ICYMI: IRS Filing Information Returns Electronically (FIRE) System will be Retired for Tax Year 2026

March 11, 2026

Last July, the Internal Revenue Service (IRS) announced that the Filing Information Returns Electronically (FIRE) system will be retired for the tax year 2026. This will affect the filings of IRS Forms 1099, 5498, 1098, 3921/3922, W‑2G, and Form 8955‑SSA, and will require all information‑return filers to use the IRS Information Returns Intake System (IRIS) platform beginning in the 2027 filing season. The IRS is actively pushing filers to obtain an IRIS Transmitter Control Code (TCC), which is a unique 5-digit alphanumeric code required to electronically file 1099-series forms directly with the IRS through the IRIS portal. Some affected industries have noted the scale of the change but there have not been any reported organized calls for delay. No extension has been announced, and the IRS appears committed to the current timeline. Are you prepared?

FIRE has been the backbone of IRS electronic information‑return filing for decades, and many employers, payroll vendors, and transmitters still reportedly rely on FIRE‑based file structures, encryption workflows, and transmission processes. The IRS’s decision to retire the FIRE system therefore represents one of the most significant modernizations of information‑return filing in decades – and imposes major compliance challenges.

FIRE is being retired in part because it is a legacy system dating to the 1980s. It uses a 750‑character flat‑file format; older transmission protocols; and has limited user authentication and security features. IRIS, in contrast, is built with modern technology in mind and requires data to be transmitted using XML (extensible markup language) files, which are much larger in size, often requiring more storage and bandwidth. IRIS is also more complex, “demanding new tools or dedicated IT resources to convert legacy file formats into IRS-compliant XML” according to Sovos, a tax‑compliance technology company that provides software and regulatory expertise to businesses that must comply with federal and state tax‑reporting rules.

Sovos says that these changes will be challenging in practice, with many of their clients saying understanding and incorporating the technical details of IRIS is the most difficult challenge. Also, uncertainty about whether source systems will support IRIS requirements is another client concern. These “highlight just how steep the learning curve will be for many organizations,” Sovos warns. For example, as Sovos explains, unlike the 1220 format — the file layout defined in IRS Publication 1220, the technical specification for electronically filing many information returns through the FIRE system — IRIS requires separate fields for first and last names. “You’ll need logic in place to split names without creating unnecessary Name/TIN mismatches, which can lead to costly penalties,” Sovos warns.

Sovos also cautions that, while the IRS moves forward with IRIS, most states still rely on the FIRE format to process information returns. As of early 2025, only a handful of states had adopted the IRIS schema, Sovos points out. This means that organizations “may need to maintain dual filing capabilities—submitting returns in IRIS XML to the IRS and FIRE format to individual states.”

The good news is that major service providers such as Sovos, as well as payroll vendors and financial institutions, are rewriting software to support IRIS; running parallel testing; and preparing clients for the end of FIRE.

The bad news is that, despite some industry commentary expressing concern about the compressed timeline, no formal extension of the current deadline has been announced, and it is NCTR’s understanding that no major trade association has publicly requested a delay. Therefore, given the IRS’s multi‑year modernization plan and the fact that IRIS is already operational, the agency appears committed to the 2027 cutoff. However, NCTR wants to hear from its members should this present any concerns.

In the alternative, should the IRS offer transitional relief for error‑correction or late filings during the first IRIS‑only year that may result from filers who may struggle with the new authentication and file‑format requirements?

In any case, public plans should be prepared for key operational impacts, including:

All FIRE‑based software must be rewritten or replaced;
All filers must obtain an IRIS TCC;
All 2026 information returns must be IRIS‑compliant; and
FIRE’s 750‑character flat file will no longer be accepted.

As IRIS becomes the primary intake system, the risk profile for non‑compliant or late‑migrating filers increases. This means that higher rejection rates are likely for filers who have not fully aligned with IRIS schemas and validation rules. Also, remediation windows may be tight, especially near filing deadlines, increasing the risk of late‑filing penalties, and organizations that delay migration from FIRE to IRIS may face problems in the final FIRE year, with limited time to correct defects.

Finally, be sure to see that third‑party transmitters and payroll vendors have updated their software to IRIS specifications; re‑tested transmission processes; re‑trained staff; and clearly communicated what changes they are making to be in compliance and IRIS‑ready for TY 2025.

NCTR has heard very little concerning this from its members but wants to ensure that all systems are fully aware of this transition and are able to meet the current deadlines. Please let us know if this is presenting challenges.