Sovos has acquired California-based 1099 Pro, a provider of software and services for tax information reporting. Terms of the deal were not disclosed.
1099 Pro offers solutions for 1099 forms, tax identification number (TIN) matching, electronic filing, Affordable Care Act (ACA) reporting and more, making it a logical choice for the rapidly expanding Sovos. The buy broadens Sovos’ offerings for small and medium-sized businesses as the tax information reporting landscape undergoes rapid regulatory changes that affect businesses in the United States.
Sovos also recently acquired Portuguese tax tech companies Fit Sistema, PetaPilot, and Saphety.
One of the tax challenges Sovos is aiming to address with its technology is the IRS decision to exclude the new 1099-NEC form for non-employee compensation from the Combined Federal/State Filing program. This change meant that 35 states, the District of Columbia, and the federal government all required businesses to report this data, many in different formats. Together, Sovos and 1099 Pro will offer options from self-service downloads to enterprise software-as-a-service, all fueled by subject matter expertise in the tax information reporting market.
The complexity of tax information reporting has increased with the Form 1099 NEC change, in addition to the cost of printing and mailing forms to recipients. Meanwhile, the threshold for electronic filing will fall in 2021, requiring smaller filers to obtain approved transmitter codes for tax information reporting.
“With disparate reporting obligations at the federal and state levels, as well as lower thresholds for reporting requirements, companies of all sizes need expert-backed software and services to stay compliant,” said Andy Hovancik, Sovos CEO, in a statement. “The acquisition of 1099 Pro dramatically expands the Sovos customer base with tens of thousands of customers, as well as enterprise users in higher education; oil and gas; gaming; local, state and federal government agencies; and other industries.”
1099 Pro CEO Ray Stewart said in a statement that the deal “comes at a critical time for businesses, and Sovos’ broad suite of solutions will further equip 1099 Pro customers to meet the growing challenges of tax and regulatory reporting.”
