With potential fines of up to $270 per inaccurate or late form, the pressure of 1099-S season is real. The good news? With the right plan, tools, and partners, 1099-S reporting can be a streamlined, stress-free process. Let’s explore best practices, key updates, and expert recommendations from your resident title experts at AccuTitle to help your agency succeed.
Why 1099-S Reporting is So Important
Per IRS rules, settlement agents listed on the Closing Disclosure are responsible for filing Form 1099-S. This form reports gross proceeds from real estate transactions to sellers (payees) and the IRS. Accuracy is essential to avoid penalties, and the stakes are higher than ever with updated IRS guidelines mandating electronic filing for entities submitting 10 or more forms annually.
Best Practices for 1099-S Reporting
We polled industry experts and customers to identify actionable strategies for a smooth 1099-S process. Here’s what they recommend:
- Appoint a 1099-S Lead: Designate a “quarterback” to oversee the year-round 1099-S process. This person should create a plan, ensure deadlines are met, and manage seller data collection and validation.
- Gather Information Early: Before closing, collect all required seller details, including tax IDs, mailing addresses, and exempt status. It is much easier to contact the seller during the process than it is to get their attention afterward.
- Validate Tax IDs: Use tax ID validation tools before closing or IRS submission. This prevents costly inaccuracies and avoids the appeals process, saving time and effort.
- Early Distribution: Spread the workload by mailing 1099-S forms to sellers quarterly or provide them at the closing table. Early distribution reduces the January rush and gives sellers time to identify and report inaccuracies.
- Use a Vendor: Partner with a vendor to handle reporting, printing, and mailing. A vendor like AccuTitle eliminates manual errors, ensures IRS compliance, and saves your team valuable time.
Key Deadlines for 1099-S Reporting in 2025
To stay compliant, mark these dates on your calendar:
February 15th, 2025: 1099-S must be sent (postmarked by) to payees
March 15th, 2025: Deadline for AccuTitle to guarantee on-time submission of 1099-S data to the IRS*
- Due date for furnishing 1099-S to sellers. If mailed, the form must be postmarked by this date.
- Reminder: January 31st is not the due date even though that is the case for other 1099 forms
March 31st, 2025: 1099-S must be submitted to the IRS
What to Look for in Your 1099-S Reporting Software
Efficient reporting starts with the right tools. When choosing or evaluating your title production software, ensure it offers these critical features:
- Data Capture Capabilities Your software should allow for capturing all required 1099-S information as discrete data fields. This ensures nothing is missed and streamlines the reporting process.
- Export Functionality The ability to export data easily to your 1099 vendor is crucial for seamless compliance and filing.
Choosing the Right 1099-S Reporting Partner
To simplify reporting further, consider a vendor that acts as a one-stop shop for 1099-S reporting. Look for these key features:
- Integrated IRS Reporting and Fulfillment: The best vendors handle IRS reporting, printing, and mailing within a single system. This eliminates the need to import, validate, or track data in multiple platforms.
- Error Validation: Choose a partner that validates all 1099-S information before submission. Catching errors early reduces costly corrections and rework.
- Tax ID Verification: Confirm your vendor verifies tax IDs with the IRS. Incorrect Tax Identification Numbers are one of the most common issues in 1099-S reporting.
- Audit Trail and Tracking: Ensure the vendor provides confirmation numbers and a complete audit trail for every submission.
Turning 1099-S Reporting into an Opportunity
While compliance is the primary goal, the 1099-S process can also be an opportunity to strengthen client relationships.
- Educational Content: Provide sellers with tips for preparing for tax season or explain how 1099-S reporting works. This positions your agency as a helpful, trusted resource.
- Value-Added Services: Highlight additional services your agency offers, such as secure document portals or tax consulting, to differentiate yourself from competitors.
- Self-Service Portals: Offering clients 24/7 access to closing documents and tax information through a secure portal can improve efficiency and satisfaction while reducing manual requests. Check out AccuTitle’s myTitleVault to learn more.
Simplify 1099-S Reporting with AccuTitle
Don’t let 1099-S reporting overwhelm your team this year.
Contact us to learn how AccuTitle can make the process stress-free, accurate, and efficient.