Business Central and IRS 1099 Reporting in the USA: An Important
IRS 1099 reporting is a critical compliance process in the United States, requiring businesses and financial institutions to report various types of non-employee income—such as payments to freelancers, interest, dividends, and rent—to the Internal Revenue Service (IRS). This ensures transparency and helps the IRS track income that may not be captured through traditional employment reporting.
For years, Dynamics 365 Business Central has supported 1099 reporting through a familiar and straightforward process. Users could configure 1099 form boxes, designate vendors as 1099-liable, and manage reporting through the purchasing and payment workflows, culminating in year-end printing on preprinted IRS forms. However, due to frequent and often last-minute changes from the IRS—typically released in October or November—Microsoft had to delay updates, creating a stressful and unsustainable cycle for partners, customers, and users alike.
Recognizing the need for a more resilient and modern approach, Microsoft has introduced a completely new 1099 reporting experience. This is not a redesign of the existing functionality, but a brand-new solution delivered as a preinstalled, standalone IRS Forms app in U.S. Business Central environments. This shift brings a fresh architecture and process flow, from setup to submission, with the most significant change occurring at the end of the reporting cycle.
What does this mean to you?
You can stop ordering preprinted 1099 forms from IRS. The new IRS Forms app no longer supports printing on preprinted forms.
This change is driven by two key factors:
- Regulatory Compliance: In this moment, businesses filing 10 or more information returns, including all 1099 forms, are required to file electronically. This threshold means that even small businesses are now likely subject to e-filing requirements.
- Technical Simplification: Supporting preprinted forms is complex and error-prone, as even slight variations in form layout can cause misalignment. It also meant customers had to wait for Microsoft to release updates each year to unblock you. With digital files, updates are easier to manage, and the submission process becomes more reliable and efficient.
But we haven’t forgotten about your vendors. The new app allows you to generate substitute 1099 copies with the same content as the official forms, which can be printed or emailed automatically. These reports are also configurable, enabling you to add new form boxes without needing support from Microsoft or a partner.
We won’t cover all the new features here—there are many productivity enhancements worth exploring. We encourage you to review the full documentation: : https://learn.microsoft.com/en-us/dynamics365/business-central/localfunctionality/unitedstates/introduction-to-the-irs-forms.
Get Ready Now
Before this change becomes mandatory, we strongly recommend enabling the new IRS Forms app in your sandbox environment and testing it alongside your upgrade process as soon as possible. This will ensure a smoother transition and help you adapt to the new workflow with confidence. To do so, just enable new 1099 forms on the Feature Management page.
Stay tuned. Based on early feedback from partners and MVPs, we’ll be rolling out additional improvements before the end of the year.
The post Business Central and IRS 1099 Reporting in the USA: An Important Shift Ahead appeared first on Microsoft Dynamics 365 Blog.