A lot of CPA and accounting firms still think about 1099 e-filing the old way: “We only have a few 1099-NECs, so we can paper file,” or “We are under the threshold for this form type.” That mindset used to work. It does not anymore.
Under the IRS’s current e-file rules, the threshold is 10 returns in the aggregate, not 250 per form type. The IRS explains the requirement on its page for filers and transmitters, including that the count includes Forms W-2 filed with the Social Security Administration: Filing Information Returns Electronically (FIRE). You can also see the broader explanation in the IRS topic page on who must file information returns electronically: Topic no. 801.
What this means in practice is simple and painful: you can be “small” on 1099s and still trip the e-file mandate because your combined count crosses 10.
Why the aggregation rule catches firms off guard
Aggregation is a counting problem disguised as a compliance problem. The IRS states that the 10-return threshold is comprised of an aggregate of almost all information return types covered by the regulation: Topic no. 801. The General Instructions for Certain Information Returns also reference the final regulations lowering the e-file threshold to 10 and clarify that it is calculated by aggregating all information returns: General Instructions for Certain Information Returns.
Two examples show how quickly a client can cross the line:
- A client issues 6 Forms W-2 and 4 Forms 1099-NEC. That is 10 in total. E-filing applies.
- A client issues 8 Forms 1099-NEC and 2 Forms 1099-INT. That is also 10 in total. E-filing applies.
This is why a January 1099 workflow cannot live in a silo. It needs to sit inside a broader “information reporting” process that includes payroll, vendor master data, and recipient statement deadlines.
The biggest operational mistakes firms make with 1099 e-filing
Counting by form type instead of total returns
This is the classic miss. Teams ask, “How many 1099s?” but forget to ask, “How many information returns overall?” The IRS makes the combined nature of the threshold clear in its e-file guidance: E-file information returns.
Treating e-file setup as a deadline-week task
If you intend to file electronically through IRS systems, a transmitter control code (TCC) is part of the equation, and processing time can matter. The IRS explicitly warns not to delay, noting it may take up to 45 days for processing in its e-file information returns page: Apply for a TCC.
Even if your firm uses a third-party provider, you still want a pre-season checklist: who files, where proof lives, and who owns the client communication when data is incomplete.
Starting upload work before the vendor master is clean
IRIS or any other filing route will not rescue messy inputs. Most “late January panic” comes from upstream gaps:
- Missing W-9s
- Legal name and EIN mismatches
- Duplicated vendors
- Wrong entity types
- Payments sitting in the wrong buckets
If those issues are not resolved early, your team ends up doing rework while the clock is ticking.
The IRIS reality: filing may get easier, but data quality still wins
The IRS has been steering filers toward IRIS and has stated that tax year 2026 / filing season 2027 is the targeted date for retiring FIRE, with IRIS as the only intake system for that season: FIRE system update. IRIS itself is summarized here: E-file information returns with IRIS.
That transition matters, but it does not change the core truth: a 1099 process is only as strong as your vendor data pack and your internal review gate.
A “1099-ready data pack” that prevents last-minute churn
Firms that run clean 1099 seasons usually produce one standardized internal packet per client before anything is submitted:
- Final payee list with legal name, EIN/SSN mask policy, address, and entity type
- Payment totals tied to the accounting system reports
- Exceptions list: vendors missing W-9, uncertain classification, address issues
- A short internal approval note: who reviewed and what is still pending
- Recipient statement plan: how and when statements are furnished, plus who handles client questions
This is not about bureaucracy. It is about removing ambiguity and reducing the number of times the same file gets touched.
When capacity is tight, reliability and integration matter more than raw speed. That is why the testimonials that resonate most are not about “cheap labor,” they are about operational fit. One firm owner described it like this: “the Finsmart team has always felt like a part of our team. They’re included in our meetings, collaborate seamlessly, and bring efficiency and productivity that we truly value.”
That “part of our team” dynamic is exactly what makes a standardized 1099-ready packet possible across dozens of clients.
Paper filing is not a fallback plan unless you have a waiver plan
If a client is required to e-file and cannot meet the requirement, the IRS indicates you should request a waiver, and it links to the waiver form directly. The IRS also notes that waivers are not automatically accepted on its FIRE page.
Operationally, this matters because “we will paper file if we have trouble” can become a risky assumption if the client’s aggregated return count triggers mandatory e-filing.
How a seat-based model reduces 1099 compliance risk
1099 season has a lot of structured work that does not require partner judgment, but does require consistency:
- vendor master cleanup
- W-9 collection follow-ups using a firm-approved script
- reconciling payee totals to reports
- preparing upload-ready templates or CSVs
- assembling proof of filing and client delivery notes
This is where a dedicated seat model can remove load from your onshore team while keeping control of tools and workflow. Finsmart’s Accounting Seat Model is built around dedicated professionals working inside your process. For tax-focused support that aligns with CPA firm workflows, there are dedicated options like the US Tax Seat.
When firms describe what “good” feels like, it often comes down to steady execution during time-bound work. As one client put it: “Their communication was steady, their execution was thorough.” That is the standard you want in January, when incomplete data can otherwise create chaos.
A clean way to protect January without slowing tax season
The firms that make 1099 season predictable usually do three things early:
- confirm whether the client’s aggregated return count triggers mandatory e-filing
- lock the vendor master cleanup window with firm cutoffs
- require a 1099-ready data pack before submission work begins
If you want a plug-and-play 1099-ready data pack template (vendor checklist, W-9 follow-up scripts, internal approval checklist, and proof-of-filing closeout format), schedule a meeting with our team or email [email protected]. When you reach out, include your approximate 1099 volume and whether you plan to file through IRIS, a third-party provider, or an internal transmitter setup.
In this Article
editor
Maanoj Shah is the Co-founder & Director of Growth Strategy & Alliances at Finsmart Accounting, where he pioneered the “Accounting Seat” model—a revolutionary offshore embedded staffing solution purpose-built for Accounting and CPA firms. Widely recognized as an outsourcing and offshoring expert, Maanoj’s insights have been featured in leading accounting publications, and he regularly speaks at premier industry conferences including Scaling New Heights, Bridging the Gap, BKX, and Women Who Count.
A dynamic growth leader with over two decades of experience, Maanoj has incubated, scaled, and exited ventures across Fintech, HR, and Consulting sectors, holding various CXO roles throughout his career. His passion for scaling businesses is matched by his commitment to social impact. He is the Co-founder of Mission ICU, a national healthcare initiative that installs critical care units in underserved areas of India, and was recognized by the World Economic Forum for its last-mile impact.
Outside of work, Maanoj leads an active lifestyle as an avid tennis player and passionate golfer, blending strategy and agility on and off the court.
CONTENT DISCLAIMER
The content in this article is for general information and education purposes only and should not be construed as legal or tax advice. Finsmart Accounting does not warrant or guarantee the accuracy, completeness, adequacy, or currency of the information in the article. You should seek the advice of a competent lawyer or accountant licensed to practise in your jurisdiction for advice on your particular situation.
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