Episode 20: Goodbye FIRE, Hello IRIS: What E-Filers of 1099s Need to Know

The IRS has been signaling for months that the FIRE system — one of its two electronic intake systems for information returns — is on its way out. But earlier 2026 drafts of Publication 1099 left some wiggle room in the language. The March 2026 draft doesn't. Jason Dinesen walks through exactly what the updated publication says, explains what FIRE and IRIS actually are and why the distinction matters, and lays out your practical e-filing options as the end-of-2026 shutdown approaches. Whether your organization files directly or through a third-party vendor, now is the time to get ready.

Transcript

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Some people have said that maybe the IRS won't shut down the fire system at the end of 2026. However, based on recent drafts of publication 1099, it appears that their plans are becoming pretty clear, and that is they're gonna shut it down at the end of this year. That is today's topic on information return intelligence. And welcome to Information Return Intelligence. My name is Jason Dinison. This is brought to you by IOFM, the Institute of Finance and Management. So the FIRE system, which is one of the intake systems that the IRS uses for receiving electronically filed information returns, such as 1099s and 1042s. The IRS has been saying since May of last year that they intend to shut FIRE down at the end of 2026. So the end of this year. And people who use fire have used the same word to me multiple times. The word dread is what people use. They're dreading fire being shut down and everything switching to the other system, iris. And some people have said, well, maybe the IRS will change their mind about this and decide not to shut down fire. Or maybe the IRS will give fire users another year. Maybe instead of 2026, it'll be end of 2027. And that would be, I guess, kind of an IRS thing to do, where sometime this year they say, you know what, we're not quite ready to shut it down. So we're gonna shut it down at the end of 2027 instead. That could happen. Although I will say the things that are coming out now from the IRS make it pretty clear what their intentions are. So in the month of March, the IRS has released now three revisions to publication 1099. Publication 1099 has a big mouthful of a name. General instructions for certain information returns, forms 1096, 1097, 1098, 1099, 3921, 3922, 5498, and W two G. That's a long title. In this publication, earlier 2026 drafts had had softer language about fire being shut down and just saying it's it's our plan to shut it down. But it was uh kind of like hedging their language a little bit. The most recent draft of publication 1099, which was released on the 23rd of March, says this, and I'm reading it right here. This is word for word. Beginning tax year 2026 slash filing season 2027, the information returns intake system, iris, will be the only intake system for information returns. You're strongly encouraged to complete your IR, your IRIS application for a TCC transmitter control code, and begin transitioning to IRIS to ensure you are ready for the 2027 filing season. FIRE will not be available for submissions, current, prior year, or corrections once the system shuts down in 2026 for the end of the year. References to FIRE and publication 1220, which is the FIRE publication, have been removed from publication 1099. So the IRS is basically pushing fire out the door. And so I think that this gives us a pretty clear, um, pretty clear view of what the IRS's plans are. We'll take a quick break to tell you about our sponsor, and then we'll come back and talk more about electronic filing and what your options are. Information return intelligence is brought to you by the Institute of Finance and Management, IOFM. If you are watching or listening to this podcast, IOFM is right up your alley. Some of you may already be IOFM members. If you're not, you should check them out at IOFM.com. I do a lot of work with IOFM. I'm their 1099 guy. Your membership at IOFM gets you into a group of peers, like-minded individuals who work in accounts payable and accounts receivable, finance positions, CFOs and such, staff accounting, all sorts of people who work in organizations doing finance information returns, invoicing, etc., etc. You'll find value at IOFM. Check them out at IOFM.com. They put on a spring convention and a fall convention. I am there at both, so you can meet me in person and I teach all of their 1099 sessions at the spring and fall conferences. And now back to the show. So let's just spend a few more minutes here talking about your e-filing options. You know, when we talk about fire and iris, some of you might say, I don't know what either of those are. Never heard of them. And I believe you that you've never heard of them. However, it's also true that if you have ever e-filed a 1099, you have in fact used fire or iris, whether you know it or not. Because for electronically filed 1099s and 1042s, they go to either FIRE or IRIS in the IRS's system. That's what the IRS calls those two systems. The IRS has several electronic filing systems. For example, your personal tax return when that gets e-filed, or your business tax return. It's going to modernized e-file, MEF system at the IRS. And we've talked in recent episodes about Form 1042. That also goes to MEF. There's also the AIR system, Affordable Care Act information returns. That's where your Form 1095, like if you have to file a 1095 B, that's where it goes, is to AIR. So you use these systems whether you know it or not. Anytime you file something electronically, you're using one of those systems. And with 1099s and 1042s, it's FIRE or IRIS. And so, as we've said, the end is near for fire. Now, what are your options? What does all of this mean? Well, one is your organization can have a login to iris or fire and you do it yourself. A lot of organizations do this because it's free. The IRS does not charge you to use these systems. However, in all seriousness, the number one complaint that I hear is about logins. Huge pain point. You also have to deal with file formatting, and you might need to purchase software to handle the formatting. But as far as the system itself, if you're doing it yourself, the IRS doesn't charge you to use Iris or FIRE. The other option is to party with a third party vendor, which could be software or there's several different online platforms. Avalera, Taxworks, Sovos. They are hooked up to Iris or Fire themselves. And so this switch, you know, where FIRE won't be available, only Iris, they're dealing with that on the back end on their side. You're interfacing with their system, the vendor's system. They take care of the technicalities and sending it off to the IRS. There's a fee, but you're paying for the convenience factor. Now, in a future episode, we'll talk about your options within Iris, because there's the taxpayer portal option, which has that 100 form limit, and then there's the application to application side, which doesn't have a form limit, but it has a file formatting requirement. We'll talk about that in a future episode. The bottom line is that the end is near for the fire system. And while the IRS could still change its mind or kick the can back another year on doing this, it seems pretty clear that their intention is to shut this thing down. And so if you're a fire user, be prepared. That'll do it for this week's episode brought to you by IOFM. I'm Jason Dinason, so long until next week. Dinason Media Adventures.