partnerships, financial institutions, and any company filing 250 or more information returns. Information returns that will require an IR-TCC to E-file going forward are Forms 1099, 1042-S, 8027, and 8955-SSA.
Applications required for all
All new applications for TCCs must be submitted through the IR-TCC system. The new online system is now live and allows filers to maintain and update their existing TCCs through the online portal. All existing filers who have received their FIRE TCCs prior to Sept. 26, 2021, will be transitioned over to the new IR-TCC system, and their existing TCC will remain valid for use until Aug. 1, 2023. According to the IRS, any applications for TCCs that were submitted on Form 4419 after Sept. 26, 2021, will not be granted, and will need to be resubmitted through the IR-TCC system.
For all FIRE TCCs active before Sept. 26, 2021, and transitioned to the new IR-TCC system, a completed IR-TCC application for that TCC must be submitted prior to Aug. 1, 2023. The IRS has warned taxpayers that any TCC, regardless of when it was applied for, that does not have a completed IR-TCC application prior to Aug. 1, 2023, will be deactivated and will not be available for e-filing. Responsible officials listed on pre-existing applications for TCCs will be able to access and update their applications through IRS.gov with an e-services account.
Impact to new and existing filers
The change to the IR-TCC system is expected to impact a large number of taxpayers that traditionally paper filed their forms but would now be required to file electronically under recently proposed regulations issued by the IRS that call for reducing the electronic filing threshold from 250 returns to 100 for 2022, and down to 10 information return filings for 2023. In addition, any filer required to file all four categories of information returns (1099, 1042-S, 8027, or 8955-SSA) will need to have four valid IR-TCC applications on file to successfully E-file all their information returns.
U.S. companies and non-U.S. companies that are 50% or more U.S. owned and that are required to file forms 1099, 1042-S, 8027, or 8955-SSA should ensure that they have a process and related internal controls for submitting and monitoring the status of their IR-TCC applications. As the IRS moves to streamline its operations and reduce costs by encouraging more taxpayers to file returns electronically, companies should likewise be prepared for changes in how they transmit and track returns.