Dive Brief:

• Nearly half (43%) of accounts payable executives lack confidence when it comes to their businesses’s understanding of the upcoming reporting thresholds for 1099-K, 1099-MISC and 1099-NEC, according to survey findings released this month from the tax software provider Avalara.
• Meanwhile, just a little over half (55%) said they are preparing for the new 1099-DA form which brokers will be required to file with the Internal Revenue Service when they sell or exchange digital assets for customers that results in a disposal event, according to data from Avalara. 
• The respondents cited unclear IRS communication as a key driver of uncertainty, the report states. “Nearly one-third (31%) want clearer instruction from federal and state agencies about what’s changing and when. This lack of clarity makes planning difficult and increases the risk of late or inaccurate filings,” the report said.

Dive Insight:

In the upcoming tax season, a number of the changes that companies will be grappling with stem from the One Big Beautiful Bill Act. For example, the OBBA retroactively changed the threshold for when apps and online marketplaces may need to provide Form 1099-K. It was poised to be reduced on a phased in basis to $2,500 for 2025, but the threshold was raised to $20,000 and 200 transactions. 

While the no tax on tips provision from the OBBA will also affect W-2s this year, managing a company’s 1099s is typically a more complex endeavor, according to Kevin Halverson, general manager of accelerator businesses at Avalara

“Processing 1099s is significantly more complex than processing W-2s. W-2 reporting is highly standardized, with a single federal form and relatively consistent requirements. By contrast, ‘1099’ refers to a family of more than a dozen different IRS forms, each with its own rules, thresholds and reporting criteria,” K, said in a statement emailed to CFO Dive. 

For example, starting in the 2025 tax year, form 1099-DA will be issued by certain digital asset brokers, such as cryptocurrency exchanges, trading platforms, custodial brokers and others that facilitate digital asset transactions. But Halverson said few companies are preparing for 1099-DA, because the rules are new and most organizations are not yet impacted by this requirement.

The IRS released the final version of the form in January 2025, and the associated regulations continue to evolve, with the IRS announcing transition relief for reporting 2025 digital asset transactions. 

“Penalties for failing to file or furnish 1099-DA forms will not apply as long as brokers can demonstrate a ‘good-faith” effort to comply with the rules, which includes attempting to gather the required data, filing accurately and meeting deadlines,” Halverson said, noting that the relief is temporary even as many companies are still working to interpret the new requirements and assess whether they qualify as brokers. 

The deadline for most companies to get 1099 forms out to both recipients and the IRS is typically Jan. 31 following the reporting year. Next year companies have a little more time because Jan. 31 falls on a Saturday, resulting in this cycle’s deadline extending to Feb. 2, 2026.

Avalara’s survey of 1,000 U.S. AP professionals found that the demands of the annual 1099 season is still largely met by existing systems, with just about one quarter of businesses reporting having fully automated tax compliance, even as 78% of respondents say they will invest in it in the coming year.