If you’re a small business owner who files 1099 forms, there’s an important change coming that could affect how you handle your annual reporting. The IRS is retiring its decades-old FIRE system and replacing it with a new platform called IRIS. Here’s what you need to know to stay compliant and avoid potential headaches.
What’s Happening with IRS Filing Systems?
The IRS has officially announced that it’s sunsetting the FIRE (Filing Information Returns Electronically) system, which has been the backbone of electronic 1099 filing since the 1980s. The final deadline is approaching fast:
- 2025 tax year: The last year you can file through the old FIRE system
- January 2027: FIRE system is completely decommissioned
- 2026 tax year returns (filed in early 2027): Must use the new IRIS system
This means businesses have just one more filing season to prepare for this major transition.
Understanding the New IRIS System
The new Information Returns Intake System (IRIS) represents a complete technological overhaul. While the old FIRE system used simple, compact file formats that were relatively straightforward, IRIS is built on modern XML technology that’s more complex but offers better functionality.
The key difference? IRIS requires data to be structured in XML format, which is larger and more detailed than the old system. This change affects how your filing software processes and transmits your 1099 data to the IRS.
What This Means for Small Businesses
For most small business owners filing under 100 forms annually, the technical details matter less than understanding how this impacts your filing process. Beyond having to apply for a separate TCC for IRIS, here are the most important points:
Filing Volume Determines Your Path: If you file fewer than 100 returns, you’ll use the IRIS Taxpayer Portal, which allows web-based filing and CSV uploads. Businesses filing 100 or more returns must use the more complex Application to Application (A2A) system.
Data Requirements Are Changing: The new system requires more detailed information, including separate fields for first and last names instead of combined name fields. This might seem minor, but incorrect formatting can lead to costly penalties from name/TIN mismatches.
State vs. Federal Filing Complexity: Here’s where it gets tricky for small businesses. While the IRS is moving to IRIS, most states are still using the old FIRE format. This means you might need to file the same information in two different formats—IRIS for federal returns and FIRE for state returns.
Timeline and Preparation Steps
With the transition deadline approaching, small businesses should start preparing now:
Immediate Steps (2025):
- Verify your current filing volume to understand which IRIS system you’ll need
- Review your vendor data to ensure you have complete, accurate information
- Consider whether your current filing method (DIY, accountant, or software) will handle the transition
Before 2027 Filing Season:
- Test any new filing software or processes
- Ensure your data collection methods capture the required information fields
- Have a backup plan in case of technical issues during the transition
The Reality for Busy Small Business Owners
Let’s be honest—most small business owners don’t want to become experts in IRS filing systems. You’re running a business, managing employees, serving customers, and handling dozens of other priorities. Learning the technical details of XML formatting and API connections isn’t how you want to spend your time.
This is exactly why many smart business owners are moving toward automated solutions like eFileMyForms that handle these complexities behind the scenes. The transition from FIRE to IRIS adds another layer of complexity to an already tedious annual process.
Streamlining Your 1099 Process
Rather than wrestling with changing IRS systems, consider how you can simplify your entire 1099 process. The right filing solution should handle not just the technical transition, but your complete workflow from data collection through final submission.
The FIRE to IRIS transition represents a significant change in how the IRS processes information returns, but it doesn’t have to create additional stress for your business. By understanding the timeline and key requirements, you can make informed decisions about how to handle your 2026 and future 1099 filings.
With eFileMyForms as your partner in 1099 reporting, you can ensure our simple 3-step process remains the same for 2025 reporting. Take the stress of IRS changes out of your reporting process, get started with eFileMyForms for a smooth 2025 reporting season.