How to File Form 1096 Electronically With the IRS
Learn how to electronically file Form 1096 with the IRS, including key requirements, submission steps, deadlines, and best practices for accuracy.
Businesses and organizations that submit tax forms such as Forms 1099 or 1098 must also file Form 1096 as a summary report. While paper filing is an option, electronic filing is faster and more efficient.
Understanding how to e-file Form 1096 correctly helps prevent delays and penalties.
E-Filing Requirements
Businesses must use the IRS’s Filing Information Returns Electronically (FIRE) system to e-file Form 1096. Before using FIRE, filers must obtain a Transmitter Control Code (TCC) through the IRS’s Information Returns (IR) Application for Transmitter Control Code system.
Businesses filing 10 or more information returns in a calendar year must e-file, a reduction from the previous 250-return threshold under the Taxpayer First Act. Failing to comply can result in penalties ranging from $60 to $310 per form, depending on how late the filing occurs.
Steps to Complete It
Setting up a FIRE system account is the first step. Registration requires an Employer Identification Number (EIN), contact details, and other identifying information. Users must then complete a Communication Test by submitting a properly formatted test file.
Once the test is passed, businesses must format their information returns according to IRS Publication 1220. Unlike paper submissions, Form 1096 is embedded within the electronic file containing the associated information returns. Using IRS-approved software ensures proper formatting and prevents rejections.
After preparing the file, businesses log into the FIRE system to upload their submission. The IRS provides an acknowledgment within 48 hours, indicating acceptance or rejection. If errors are found, the IRS issues a report detailing necessary corrections. Businesses must address these promptly to avoid penalties.
Submission Deadlines
The IRS has strict deadlines for filing Form 1096 and its associated information returns. Forms 1099-NEC, which report nonemployee compensation, must be submitted by January 31. Other information returns, such as Forms 1099-MISC, 1098, and 5498, are due by March 31 when filed electronically.
The FIRE system experiences high traffic as deadlines approach, which can slow processing times. Businesses should submit filings early to avoid last-minute technical issues. If a deadline falls on a weekend or federal holiday, submissions must be completed beforehand.
Handling Corrections
Errors in e-filed tax documents can cause discrepancies in IRS records, potentially leading to audits or penalties. Businesses must correct mistakes promptly.
The IRS categorizes errors into two types: Type 1, which involves incorrect taxpayer identification numbers (TINs) or payment amounts, and Type 2, which includes misreported recipient details or missing forms. Each requires a different correction process.
Submitting corrections involves preparing an amended electronic file following IRS Publication 1220 guidelines. The revised data must clearly indicate the original erroneous entry and provide the correction. If a TIN mismatch occurs, businesses should use the IRS TIN Matching Program before resubmission to prevent repeated rejections. If the mistake affects state filings, businesses must also update relevant state tax agencies.
Record Retention
Businesses must retain copies of all filed documents, including electronic submission confirmations and error reports, for at least three years from the filing due date or actual filing date, whichever is later. If a return is filed late or corrected, the retention period may extend.
Some states require businesses to keep tax records for up to six years, particularly if the information returns are used for state tax reporting. Maintaining digital backups prevents data loss, and secure storage solutions, such as encrypted cloud storage or external drives, help protect sensitive taxpayer information.