IRS 1099 e-filing rules are changing for the 2025 filing season. Here’s what small businesses need to know.

The IRS made a change to the series Form 1099 e-filing requirements.  We suggest you make changes to your 1099 preparation procedures now to save time and money so that you are ready by January 2026.

Why the change? The IRS aims to ensure that income paid to self-employed individuals and other recipients is reported accurately, especially given the growth of the gig economy.  Also, by implementing stricter TIN matching, the IRS hopes to minimize errors in 1099 filings and associated problems for both payers and recipients.

Related Resource: 1099 Templates

What’s Changing for the 2025 Filing Season?

Effective for the 2025 filing season (i.e., starting in January 2026), the name of the Recipient (vendor) and tax identification number must be an exact match to IRS records.  If not, the 1099 will be rejected immediately, and a new 1099 would need to be filed with the correct information by January 31^st.

New Penalties for Late Filings

You can file after January 31^st, but it will be considered a late 1099 filing.  The IRS may apply late filing penalties depending on when the form was e-filed.  These penalties are:

• $60 per form if filed within 30 days after the due date
• $120 per form if filed more than 30 days after the due date but before August 1^st
• $310 per form after August 1^st or fail to file

Use the IRS TIN Matching System Early

Waiting to address this issue in January leaves businesses very little time to resolve.  Additionally, it’s crucial for businesses to know if the information provided by the Recipient is accurate and matches the IRS’ records. That’s where TIN Matching comes in.

How TIN Matching Works

Businesses can verify Recipient information through an IRS service known as TIN Matching.   Payors furnish a spreadsheet containing the names and Tax IDs of all Payees that may require a Form 1099.  The IRS responds with a report which identifies:

1. Name and Tax SSN/EIN are a positive match.
2. Tax ID does not match the name of Recipient.
3. Tax ID has not been assigned.

Recipients that fall into categories 2 or 3 will need to be contacted to obtain accurate information.

When to Start TIN Matching to Avoid Delays

But be careful – From February to December each year the turnaround time is 24 – 48 hours.  But in January it may take up to 5 days for a response.  This further reduces the time needed to get the 1099s filed by the due date of January 31^st.  It is prudent that businesses do not wait until the last minute.

We recommend using TIN Matching by the 3^rd quarter of the year but no later than November or early December.  This will allow more time to contact the Recipients and update your records.  This timing can help ensure your business avoids late fees and saves money!

We’re here to help!

TIN Matching can be a time consuming process, but we’re here to help. Wegner CPAs tax advisors can assist you with TIN Matching services for a nominal fee.  Please reach out to your Wegner contact for more information.