Tax reporting 2026: the cost of doing nothing is rising

The 2026 Tax Reporting & Withholding Conference, held in Washington, D.C. from 4–6 May, brought together regulators, practitioners and industry leaders.

Comply Exchange has shared its key takeaways from the event  and the message is unambiguous: this is no longer a period of incremental adjustment.

The IRIS transition is an operating model overhaul

The shift from the legacy FIRE system to IRIS is widely discussed as a filing change, but Comply Exchange’s analysis frames it as something far more consequential.

Real-time validation is replacing post-filing error discovery, and record-level processing is superseding file-level outcomes. Firms will now be required to track submission IDs, receipt IDs and record-level statuses, and to manage in-cycle corrections rather than post-season clean-up.

Form 1042-S: growing complexity

The Form 1042-S continues to evolve in ways that add pressure rather than simplicity.

Structural changes to address fields, including the subdivision of prior box 12i into four separate fields covering city, state or province, country, and postal code, are compounding the data capture burden.

Three new income codes (consent fees, loan syndication fees, and settlement payments) are increasing classification pressure, while greater emphasis is being placed on accurate income classification rather than defaulting to “other income”. Parallel FIRE and IRIS reporting continues for tax year 2025, with a full IRIS transition to follow.

Draft W-9 signals upstream accountability

A newly released June 2026 revision to Form W-9 will supersede the January 2026 draft. The updated form introduces expanded digital asset reporting classifications, additional certifications tied to broker activity, and tighter TIN accuracy requirements.

Reporting thresholds rewritten by new legislation

Among the most operationally significant updates are changes stemming from the One Big Beautiful Bill Act (OBBBA). The reporting threshold for 1099-MISC and 1099-NEC filings has been raised from $600 to $2,000 for calendar year 2026, with the figure indexed for inflation going forward.

Backup withholding has been aligned to the same threshold. Meanwhile, the 1099-K threshold has been reverted to $20,000 plus 200 transactions, accompanied by new carry-forward withholding rules that can persist across years where a TIN has not been obtained. As Comply Exchange notes, fewer forms may ultimately be required but when thresholds are triggered, the obligations are more complex and durable than before.

Enforcement is becoming data-led

The IRS’s modernisation drive is not limited to systems. Active compliance campaigns targeting 1042 and 1042-S filings, treaty benefit claims, intercompany payments and FATCA gaps signal a sharpening enforcement posture.

Increased data reconciliation across filings means that documentation, workpapers and internal controls are all under greater scrutiny. Comply Exchange flags that “soft letters” from the IRS should now be treated as precursors to full examinations rather than routine correspondence.

For more insights, read the story here.