A Year-Round Process

A month-by-month checklist can help your business stay organized.
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January

  • Apply IRS, state, form and logistical validations to your data set to ensure your information is complete and compliant.
  • Double check the print, mail and filing deadlines for all form types you need to file.
  • If you are managing any withholding, be sure to reconcile withholding payments and filing information with withholding information reported on 1099/W-2 forms.
  • File 1099-NEC information to the IRS and W-2 information to the SSA by January 31.
  • File annual returns for federal 941, 945, 1042 and state equivalent annual returns.
  • File 1099 and W-2 information directly with states where the IRS’ Combined Federal/State Filing program does not satisfy their requirements.

February

  • Address late originals and corrections for 1099-NEC and W-2 forms. If you have any late filings, you can minimize potential penalties by getting them filed within 30 days of the filing deadline.
  • Correct any errors from TIN matching or recipient inquiries and update forms printed/mailed in January, but not yet transmitted to the IRS.
  • Print and mail brokerage forms by February 15.
  • Verify TIN and name accuracy for any changes due to customer inquiries or new W-9 form submissions. See our TINCheck service for real time or Bulk TIN Matching plans.
  • File Extension of Time (8809) if needed, which allows 30 extra days to file with the IRS, if applicable.
  • Start prepping for 1042-S printing/mailing and reporting due March 15.
  • Begin organizing and prepping data for ACA filing. Paper copies are due to recipients by March 2 and electronic filing is due March 31.

March

  • Continue to proactively address any late 1099 and W-2 originals and corrections for 1099, 1095 and W-2 forms.
  • Print and mail 1042-S forms due March 15.
  • File Extension of Time (8809), which allows 30 extra days to file with the IRS, if applicable.
  • Transmit remaining form types (1099-MISC, 1099-S, 1099-INT, 1099-DIV, 1095, 1098 Series) to the IRS by the March 31 deadline if Extension of Time (8809) is not filed.

April

  • Address late originals and corrections for 1099-NEC and W-2 forms.
    • Second tier penalties ($120 per form) apply for records filed 31 days after the filing deadline through August 1.
  • Prepare late originals and corrections for:
    • Forms filed in March without Extension of Time (8809): 1042-S and 1099s/1098/3921/3922.
    • First tier penalties apply for records filed within 30 days of the filing deadline.
  • Update forms printed/mailed but not yet transmitted to the IRS if Extension of Time (8809) was filed.
  • Verify TIN accuracy of any records not yet transmitted to the IRS to mitigate any potential penalties.
  • Be aware of the new deadlines for reporting in April, if Extension of Time (8809) was filed:
    • 1042-S reporting due April 14.
    • Remaining 1099/1098/3921/3922 reporting due April 30.

May

  • Be aware that 5498 reporting is due May 31.
  • Continue to work through any late originals and corrections:
    • Forms filed in April with Extension of Time (8809): 1042-S and 1099s/1098/3921/3922.
    • First tier penalties apply for records filed within 30 days of the filing deadline.
    • Any corrections from prior tax years.
  • Conduct a season/process review with internal resources and external vendors to determine:
    • What went well during season?
    • What did not go well during season?
    • What improvements could be made?
      • Develop a plan/budget to make improvements to the process.
  • Implement proactive TIN matching against the IRS database to eliminate IRS Notice CP2100 altogether.

June

  • Continue to work through any late originals and corrections:
    • Second tier penalties apply for records filed prior to August 1.
    • After August 1, penalties rise from $120 to $310 per record filed.
  • Begin implementing post season process changes – W-9/data collection improvements, proactive TIN match, state filing data collection, withholding process improvements, etc.

July

  • Create an action plan for potential IRS Notices: CP2100 (B Notice) and 972CG (P Notice)
    • Bulk TIN match records transmitted to the IRS, and subject to backup withholding, to determine potential IRS Notice CP2100 exposure.
  • Prepare Late Originals and Corrections for Forms 1042-S/1099s/1098/3921/3922/5498:
    • Second tier penalties apply for records filed 31 days late but before August 1.
    • After August 1, penalties rise from $120 to $310 per record filed.

August

  • Process and respond to IRS Notice 972CG. Notices start arriving late July:
    • Determine why the P Notice is being received:
      • Missing or invalid name and TIN combinations
      • Filed late
      • Filed in incorrect formats
    • If proposed penalty was due to missing or invalid name and TIN combinations:
      • Gather previous B Notice data.
      • Determine where additional W-9 solicitations are required.
    • Prepare abatement to the IRS within 45 calendar days.
  • Prepare action plan for handling IRS Notice CP2100 (B Notice). Notices are expected to start arriving late September:
    • How will you:
      • Determine which type of solicitation to send: first or second B Notice?
      • Prepare and mail W-9 solicitations?
      • Update information and ensure correct information has been received?
      • Apply backup withholding for those who do not respond to solicitations?
  • For high volume filers, begin scheduling and coordinating pre-season testing internally. Ideally, pre-season testing is conducted between September and November.

September

  • Process and respond to IRS Notice 972CG (P Notice). Notices started arriving in late July.
    • Determine why the P Notice is being received:
      • Missing or invalid name and TIN combinations
      • Filed late
      • Filed in incorrect formats
    • If proposed penalty was due to missing or invalid name and TIN combinations:
      • Gather previous B Notice data.
      • Determine where additional solicitations are required.
    • Prepare abatement to the IRS within 45 calendar days.
    • Prepare action plan for handling IRS Notice CP2100 (B Notice). Notices are expected to start arriving late September/early October.
      • How will you:
        • Determine which type of solicitation to send: first or second B Notice?
        • Prepare and mail solicitations?
        • Update information and ensure correct information has been received?
        • Apply backup withholding for those who do not respond to solicitations?
    • For high volume filers, begin internal pre-season testing. Ideally, pre-season testing is conducted between September and November.

October

  • Review/implement regulatory changes:
    • Annual review of regulatory updates (federal and states).
    • Understand where you may have direct state filing requirements (forms not satisfied by CF/SF).
    • Communicate with vendors and internal staff:
      • Overview of tax reporting processes applicable to each vendor or department.
      • Alignment on who is responsible for what processes.
      • Updates to previous processes, responsibilities or regulatory changes that could confuse the recipient.
    • Conduct a pilot test of your processes prior to season to ensure every step of the process runs smoothly:
      • Pull your filer and recipient data and check for obvious errors: missing TIN, address info, state filing data, etc.
      • Ensure recipients are categorized correctly so they receive the proper form.
      • Conduct a bulk TIN check with the IRS to reduce the number of invalid name/TIN combinations filed during season. This is a useful process to common changes in status, name, business/recipient ID, death, etc.
    • Address IRS Notice CP2100 or B Notice processing (if received in October):
      • Prepare and mail solicitations.
      • Update information, TIN match and file corrected returns for any responses received from solicitations.
      • Apply backup withholding for those who do not respond to solicitations.

November

  • Prepare your staff:
    • If the responsibility for the 1099 reporting process changes frequently (which is typical in small to mid-sized organizations), make sure you have a clear owner identified and that they have the resources they need.    
    • Review/implement regulatory changes:
      • Annual review of regulatory updates (federal and states).
      • Incorporate any changes found into your existing reporting processes.
    • Communicate with vendors and internal staff:
      • Overview of tax reporting processes applicable to each vendor or department.
      • Alignment on who is responsible for what processes.
      • Updates to previous processes, responsibilities or regulatory changes that could confuse the recipient.
    • Conduct a dry run or pilot test of your processes prior to season to ensure every step of the process runs smoothly so you don’t run into any hiccups during January.
    • Conduct a bulk TIN check with the IRS to reduce the number of invalid name/TIN combinations filed during season. This is a useful process to common changes in status, name, business/recipient ID, death, etc.
    • Address IRS Notice CP2100 or B Notices processing (if received in November):
      • Prepare and mail solicitations.
      • Update information, TIN match and file corrected returns for any responses received from solicitations.
      • Apply backup withholding for those who do not respond to solicitations.
    • Conduct a bulk TIN match to ensure accurate name and TIN information of your vendor list.

December

  • Complete solicitations, response handling and/or abatements for any outstanding IRS Notices (CP2100 or 972CG).
  • Research and implement latest federal and state regulatory updates.
  • Conduct a test run of your existing 1099 reporting process to fix any issues ahead of season.
  • Create a project plan for all tasks needing to be completed in January, including deadlines and responsible parties:
    • Agree on deadlines with print partner, accounting partner and others if applicable.
    • Agree on deadlines with IT or other areas responsible for data extraction.
  • Review project plan with all parties involved.
  • Train new employees on 1099 reporting requirements and processes.
  • Train customer service team on 1099 reporting requirements and corrections process, if applicable.