The IRS has announced a change in the electronic filing requirements for users that transmit information returns and automatic extension requests to the IRS through the Filing Information Returns Electronically (FIRE) System. Beginning on September 26, 2021, the new online Information Returns (IR) Application for the Transmitter Control Code (TCC) will replace the Form 4419, Application for Filing Information Returns Electronically (FIRE) and Fill-in Form 4419 on the FIRE System.

Background

Beginning on October 1, 2019, Form 4419 had to be filed electronically to request an original TCC (a five-digit number that is required to file information returns electronically). A paper Form 4419 could be used for filers with existing TCCs to revise TCC information or request an additional TCC.

Currently, the following forms may be filed electronically through the FIRE System after the filer (referred to as a "Responsible Official") obtains a TCC:

• Information returns 1097, 1098, 1099, 3921, 3922, 5498, W-2G
• Form 1042-S, Foreign Person's U.S. Source Income Filing Information Returns Subject to Withholding
• Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips
• Form 8955-SSA, Annual Registration Statement Identifying Separated Participants with Deferred Vested Benefits
• Form 8596, Information Returns for Federal Contracts (Federal Government Agency Use Only)

Any corporation, partnership, employer, estate and/or trust that must file 250 or more information returns for any calendar year must file electronically (the IRS has issued proposed regulations that would lower this number to 100).

New process

New users will have to authenticate their identities and create a new account to access the new online IR Application for TCC.

To create an account, new users must pass the Secure Access process. New users that already have a Secure Access account (such as e-Services or an Online Payment Agreement) can create their new IR Application for TCC without going through the Secure Access process.

In its announcement, the IRS said that existing FIRE users, if approved, will be able to validate their identities through the Secure Access process to use the IR Application for TCC.

According to the IRS, the new online IR Application for TCC will (1) automate the TCC application to avoid manual review; (2) allow new users to manage their application, add and remove authorized users, view their TCC and request additional ones; and (3) speed up the application process.

Implications

Updates to the IRS FIRE system illustrate the IRS's continued efforts to expand its electronic filing capabilities.

The Taxpayer First Act of 2019 aimed to transform the IRS into a more taxpayer-friendly agency by modernizing its technology and enhancing its cyber security. Under the Act, tax-exempt organizations that file over 250 returns must electronically file information returns and related forms for tax years beginning on or after July 2, 2019. This requirement includes payments for unrelated business taxable income (UBTI) and Private Foundation-related excise taxes.

Exempt organizations that must already file information returns using the FIRE system should consider adjusting their internal compliance processes for the aforementioned changes to the application and identity-authentication requirements. Organizations that are below the current threshold of 250 filed information returns, but have historically filed at least 100 information returns, should monitor future communications from the IRS that might lower the filing threshold and require them to register for the FIRE system.

The IRS continues to respond to legislation affecting its e-file mandates and processes. Tax-exempt organizations should evaluate what electronic filing tools and options are available so they can comply with these mandates. Prospectively, tax-exempt organizations should continue to adjust their compliance processes as the IRS continues to update electronic filing requirements for all returns and related forms and payments. Given the recent trends, any proactive measures to familiarize and incorporate electronic filing systems into an organization's compliance process will likely save the organization time and resources once these systems become mandatory for a broader range of taxpayers.

Please contact your EO professional for further information.

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