Key Findings

  • A survey released this month by tax software provider Avalara found that nearly half (43%) ofaccounts payable executiveslack confidence in their organizations' understanding of the upcoming 1099-K, 1099-MISC, and 1099-NEC filing thresholds.
  • Meanwhile, according to Avalara, just over half (55%) of respondents said they are preparing for the new Form 1099-DA, which requires brokers to report to the IRS when they sell or exchange digital assets on behalf of customers and trigger a disposal event.
  • The report noted that respondents identifiedunclear IRS communicationas a key driver of uncertainty. The report stated: "Nearly one-third (31%) of respondents want federal and state agencies to provide clearer explanations of what is changing and when. This lack of clarity makes planning difficult and increases the risk of filing delays or errors."

Deeper Dive

Many of the changes businesses must navigate in the upcoming filing season stem from theOne Big Beautiful Bill Act (OBBA). For example, OBBA retroactively changed the threshold at which apps and online marketplaces may need to provideForm 1099-K. The threshold was originally scheduled to phase down to $2,500 in 2025, but was ultimatelyraised to $20,000 and 200 transactions。

Although the "no tax on tips" provision in OBBA will also affect W-2 forms this year, managing 1099 forms for businesses is typically a more complex undertaking, according to Kevin Halverson, general manager of Avalara's accelerator business.

"Handling 1099 forms is far more complex than handling W-2 forms. W-2 filings are highly standardized, with a single federal form and relatively consistent requirements. In contrast, '1099' refers to a family of more than a dozen different IRS forms, each with its own rules, thresholds, and filing standards," Halverson said in an email statement to CFO Dive.

For example, starting with the 2025 tax year, Form 1099-DA will be issued by certain digital asset brokers, such as cryptocurrency exchanges, trading platforms, custodial brokers, and other entities that facilitate digital asset transactions. However, Halverson said few businesses are preparing for 1099-DA because the rules are brand new and most organizations have not yet been affected by the requirement.

The IRS released the final version of the form in January 2025, and the regulations are still evolving.The IRS has announced transitional relief for reporting digital asset transactions in 2025。

"As long as brokers can demonstrate 'good faith' efforts to comply with the rules, including attempting to collect required data, accurately file, and meet deadlines, penalties for failing to file or furnish Form 1099-DA will not apply," Halverson said. He also noted that even though many companies are still trying to interpret the new requirements and assess whether they meet the broker definition, this relief is temporary.

The deadline for most companies to send 1099 forms to recipients and the IRS is typically January 31 of the year following the filing year. Next year, businesses will have slightly more time, as January 31, 2026, falls on a Saturday, so the deadline for this filing cycle will be extended to February 2, 2026.

Avalara's survey of 1,000 U.S. accounts payable professionals found that the demands of the annual 1099 filing season are still largely met by existing systems, with only about a quarter of businesses reporting full automation of tax compliance, although 78% of respondents said they will invest in this area within the next year.