A disconnected operation. That’s what happens in large organizations where tax reporting happens in separate workflows and teams. When different teams handle different aspects of tax reporting, with each team owning their own piece of the process, there is no oversight and a lack of accountability when something goes wrong.
By the time a tax-related issue reaches the IRS, it becomes harder, more urgent, and more expensive to correct. Having inefficient processes creates gaps that can compromise an organization and increase compliance issues. A Gartner study found that 59% of accountants made several financial errors per month due to capacity constraints. That means teams are not making mistakes because they are careless. They are making mistakes because they are working under tight timelines and dealing with too much manual or fragmented work.
The more fragmented the tax reporting process is, the easier it is for errors to slip through unnoticed until they become filing and compliance issues.
Fragmented Ownership and Why It’s Breaking Tax Information Reporting
In most enterprise organizations, tax reporting is not owned by one single team. There are different teams handling different aspects of the reporting process. The AP and procurement teams manage vendor payments and onboarding. The tax team is responsible for making sure the organization meets tax reporting obligations. Finance looks at the broader financial aspect of reporting. IT manages the movement of data between different systems.
Each team plays a critical role. But in many organizations, ownership of the full tax reporting process is not clearly defined. And when those teams work in separate workflows, even a small error from one of the teams can travel downstream and by the time it reaches the tax team, it can be a major reporting error.
On top of that, a lot of tax work is being outsourced. A 2025 Deloitte Tax Transformation Survey showed 86% of respondents to the survey are leveraging outsourcing for their tax processes.
With no clear accountability and responsibility shifting from one team to the next, gaps can occur. And most of the time, issues often go unnoticed until they reach the IRS and become harder, more time-sensitive, and expensive to fix.
The Cost of Splitting Tax Reporting Ownership Between Different Teams
Fragmented tax reporting workflows do not fail at once. They compound over time and show up as duplicate work across teams, manual follow-ups, inconsistent data across systems, and last-minute corrections close to deadlines which can cost time and money to fix.
Tax reporting already demands a lot of time and effort. The IRS estimates it takes 105 hours on average to comply with Form 1120 reporting. For large corporations, the time increases to 830 hours or more than 20 weeks just to comply with tax reporting requirements.
With so much time already spent trying to stay compliant, a fragmented tax reporting workflow adds more pressure. The disconnect between the different teams (with their own processes) where one team may finish its part, but another team may not have full visibility into what was done creates situations where information does not always move smoothly from one part of the process to the next.
As deadlines get closer, those process gaps become more serious, and compliance risk increases. There is less time to investigate issues, fix errors, or confirm that the data is ready. And when the process itself is not aligned, teams get stuck in their own silos and struggle to see the bigger picture.
The challenge here is not about the effort that goes into tax reporting. AP, tax, finance, procurement, and IT teams are already doing the work. It is the lack of coordination and smooth data flow between teams. When ownership is split and workflows are disconnected, even experienced teams can lose visibility into where issues begin and who is responsible for resolving them.
AP Sees Payment Data, But Not Always Compliance Risk
AP teams have to take care of vendor payments and transactions, so they usually have clear visibility into this data. But they do not always see the tax risk and reporting rules connected to these payments. Since the team is not the responsible party for filing information returns with the IRS, they do not need to validate TINs or apply tax reporting rules. That means any issues that are detected at a later stage, such as incorrect TIN formats or missing tax classifications, can pass through without being flagged.
Manual work also remains another major source of risk for AP teams since 60% of them are still using manual processes for entering invoices into ERP or accounting software. This creates more chances for errors and mistakes to enter the reporting process.
By the time a problem is found, it is already part of the tax reporting process, which makes it harder to resolve.
Procurement Collects Vendor Information, But May Not Validate It
When it comes to procurement teams, they play an important role in vendor onboarding. Their process is mainly designed to onboard vendors quickly. Their focus is only on getting the vendors into the door and collecting basic details. And because of the different areas of focus, the tax information may not always get the same level of verification and review.
Tax reporting needs more than basic vendor setup. It needs the vendor information to be validated and accurate. Usually, a vendor might be onboarded even if their Form W-9 data is inconsistent and tax-related information is missing or not fully validated. This means the vendor may be approved from a procurement standpoint, but not fully ready from a tax compliance standpoint.
Vendor details collected during onboarding have to be used later for tax reporting and compliance. Using any incorrect or outdated details creates gaps that only become visible later during reporting.
Tax Teams Own Filing Accuracy but Often Receive Data Too Late
Most organizations have a dedicated tax team that is responsible for making sure the 1099 filings are accurate. However, in order to make sure the filings are correct and done on time, the data they receive from other teams should be accurate and without any errors.
Unfortunately, in many cases, the teams receive data after it has already moved through AP, procurement, and finance systems. A study found that 10% of tax and finance executives consider integrating tax-related data across their company as one of their main challenges.
By the time the data arrives on the table of the tax team, errors including missing vendor information, incorrect TINs, inconsistent names, duplicate records, wrong payment classifications, or incomplete documentation, are already embedded into the tax reporting process. At that point, the issue is no longer just a small data entry mistake. It has already moved through the workflow and become part of the reporting data.
So, instead of focusing on compliance and review, tax teams are spending their time correcting and reconciling the data under tight filing deadlines.
IT Supports Data Movement, But Shouldn’t Own Filing Outcomes
IT teams often play a supporting role in the enterprise tax reporting process. They are not responsible for tax filing or compliance. Their role here is to help move data between different systems.
In most enterprise tax reporting processes, data lives in different systems. Vendor information may be stored in a procurement or onboarding platform. Payment and invoice data may live in AP or ERP systems. It’s the role of the IT team to move the tax data between systems through integrations or exports.
When workflows are fragmented, IT often becomes a critical dependency during the filing season. 52% of finance leaders believe that IT plays an important role in deciding on a tax department’s technology strategy and budget.
During filing season, teams may need IT to pull data from different places, fix any formatting issues, troubleshoot problems, or help correct files quickly. The problem with this last-minute work is that it creates a bottleneck. IT can support the systems, but they are not responsible for tax filing.
What an End-to-End Reporting Workflow Should Include
A fragmented tax reporting process requires a connected end-to-end workflow that brings all the different processes together with the goal of creating alignment across them so that data, ownership, and accountability is present at every stage of the workflow. An effective workflow typically includes:
- A centralized view of payee data across systems with standardized Form W-9 and Form W-8 collection process.
- IRS TIN matching (both bulk and real-time) to validate name and TIN against IRS records.
- Clear ownership and accountability of each stage of the tax reporting process with role-based reviews and approvals.
- Ability to identify and resolve exceptions before filing along with audit-ready reporting.
Evaluate Your Current Workflow: Questions to Ask When Evaluating
- Who owns exception handling when data issues are identified?
- Who is responsible for validating TINs?
- Does TIN validation happen during onboarding, before payment, or only before filing?
- Who reviews and approves forms before filing?
- Is the approval process consistent across different entities, teams, and jurisdictions?
- Who monitors rejected filings, manages corrections, and ensures resolution?
- How is recipient form delivery done and who approves it?
- Can leadership see real-time filing status, exceptions, and compliance risk across all entities?
If the answers to these questions are either a) unclear, b) spread across different teams, or c) requires manual processes, this may be a sign that your tax reporting workflow needs to change.
How Tax1099 Enterprise Helps Centralize Workflow Ownership
Tax1099 Enterprise brings structure and visibility to a fragmented 1099 tax reporting process with the following features:
- Improve visibility: Teams can view all the tax information and reporting data in one place, including filing status and outstanding actions.
- Support role-based workflows: Different roles such as preparer, approver, and transmitter can be assigned within the system.
- Tracks actions and exceptions: Teams can track exceptions as they occur and resolve them before the filing deadline.
- Provides audit-ready traceability: Every change, validation, and action is documented to create a clear audit trail.
- Fits into existing enterprise systems: Integrates with existing ERP, procurement, and finance systems for seamless data flow.