When evaluating 1099 e-filing software, too many businesses focus on things like templates, integrations, or pricing. But what separates a successful filing season, and one filled with continuous IRS rejections is validations.
The IRS can reject a file for something as small as a missing field, an invalid character, or a name and TIN mismatch. If your software does not catch these issues early, you will waste time correcting errors and risk penalties that can reach 340 dollars per incorrect return.
This checklist will help you evaluate 1099 e-filing solutions to ensure successful filing and reduced penalties.
The Essential 1099 E-Filing Validations Every Buyer Should Require
Name and TIN Matching Validation
Name and TIN mismatches are the number one cause of IRS errors and CP2100 or CP2100A notices.
Your solution must :
- Validate legal name and TIN combinations
- Flag mismatches before submission
- Support real-time or bulk TIN matching
- Without this, you risk penalties and unnecessary backup withholding.
Required Field Validations
The IRS rejects files automatically if mandatory fields are missing.
Your solution must flag missing:
- Recipient TIN
- Recipient name or address
- Payer information
- Required income fields
Field Format and Character Validation
Many errors occur because fields are incorrectly formatted.
Your solution must validate:
- Correct TIN structure
- Proper field lengths
- Allowed characters only
- No leading or trailing spaces
- No special characters where they are not permitted
Small formatting mistakes cause major rejections if not caught early.
Income and Withholding logic checks
Incorrect dollar amounts trigger immediate IRS errors.
Your solution must detect:
- Withholding amounts greater than income
- Negative numbers where not allowed
- Decimals in whole-dollar fields
- Invalid form box combinations
These logic validations prevent the most common IRS rejections.
IRS Schema and filing format for FIRE and IRIS
Your 1099 e-filing solution must validate against the exact file format required by the IRS system you use.
The IRS has two filing systems, and each uses a different format.
- FIRE (Filing Information Returns Electronically)
Uses the 1220 fixed-width text file format. Even one spacing, alignment, or character-width error can cause a full-file rejection. - IRIS (Information Returns Intake System)
Uses XML-based schemas. These require strict tag structure, element naming, and business-rule compliance.
Your solution must:
- Validate format, structure, and layout for each system
- Enforce IRS business rules for each form type
- Ensure correct control totals and file formatting
- Prevent file-level rejections by catching issues before submission
If the file does not follow the 1220 or XML rules, the IRS will reject the entire submission.
Duplicate Record Detection
Your software must automatically catch:
- Duplicate recipients
- Duplicate 1099 entries
- Multiple filings of the same record
This protects data quality and avoids confusion with recipients and the IRS.
State-Specific Validation Rules
States have additional rules that often differ from federal requirements.
Your solution should validate:
- State ID field formats
- Extra state-required data elements
- State filing thresholds
- Formatting for states not in the Combined Federal and State Filing program
Missing state validations is one of the most common and costly compliance gaps.
Correction Workflow Validations
Information return corrections have unique IRS rules.
Your solution must:
- Enforce correct correction types
- Prevent duplicate or conflicting corrections
- Validate that an original return exists
- Guide users through proper sequencing
A strong correction workflow reduces rework and liability.
Address Validation
Optional, but highly recommended.
Your solution should:
- Validate USPS formatting
- Confirm ZIP code and state combinations
- Enforce international address rules
This reduces undeliverable mail and duplicate statements.
Pre-Submission Proofing and Error Summary
Before you file, your solution must provide:
- A detailed error report
- A warning summary
- Record totals and data validation checks
- A clear confirmation that the file passes all IRS and state rules
This final safety net is essential for first-time acceptance.
Quick Buyer Checklist:
Your 1099 eFiling solution should have:
- Name and TIN matching
- Required field validation
- Format and character checks
- Income and withholding logic checks
- FIRE 1220 text-file validation
- IRIS XML schema validation
- Duplicate detection
- State-specific validations
- Correction workflow rules
- A pre-submission validation summary
If a vendor cannot confidently answer yes to all of these, the solution will not protect you from rejections or penalties.
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