IRS plans improved security for information returns

The Internal Revenue Service is beefing up the security requirements for tax professionals using its system for electronically filing information returns.

The IRS said Monday that it’s improving the Filing Information Returns Electronically, or FIRE, application process for new users. They will be required to authenticate their identities and create a new account through the IRS Secure Access Account to access the new online "Information Return Application for Transmitter Control Code." The details on what users will need to verify their identities can be found here.

Current users of the Secure Access accounts will be able to use their existing accounts for now. However, in late 2022, to secure the FIRE system even further, existing FIRE users will also be required to move to the stronger identity-proofing authentication process. The target timeframe for that move is fall 2022.

Andrew Harrer/Bloomberg

The new online IR Application for TCC is scheduled to deploy on Sept. 26, 2021. The new application will be available on IRS.gov and will replace both the current Form 4419 and the Fill-in Form 4419 on the FIRE system.

Any tax filer, including corporations, partnerships, employers, estates and trusts, who files 250 or more Forms 1097, 1042-S, 1098, 1099, 3921, 3922, 5498, 8027, 8955-SSA or W-2G for any calendar year needs to file their information returns electronically. Last week, the IRS posted proposed regulations that would lower this threshold to 100 in 2022 and then 10 returns by 2023, in line with the Taxpayer First Act of 2019 (see story).

The Taxpayer First Act required the IRS to improve its taxpayer service and technology, including its cybersecurity. The agency’s systems are frequently under attack from identity thieves and cybercriminals who probe for vulnerabilities in the defenses of the IRS and tax professionals.

For more information on the changes in the FIRE system, click here.