The Internal Revenue Service (IRS) has released updated versions of Publication 1220 and Publication 1187, which outline the technical requirements for electronically filing information returns such as Forms 1099 and 1042-S.
According to TAINA Technology, these updates mark a major step in the IRS’s ongoing modernization initiative, compelling institutions to accelerate their digital transformation to maintain compliance.
Lower Electronic Filing Threshold Under TD 9972
The most significant change for Tax Year 2025 comes from Treasury Decision (TD) 9972, which drastically reduces the threshold for mandatory electronic filing.
Previously, filers submitting up to 250 information returns could do so on paper. Now, any filer submitting 10 or more information returns must file electronically.
This lower threshold applies across several IRS systems, including:
- FIRE (Filing Information Returns Electronically)
- IRIS (Information Returns Intake System)
- AIR (Affordable Care Act Information Returns)
- Social Security Administration (SSA) for Form W-2 submissions
The update affects all forms governed under Publication 1220, such as Forms 1097, 1098, 1099, 3921, 3922, 5498, and W-2G, as well as those under Publication 1187, including Form 1042-S.
By tightening the e-filing threshold, the IRS aims to streamline reporting, improve accuracy, and reduce paper processing costs, while pushing all reporting institutions toward electronic compliance.
Transition from FIRE to IRIS Begins
Another major shift involves the retirement of the long-standing FIRE system, which has served as the backbone for electronic information return submissions for decades. Beginning with Tax Year 2026 (Filing Season 2027), the IRIS platform will become the IRS’s sole filing system for information returns.
The agency encourages all filers—especially financial institutions—to begin transitioning early. Applying for a Transmitter Control Code (TCC) through the IRIS portal well before the 2027 filing season will help ensure continuity and reduce the risk of delays.
The move from FIRE to IRIS underscores the IRS’s broader digital strategy to modernize its infrastructure and improve the taxpayer experience.
The new system promises a more intuitive interface, better security protocols, and compatibility with emerging technologies that enhance data validation and transmission efficiency.
Key Form Updates for 2025
Alongside the systemic changes, the IRS has introduced form-specific updates that expand reporting capabilities and improve the granularity of tax data collection.
- Form 1099-R now includes a new Distribution Code “Y” to report Qualified Charitable Distributions (QCDs), providing clearer reporting for charitable contributions made directly from retirement accounts.
- Form 1099-Q introduces a new Code “2” for Qualified Tuition Program (QTP) transfers to Roth IRAs, reflecting the IRS’s continued focus on transparency in tax-advantaged savings movements.
These targeted updates align with the IRS’s long-term strategy to promote more accurate data capture across a growing array of financial transactions, ensuring consistent oversight and easier reconciliation of taxpayer records.
Preparing for Compliance: Immediate Steps for Financial Institutions
For financial institutions, the implications of these updates are significant. The reduced electronic filing threshold means that many organizations that previously filed on paper must now adopt digital systems. The transition to IRIS requires both operational and technological preparation.
To ensure compliance, institutions should take the following proactive steps:
- Evaluate filing volumes across all forms and entities under the same Taxpayer Identification Number (TIN). Filers submitting 10 or more returns must now use e-filing.
- Apply for a Transmitter Control Code (TCC) through the IRIS system by November 1, 2025, to avoid processing delays.
- Test internal systems early to confirm compatibility with the IRIS platform and ensure smooth data transmission.
- Update compliance policies and training, ensuring that all relevant departments—tax, legal, IT, and operations—understand the new requirements.
- Engage with technology vendors or service providers that specialize in electronic tax reporting and data validation to streamline compliance efforts.
Failure to comply with the new e-filing mandate may result in substantial penalties, particularly for institutions that do not obtain an approved waiver in advance.
The Broader IRS Modernization Push
Behind these updates is the IRS’s larger effort to modernize its digital infrastructure, enhance data accuracy, and minimize administrative burdens. The move toward IRIS reflects a broader commitment to efficiency and transparency.
For businesses, however, the shift brings new operational demands—requiring careful coordination among compliance teams, IT departments, and third-party providers.
As the agency evolves its digital capabilities, taxpayers and financial institutions alike are expected to operate in a more integrated and technology-driven regulatory environment. This modernization is intended to improve reporting quality while reducing manual errors and paper-based inefficiencies.
How TAINA Technology Supports the Transition
TAINA Technology, a leading RegTech provider, continues to support financial institutions through this evolving compliance landscape.
Its automated FATCA, CRS, and QI validation platform helps organizations strengthen data integrity, reduce manual workload, and achieve real-time compliance with global tax reporting standards.
TAINA’s platform enables firms to automate onboarding tax form validation, streamline reporting workflows, and adapt quickly to new IRS filing requirements.
As the IRS advances its modernization agenda, TAINA’s solutions offer financial institutions the tools needed to stay compliant, efficient, and future-ready.
The IRS’s updates to Publications 1220 and 1187 mark a defining moment in the digital evolution of tax reporting. The lowered e-filing threshold and the upcoming transition to IRIS will reshape how institutions manage compliance.
Financial institutions that act early—by applying for TCCs, updating systems, and training teams—will not only avoid penalties but also gain operational advantages in a fully digital compliance environment.
With technology partners like TAINA, organizations can navigate these regulatory shifts with greater confidence and agility.
