1099 Filing: How to Simplify Compliance and Reduce Risk
Every year on January 31st, businesses across industries face the same important tax deadline: 1099 filing.
It’s a deadline that comes with the costly risk of penalties and operational backlogs. Despite being a once-a-year requirement, 1099 reporting risk builds all year long from mismatched tax identification numbers (TINs), manual data entry, and disconnected payment systems. However, reducing 1099 reporting risk can start with a proactive approach long before year-end.
The Risk of TIN Mismatches
TIN mismatches are one of the most common sources of 1099 reporting issues, and one of the most avoidable.
When filing 1099s, the recipient TIN and name must be an exact match against the IRS database. If it does not match, businesses may receive CP2100 notices (commonly called “B Notices”) or face audits and penalties that demand immediate correction.
Penalties range from $60 to $300+ per incorrect form, depending on the business size and when the return is filed, which drives the financial cost up fast. However, real strain often comes from administrative effort. Tracking accurate information, filing corrections, and managing the associated paperwork consumes valuable time and resources that could otherwise be spent on higher-value work.
For more on compliance, common filing errors, and TIN matching, read our blog: 1099 Essentials
The Coming Change: From FIRE to IRIS
The IRS is preparing for a major shift. The legacy FIRE e-filing system, in place since the 1980s, will be retired after the 2026 filing year and replaced by the Information Returns Intake System (IRIS), a modernized platform requiring new credentials, tech specs, and re-certifications.
This transition will introduce new technical requirements as IRIS is built on modern XML technology, and FIRE is designed for 1220 flat files. Even when the IRS formally moves to IRIS, states may still require filing in FIRE formats, doubling complexity for businesses of all sizes.
Organizations that depend on internal filing processes or outdated systems may struggle to adapt in time, especially when the new standards take effect in 2027.
How ECHO Simplifies Compliance
At ECHO, we help businesses eliminate 1099 reporting risk by embedding compliance into every payment.
What A “Full-Service 1099 Process” Really Means
Without full-service 1099 processing, gaps remain and so does the risk.
ECHO’s full-service 1099 offering identifies errors well before clients file thanks to our continuously updated, IRS-validated database of over 1.6 million payees. Every new payee processed through the ECHO Payment Network contributes to this accuracy, expanding the verified database and eliminating risk for every client.
Here’s what the “full-service 1099 process” looks like for clients:
- Bulk matching for TIN/name combinations
- Transparent reporting
- Filing (e-File, Print and Mail)
- Printing and mailing all forms by January 31
- Electronic filing with the IRS, including all required form types
- Correction reporting: TIN/name cleanup and address normalization
- Return mail handling and reissuance
- Exceptional customer support
- Liability for potential fines
This also includes a proactive fall cleanup where ECHO reaffirms the entire TIN/name list before filing season even begins, identifying discrepancies early to prevent last-minute issues.
Plus, when the FIRE to IRIS transition takes effect in 2027, clients will experience no disruption because ECHO will manage the entire transition on their behalf, just as we already assume full responsibility for 1099 processing today.
Eliminating vs. Reducing Risk
Not all payments carry the same level of risk related to 1099 reporting. For payments made through the ECHO Payment Network, risk is completely eliminated because the TIN matching is IRS-validated prior to payment and ECHO accepts full liability for any mismatch fines.
As for payments made outside ECHO platform, a 1099 Corrected Name-TIN Report can be shared with clients to help reduce the risk of IRS fines for those payments as well.
This distinction matters because TIN matching isn’t a one-time task; it’s a year-round process that supports ongoing compliance and data integrity. Organizations that treat TIN validation as a preventive measure, rather than a reactive fix, consistently avoid IRS penalties and year-end stress.
Why ECHO Assumes Liability for Mismatch Fines
“If you’re making payments on our platform, you’re washing your hands of anything 1099-related.”
ECHO can confidently assume liability of TIN mismatch fines because we've built the foundation to support it through:
- The largest payment network of IRS validated payees in the industry, with 1.6 million and growing
- Proactively updating our database to ensure clean, IRS-validated data before year-end
- A trusted 1099 process backed by continuous auditing and exception testing
No other payment partner in the industry assumes this liability for 1099 accuracy, and our confidence comes from a proven track record. Over the past six filing seasons, we've had zero fines, dispute notices, or late filings. During that time, the 1099 volume we file on behalf of clients has grown more than 50% year-over-year.
From Year-End Stress to Year-Round Assurance
At ECHO, 1099 compliance isn’t a once-a-year scramble. It’s built into every payment, every day. TIN validation is a preventive measure to help health plans, third-party administrators, and property and casualty insurers avoid unnecessary stress and IRS penalties.
By combining the industry’s largest payment network, continuous data validation, and a proven record of trusted partnership, we help clients eliminate risk, simplify compliance, and restore confidence during tax season.
Let ECHO help you walk into tax season ready to file on time, every time.
