The IRS requires any Payer with 250 or more forms to e-file. In fact, the IRS recommends that everyone should e-file. E-filing makes their internal processes more efficient. With paper submissions, the IRS has to scan each form and hope the details are legible. Readability is never an issue with e-filed forms. E-filed forms meet data formatting requirements, too. The IRS rewards e-filers with an extra month to submit forms.
The extra time before the submission deadline is one distinct advantage of E-filing. What are some other ways paper filing and e-filing compare?
Completing forms
Paper filing: You have to decide how many forms you’ll need. Then, go buy the forms. You’ll either fill these forms by hand, or print your information onto the forms. Hopefully, you won’t make more mistakes than you have forms.
E-filing: You don’t need to buy any pre-printed forms. You can type in your data, if you have a few forms. You can import from an accounting software. Tax1099.com saves payer and recipient information. This can be helpful for vendor-TIN management in the years going forward.
Summary 1096 and W-3 forms
Paper filing: You gather summary information. You must file a summary form. If you make a change to your forms, you must update the summary form.
E-filing: You don’t need to file a summary form. You don’t need to create a summary, and you don’t need to update the summary.
Vendor Form Delivery
Paper filing: Your only form delivery option is through the mail. Mail delivery involves envelopes, stamps, and a trip to the post office. You also have to think about the postmarked deadline. If you cut it close to the vendor form delivery deadline, the USPS may not postmark the forms in time.
E-filing: Tax1099.com offers full-service vendor form delivery options. You can also mail forms yourself. You can download, print, and mail forms from Tax1099.com. You can print the vendor’s PDF on blank printer paper, and mail the form in a #10 double-window envelope.
Tax1099.com also processes USPS requests. Your forms’ status appears in a forms delivery report in Tax1099.com.
Tax1099.com offers two electronic delivery methods: PDF to e-mail and PDF to portal.
Before sending vendors a PDF to e-mail, secure their permission. Tax1099.com will send vendors a password-protected PDF of their form. The system tracks the delivery status of the form: sent, delivered, opened. Some e-mail servers reject e-mails from unknown sources. You’ll be able to see which vendors’ servers have rejected the e-mail.
With portal delivery, Tax1099.com tracks e-delivery opt-in statuses. Tax1099.com will send vendors instructions on retrieving their PDF from a portal.
Storage
Paper filing: You are responsible for storing forms in a secure location.
E-filing: Tax1099.com stores your forms for the required seven years. We encrypt your data, and protect it with 256-bit bank-grade security.
Security
Paper filing: Remember to put asterisks in the place of the first 5 digits of the TIN.
E-filing: Tax1099.com masks the first 5 digits of the TIN. This is the truncation the IRS recommends for filers. This adds to the security of your forms, which your recipients will be glad for.
Filing for a Prior Year
Paper filing: You’ll need to collect all the relevant forms. You’ll also need to update the 1096 summary form with the information.
E-filing: If you e-filed, you can file a vendor’s form for the prior year without updating a 1096. The process would be as simple as filing a form for the current year.
Filing a Corrected Form
Paper filing: You’ll have to dig up relevant forms. You’ll also need to send in a corrected form 1096.
E-filing: You can edit the existing payer/recipient information. You won’t need to update or correct a summary report.
E-filing is More Efficient than Paper Filing
With all these advantages, e-filing is a great way to streamline the filing process. January can be stressful. E-filing can make it less so. E-filing simplifies the process this year, and in the years going forward. Get started at Tax1099.com.