What Is the Combined Federal/State Filing (CF/SF) Program?
Learn about the Combined Federal/State Filing (CF/SF) Program, an IRS initiative that streamlines compliance for information returns submitted to federal and state agencies.
The Combined Federal/State Filing (CF/SF) Program is designed to streamline reporting financial information to both federal and state tax authorities. It offers convenience to businesses and financial institutions by enabling a single electronic submission to the Internal Revenue Service (IRS). The IRS then forwards relevant data to participating states, simplifying compliance obligations for filers.
Defining the Combined Federal/State Filing Program
The CF/SF program is an Internal Revenue Service (IRS) initiative designed to ease administrative responsibilities for entities reporting specific financial data. It functions as a central clearinghouse, collecting information returns from filers, such as businesses and financial institutions. This program specifically addresses information returns, which detail payments made to others, rather than income tax returns.
The core objective of the CF/SF program is to promote efficient and accurate reporting by minimizing redundant submissions. States also require this information for their own tax administration purposes. The program integrates federal and state filings, with the IRS forwarding necessary data to states on behalf of the business. This integration helps reduce the burden of separate filings across multiple jurisdictions.
Information Returns Included in CF/SF
The Combined Federal/State Filing program encompasses specific types of information returns, primarily from the IRS Form 1099 series. Forms commonly included are:
- Form 1099-B (Proceeds from Broker and Barter Exchange Transactions)
- Form 1099-DIV (Dividends and Distributions)
- Form 1099-G (Certain Government Payments)
- Form 1099-INT (Interest Income)
- Form 1099-K (Payment Card and Third Party Network Transactions)
- Form 1099-MISC (Miscellaneous Information)
- Form 1099-NEC (Nonemployee Compensation)
- Form 1099-OID (Original Issue Discount)
- Form 1099-PATR (Taxable Distributions Received From Cooperatives)
- Form 1099-R (Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs)
Additionally, Form 5498 (IRA Contribution Information) is part of the program.
Not all information returns are eligible for the CF/SF program. For example, Form W-2G, Certain Gambling Winnings, is not included, despite many states requiring its reporting. State participation in the program can also vary for each specific form type. This means a state might accept one type of 1099 form through CF/SF but require direct filing for another.
Operational Mechanics of CF/SF
The operational mechanics of the Combined Federal/State Filing (CF/SF) program involve electronic data exchange initiated by the filer. To participate, filers submit a single electronic file to the IRS through the Filing Information Returns Electronically (FIRE) system. This submission must adhere to the specifications detailed in IRS Publication 1220, which outlines the technical requirements for electronic filing of various information returns.
After the IRS processes this data, it acts as a forwarding agent. For eligible forms and states, the IRS electronically transmits the relevant information to the respective state tax agencies. While the IRS facilitates this data transfer, filers remain responsible for meeting all federal filing requirements.
The IRS provides these CF/SF files to participating states approximately six times a year. States must apply to be part of the program, and it can take about a year for records to begin appearing in the CF/SF system after a state joins.
Key Considerations for Filers
Filers utilizing the Combined Federal/State Filing (CF/SF) program must be aware that state participation is not universal for all forms. Not all states participate, and even among those that do, their acceptance of specific forms through CF/SF can differ. Therefore, it is important for filers to verify the specific requirements of each state where they have reporting obligations.
Some states that participate in the CF/SF program may still require additional state-specific forms or separate direct filings for certain transactions or income types. This often occurs if the state has unique reporting thresholds or specific data requirements not fully satisfied by the federal submission. For instance, many states may still require direct reporting for Form 1099-NEC, Nonemployee Compensation, even though it is included in the CF/SF program.
Filers retain the responsibility for ensuring all state filing obligations are met, regardless of their use of the CF/SF program. Any errors in the initial federal filing will propagate to the states, potentially leading to compliance issues. Filers should consult IRS Publication 1220 for the most current list of participating states and their codes, as states can be added or removed from the program.