The IRS is preparing to roll out several major updates that will change how businesses file 1099 forms in the 2026 and 2027 seasons. These updates include the gradual shift from the FIRE system to IRIS, new data entry requirements, form changes, a higher reporting threshold for certain forms, and adjustments to the Combined Federal and State Filing program. Because these changes affect how small businesses prepare returns, understanding them early can help you avoid filing delays or compliance issues.
Key Takeaway:
Significant IRS changes are coming to 1099 filing in 2026 and 2027, and WageFiling is already making system updates so users can stay ahead of new requirements without added stress. This allows the rest of the blog to focus on the IRS rules while WageFiling manages the technical updates behind the scenes.
As the IRS modernizes its systems, businesses can expect new formatting rules, additional reporting fields, and updated filing requirements. Below is a clear overview of what is changing and when these changes will take effect.
IRS Filing System Changes: IRIS Replacing FIRE
The IRS is transitioning electronic filing from the legacy FIRE system to the newer IRIS platform. FIRE will remain active through the 2026 filing season, but IRIS is expected to become the primary system for 1099 electronic submissions over time.
You can review the IRS IRIS system here.
The FIRE system details are available here.
As the transition continues, filers should expect updates to formatting specifications, validation rules, and data entry structures required for successful submission through IRIS.
2026 Filing Season Changes
The IRS has announced several updates that take effect for the 2026 filing season. These changes may influence when and how businesses prepare their forms.
FIRE System Temporary Closure
The FIRE system will be unavailable until January 6, 2026. Any early submissions must continue using the 2025 program until the system reopens.
1098 VLI Print and Mail Requirement
For the 2025 tax year, Form 1098 VLI must be printed and mailed to recipients. At this time, the IRS has not issued penalties for late filing, but lenders should still ensure they provide accurate borrower statements.
1099 DA Reporting Requirement
Beginning with the 2025 financial year, businesses classified as brokers must issue Form 1099 DA for digital asset transactions. This includes cryptocurrency, NFTs, tokenized assets, and other digital assets defined by the IRS.
Draft IRS instructions can be reviewed here.
Initial IRIS Processing for Some 2026 Forms
Because IRIS is gradually replacing FIRE, certain 1099 forms may begin routing through IRIS during the 2026 season. Filers should prepare for updated electronic formatting requirements as more information becomes available.
2027 Filing Season Changes
More significant changes take effect in the 2027 filing season, especially involving data entry rules and reporting thresholds.
New Data Entry Requirements
Beginning in 2027, IRIS will require expanded name fields for individual payees. Filers must enter:
- First Name
- Middle Initial
- Last Name
- Suffix
A new indicator will also be required to identify whether the TIN provided is an EIN or an SSN. These updates improve record matching and reduce IRS processing errors.
Businesses may need to update their recordkeeping processes ahead of this change to ensure their data captures all required fields.
Higher Reporting Threshold for NEC and MISC
One of the most impactful updates is the increase in the reporting threshold for Forms 1099 NEC and 1099 MISC. The threshold will rise from $600 to $2,000, beginning with the 2027 filing season. After this change, the threshold will adjust annually for inflation.
This update reduces administrative workload for businesses that issue many small payments and reflects broader changes in reporting policy.
Form Changes for the 2025 Software Version
The IRS is also implementing form level changes that will appear in the 2025 software used for the 2026 filing season. These include:
- 1099 MISC: Box 14 removed (excess golden parachute payments)
- 1099 NEC: New Box 3 added (excess golden parachute payments)
- 1099 Q: New checkbox in Box 4
- 1099 R: New Box 7 code Y
- 1096: New box added for reporting 1099 DA filings
These updates affect how information is reported and may require filers to adjust their data entry practices.
Combined Federal and State Filing (CF/SF) Updates
The IRS has added Oregon to the CF/SF program and removed Missouri. This means filers in these states should verify whether separate state reporting is still required.
1042 S Updates
The IRS has introduced several updates to Form 1042 S, including:
- New Chapter 3 status codes
- New income codes
- US now recognized as a valid country code in Box 12f
- New Box 7d for escrow related withholding
- Recipient address fields have been split, which impacts envelope compatibility
These updates allow the IRS to capture more complete information for payments made to foreign persons.
Where to Stay Updated on WageFiling System Changes
WageFiling continually updates its platform to align with IRS requirements. Filers can review the most recent enhancements and compliance updates here.
This resource provides ongoing information about new IRS regulations and the adjustments being made within the WageFiling system.
Frequently Asked Questions
1. When will the IRS fully replace FIRE with IRIS?
The IRS has not announced a final cutoff date. FIRE will remain active through the 2026 filing season, and IRIS will gradually take on more responsibility in 2026 and 2027.
2. When does the new $2,000 reporting threshold begin?
The increased threshold for Forms 1099 NEC and 1099 MISC will begin with the 2027 filing season. After that, it will adjust for inflation.
3. Do businesses need to update systems for the new name fields?
Yes. Beginning in 2027, filers must provide expanded payee name fields and identify whether the TIN is an EIN or SSN.
