By Kelly Conner
Historically, financial institutions have relied on their core banking platforms to fulfill all their 1099 tax information reporting needs. Can core banking solutions keep up with the current demands of evolving regulations and customer expectations? Here are the telltale signs that it's time to make a change to the way your organization processes 1099s.
Your customers are pushing for an improved experience
Old systems can't make real-time electronic tax statements, causing delays for customers who have to wait for printed and mailed statements. If there are mistakes, corrected versions cannot be accessed in real-time and must be reprinted and mailed. You deserve a solution that was created to manage tax compliance.
De-centralized tax reporting processes are inefficient
With many lines of business involved, including loans, treasury, trust, retirement, investments and accounts payable, it is often necessary to consolidate 1099 data from various divisions to ensure compliance. However, core banking solutions typically produce files by division, which makes consolidation a difficult task. Your solution should create efficiencies to maximize the resources you have available.
Not meeting compliance requirements
Core banking platforms weren't designed to handle late breaking IRS and state regulatory updates, nor are they liable for any errors made in the year-end programming for tax reporting. State reporting requirements have accelerated greatly, and many core banking platforms are only complying with a segment of requirements – likely only filing via Combined Federal State filing programs on your behalf and ignoring all direct state reporting requirements. Consider a solution that is agile and able to absorb all regulatory changes long before the busy January season.
There's been an increase in IRS notices and penalties
Outdated systems don't check data for accuracy and completeness before filing, and they lack important validations such as IRS format requirements and box-by-box validations, which can cause rejections when submitting to the IRS FIRE system. Look for a solution that can effortlessly scale and has built-in validations protecting you from potential audits and penalties.
