Postal Service Changes Postmark Rule
Find the related podcast here: https://podcasts.dinesenmedia.com/show/information-return-intelligence/usps-postmark-changes-what-1099-filers-need-to-know/
On December 24 of last year, the United States Postal Service gave us a Christmas Eve gift that hasn’t necessarily received a lot of attention. If you missed the unwrapping of this Christmas gift, let’s unpack it for you.
The change involves when the USPS will postmark a piece of mail. This is a big deal in the tax world (which includes 1099s) for meeting deadlines when you mail something to the IRS.
The Change
The new rules say the postal service will postmark a piece of mail when it processes it at a facility. This may be after the day you put the envelope in the mail. This is a problem.
It used to be that if you dropped an envelope in the mail before the posted pickup time on the box, it would be postmarked that day. So, if your tax return was due April 15, and you put it in the mail before the posted pickup time on the box on April 15, it would be postmarked on April 15. And, when it arrived to the IRS several days later, they’d count it as being filed on time because you put it in the mail by the due date.
Under the new way, you might drop something in the mail before the posted pickup time, but there’s no guarantee that it will be postmarked that day. It needs to make its way to the regional processing center, where it will be postmarked. This could happen on a later day.
Solutions
You have two solutions to this. One is to e-file. The other is to send via a way that gets a postmark on it right away. Let’s talk about this second thing first.
Take Control of Mailings
If you’re mailing something time-sensitive to the IRS, you should not just drop it in the local dropbox. Take it into the post office and have them stamp it at the counter (this would count as it being postmarked). Even better, along with getting it postmarked at the counter, have it sent by certified mail with return receipt.
Your author has learned to be careful about what he says about paper filing of 1099s. In a session in June, he was talking about FIRE being shut down, and made a comment about how we don’t really talk in the session about paper filing because few organizations do that anymore. And someone sent in a comment saying “I still paper file 1099s.”
So if you are mailing 1099s to the IRS, you need to make sure you get a postmark by January 31, which is best done by taking your envelope into the post office and having them stamp it, and send it via certified mail with return receipt.
Better Yet … E-File
The better solution is, e-file everything if you can. This eliminates this postmark issue entirely. An e-file is considered timely filed if you submit it by the end of the day the filing is due.
In informal terms, you author would say it’s considered filed when you push submit on the e-filing. The technical rule found in regulation 301.7502-1 is that the filing time is based on when the transmittal is received by the electronic return transmitter.
Let’s say you use TurboTax to file your personal return. TurboTax would be the transmitter. It’s considered timely filed if you submit to TurboTax by 11:59 pm on April 15, with the time based on your local time based on the time zone where you live.
For this audience, filing 1099s, think about the system you use for filing. It might be IRIS, or Avalara or some other platform, or a software solution. In any case, your e-filing is considered filed based on your local time, and when your submission reaches the transmitter.
In practice, this is usually right away after you hit submit, though it’s best to inquire about that with your provider so you know for sure, especially for filings happening around deadlines.