Key Takeaways
- Government entities must file 1099s just like businesses do. For 2026 payments, the 1099-NEC and most 1099-MISC thresholds rise to $2,000, and the forms include new and renumbered boxes.
- The IRS is retiring its FIRE system. Public entities that file directly will need a new IRIS TCC, and approval can take up to 45 calendar days.
- IRIS applications are tied to named individuals. Staff turnover and January transitions after elections make it important to review your application now.
- Attorney payments, equipment rental, and vendor TIN mismatches are common trouble spots for public entities.
- IRS penalties can’t be paid with public funds in Ohio, meaning the responsible official may be held personally liable.
Ohio’s cities, counties, school districts, libraries, park districts and other political subdivisions pay contractors, attorneys, and professional service providers throughout the year, and that makes them 1099 filers. Filing requirements apply to payments made in the course of a trade or business, regardless of tax status. This year’s changes affect public entities in a few specific ways, and planning now will make January much easier.
Rea’s recent webinar, The 1099 Playbook: The Questions We Hear Every Year, Answered Under Today’s Rules, covers these changes in detail, along with common coding mistakes and a year-end checklist. Watch the on-demand recording and share it with your finance team.
The Threshold Rises, but Records Still Matter
Under the One Big Beautiful Bill Act, the reporting threshold for Form 1099-NEC and most 1099-MISC payments rises from $600 to $2,000 for payments made in 2026. Starting in 2027, it will adjust for inflation.
For public entities, fewer forms don’t mean fewer records. Transparency and sound internal controls depend on complete vendor files. Keep collecting W-9s before a vendor’s first payment, keep tracking payments all year, and check whether any internal policies still reference the old $600 figure. Since the threshold will adjust for inflation starting in 2027, consider updating that language to refer to the current IRS reporting threshold rather than a set dollar amount. That way, your policies stay accurate without needing a revision every year.
The 2026 forms also add boxes for qualified tips and overtime, and nonemployee compensation on the 1099-NEC moves from Box 1 to Box 1a. If your accounting system uses saved mappings or templates, make sure they’re updated before you run your batch.
The IRIS Transition and Your People
The IRS is retiring its FIRE system. Beginning January 1, 2027, IRIS will be the only way to e-file 1099s directly with the IRS. FIRE TCCs don’t transfer, so entities that file directly will need to apply for an IRIS TCC.
That application is tied to people, not just your entity. Each person named on it must verify their identity through an IRS online account using their own Social Security number or ITIN. When a fiscal officer retires, a treasurer moves on, or a new official takes office in January, the application needs to reflect those changes. With approval taking up to 45 calendar days, now is the time to review who’s listed and apply if you haven’t.
If a software provider or third-party platform files for you, ask how they’re handling the IRIS transition and whether they file under their own TCC.
Trouble Spots for Public Entities
Attorney payments. Payments for legal services, such as solicitor or general counsel work, go on the 1099-NEC. Gross proceeds paid to an attorney, such as settlement payments, go on the 1099-MISC. Attorneys receive a 1099 whether or not they’re incorporated.
Equipment and facility rent. Rent, including equipment rental, belongs in Box 1 of the 1099-MISC, not on the 1099-NEC.
Services coded as “other income.” Payments for services belong on the 1099-NEC. Box 3 of the 1099-MISC is for rare, unusual payments.
E-filing. The 10-return e-filing threshold counts all information returns combined, including W-2s. With staff payrolls, nearly every public entity is required to file electronically.
TIN Matching Protects Your Entity
TIN matching checks vendor names and TINs against IRS records before you file. Keeping a copy of your results documents due diligence and can support a penalty waiver if a notice arrives. Mismatch notices (CP2100 and CP2100A) typically arrive in April or October and often relate to filings from the prior year. If a vendor’s information can’t be corrected, backup withholding is required on future payments. Since penalties apply per form, a clean vendor file is one of the simplest ways to prevent fines and penalties.
Mark Your Calendar
Recipient copies and Form 1099-NEC filings with the IRS are generally due January 31. In 2027, that date falls on a Sunday, so the deadline moves to Monday, February 1. Most other 1099s are due to the IRS by the end of February on paper, or by March 31 if filed electronically. Penalties increase the later you file, and for public entities, they carry an added layer of risk.
Why Penalties Hit Differently for Public Entities
For a business, an IRS penalty is an unwelcome expense. For an Ohio public entity, the stakes are higher. Public funds can only be spent for a proper public purpose, and the Auditor of State has consistently found that penalties and interest from late IRS filings or payments don’t meet that standard. When that happens, auditors can issue a finding for recovery against the official responsible, often the fiscal officer, who may be held personally liable along with their bonding company.
Because 1099 penalties apply per form, even a short delay across a full vendor list can add up. Starting early on your IRIS application, W-9s, and TIN matching protects your entity and the people who serve it.
Your Year-End Checklist
- Pull your vendor list and identify payees who may need a 1099.
- Collect missing W-9s and run TIN matching.
- Review who’s named on your IRIS application and plan for January transitions.
- Apply for your IRIS TCC now if you file directly.
- Update your accounting system for the new threshold and box numbers and update policies to reference the current IRS threshold instead of a fixed amount.
- Review last year’s coding for attorney payments, rentals, and Box 3.
We’re in This Together
Rea works alongside Ohio’s local governments, schools, and public entities on financial reporting, compliance, and year-end readiness. When 1099 questions come up, our government services team can connect you with Rea’s 1099 specialists, the same team that handles 1099 filing for clients across the firm. Whether you need help with your IRIS application, a review of your 1099 coding, or a second set of eyes before filing season, we’ll make sure you’re talking with the right people. Watch The 1099 Playbook on demand, or connect with Rea’s government services team and we’ll point you in the right direction.
About the Author
Anita Martin, CPA, Principal, Government Accounting and Advisory Leader
Anita leads Rea’s government accounting and advisory practice from the Medina office, helping Ohio public entities with financial reporting, complex accounting and advisory needs, and the processes behind them. As a member of GFOA’s education committee, she focuses on helping finance officers stay ahead of changes like the IRIS transition. Reach out to Anita to talk through your government’s year-end readiness.
