Navigating the 2025 IRS Information Reporting Landscape: What Financial Institutions Need to Know

As we approach the reporting season for 2025 tax year, financial institutions face a rapidly evolving regulatory environment, particularly in the realm of information reporting. The IRS has released updated versions of Publication 1220 and Publication 1187, which outline the specifications for electronic filing of various information returns, including Forms 1099 and 1042-S. At TAINA, we are committed to helping financial institutions stay ahead of these changes and ensure compliance with confidence.

Here’s a breakdown of the what, why, and how, along with the key changes for 2025 that every financial institution should be aware of.

What’s Changing in 2025?

1. Mandatory E-Filing Threshold Lowered

The IRS has implemented Treasury Decision (TD) 9972, which significantly reduces the threshold for mandatory electronic filing. Now, any filer submitting 10 or more information returns must file electronically. This includes returns filed via:

• FIRE (Filing Information Returns Electronically)

• IRIS (Information Returns Intake System)

• AIR (Affordable Care Act Information Returns)

• SSA (Social Security Administration for W-2s)

This change applies to both Publication 1220 (Forms 1097, 1098, 1099, 3921, 3922, 5498, W-2G) and Publication 1187 (Form 1042-S).

2. Transition from FIRE to IRIS

The IRS has announced that Tax Year 2026 (Filing Season 2027) will mark the retirement of the FIRE system. The IRIS platform will become the sole system for filing information returns currently submitted through FIRE. Financial institutions should begin transitioning now by applying for a Transmitter Control Code (TCC) through the IRIS portal.

3. Form-Specific Updates

• Form 1099-R: A new Distribution Code “Y” has been added to indicate Qualified Charitable Distributions (QCDs).

• Form 1099-Q: A new Code “2” has been added to report Qualified Tuition Program (QTP) to Roth IRA transfers.

Why These Changes Matter

The IRS is modernizing its systems to improve efficiency, reduce paper filings, and enhance data accuracy. For financial institutions, this means:

• Increased Compliance Pressure: With the lower e-filing threshold, many institutions that previously filed on paper must now transition to electronic filing.

• Operational Shifts: The move to IRIS requires technical readiness, including new system integrations and staff training.

• Risk of Penalties: Failure to comply with electronic filing mandates without an approved waiver may result in significant penalties.

How to Prepare: Action Steps for Financial Institutions

• Assess Your Filing Volume: Aggregate all information returns across form types and entities under the same TIN. If the total is 10 or more, you must file electronically.
• Apply for a TCC via IRIS: Submit your IR Application for TCC by November 1, 2025, to ensure timely processing for the 2026 filing season.
• Test Your Systems: While not mandatory, test file submissions are highly recommended to validate compatibility with IRS systems. Note: The FIRE and IRIS test systems are separate and require distinct TCCs.
• Update Internal Processes: Ensure your compliance teams, IT departments, and service providers are aligned on the transition to IRIS and the new filing requirements.
• Monitor IRS Communications: Subscribe to IRS QuickAlerts, the TAINA Newsletter, or participate in industry meetings to stay informed on future updates.

TAINA’s Commitment to Your Compliance Journey

At TAINA, we understand the complexities of tax compliance in a digital-first regulatory environment. Our fully automated FATCA, CRS, and QI validation platform is designed to help financial institutions:

• Automate onboarding tax form validation for improved reporting data intergrity

• Reduce manual processes and operational risk

• Ensure real-time compliance with evolving IRS regulations

As the IRS continues its digital transformation, TAINA remains your trusted partner in navigating these changes with agility and confidence.

We would love to talk to you more about your current documentation validation process and how our award-winning FATCA and CRS Validation platform may add value to your organisation. 

For more information on how our fully automated FATCA and CRS Validation platform can add value to your business, get in touch or request a demo to see it in action.