You May Need a New TCC to File Forms 3921 and 3922

The IRS has updated the application process to obtain a transmitter control code for its FIRE System. If your company uses its own TCC to submit forms 3921 (for ISOs), 3922 (for ESPPs), Form 1099-MISC, Form 1099-NEC, or Form 1042-S electronically to the IRS and you applied for your TCC prior to September 26, 2021, you will need to complete a new TCC application.

Background

What is the FIRE system?

FIRE, which stands for Filing Information Returns Electronically, is the system the IRS uses to accept electronic filings of certain information returns, including all forms in the 1099 series (1099-NEC, 1099-MISC, 1099-DIV, etc.) and forms 3921 and 3922. It is not used for Form W-2; that form is submitted to the Social Security Administration.

What is a TCC?

Every entity that submits filings via the FIRE system must have a transmitter control code or TCC. The TCC is used to log onto FIRE and is also included in the electronic filing to identify the transmitter.

Does every company need a TCC?

Nope. If you outsource filing of forms 1099-MISC, 1099-NEC, 3921, and 3922 to a third party, that provider will often have its own TCC. In that case, the provider would submit the filings under its own TCC, listing your company as the payer, and your company would not need a TCC. I recommend that you confirm with your provider that they will submit the filings under their own TCC, however, before assuming that you don’t need one.

Likewise, if you don’t submit any forms electronically via FIRE, you don’t need a TCC. If you submit forms 1099-MISC, 1099-NEC, 3921, 3922, or 1042-S on paper or your company doesn’t need to file any of these forms, you don’t need to worry about submitting a TCC application. There are other forms that are filed via FIRE and someone at your company may need to worry about applying for a TCC for those filings, but that isn’t your problem.

What if we applied for our TCC after September 26, 2021?

You should be all set. You can skip the rest of this blog entry.

Applying for a TCC

Who is responsible for submitting a company’s TCC application?

It depends. Generally, each company has only one TCC for the FIRE system; if your company already has a TCC for the FIRE system, you should use that code to submit any filings you are responsible for (except for Form 1042-S, which requires an additional TCC). You should not apply for a second FIRE system TCC for your company. I suspect the application would just be rejected as a duplicate based on the legal entity name or EIN. If it isn’t, my guess is that it is a mess to clean up (if any readers have inadvertently applied for a second TCC, I’d love to find out what happened).  

The accounts payable team is typically responsible for filing forms 1099-NEC and 1099-MISC. If they are filing these forms via the FIRE system, I would expect that they own the company’s TCC application. But if the only forms your company files via the IRS FIRE system are forms 3921 and/or 3922, you might be responsible for the TCC application.

To make things even more confusing, all forms in the 1099 series can also be filed via the Information Returns Intake System (IRIS). This system has its own TCCs, which are different than the FIRE TCCs. So if your accounts payable team is filing forms 1099 via IRIS, you may need to apply for a separate TCC for your company so you can file forms 3921 and 3922 via FIRE (forms 3921 and 3922 cannot be filed via IRIS). Is this ridiculously complicated? Yes, yes, it is. What can I say—it’s the government.

What is needed to submit a TCC application?

You will need the following information to submit a TCC application.

Business Information

• Business legal name
• Employer identification number (EIN).
• Business physical location, mailing address, and phone number.
• Business structure (corporation, LLC, sole proprietor, etc.)
• Business telephone number

Type of Filer

You can apply as an issuer or a transmitter. An issuer only submits filings on behalf of itself. A transmitter can submit filings on behalf of other entities (e.g., its clients) or itself.

Form Types

You need to know what types of forms you expect to file under the FIRE system. The forms that relate to stock compensation that can be filed on FIRE include:

• Any forms in the 1099 series (i.e., 1099-MISC, 1099-NEC, 1099-DIV)
• Forms 3921 and 3922
• Form 1042-S (requires an additional TCC)

Responsible Officials

Corporations must designate a minimum of two responsible officials in the application (sole proprietors and limited liability single members/disregarded entities are only required to designate one responsible official).

The responsible officials are individuals with responsibility and authority for the business entity. They must have authority to sign and revise the application.

The IRS documentation is a little unclear, but I believe you’ll need the name of each responsible official, their Social Security number or TIN, title, telephone number, and date of birth.

Each responsible official must validate their identity through ID.me. Once validated, they will create a five-digit PIN that they will use to sign the TCC application.

Contacts

Contacts are individuals who can submit filings on behalf of the organization. A corporation’s TCC application must include a minimum of two contacts and can include a maximum of 50 contacts.

Here again, the IRS documentation is a little unclear, but I believe you’ll need the names of each contact and their Social Security number or TIN, title, telephone number, and date of birth.

As far as I can tell, contacts do not have to validate their identity with ID.me. They do, however, need their own FIRE account. Once you have your TCC, you will provide it to each contact, along with the company’s legal name as included in the TCC application and EIN and they will use that information to create their FIRE accounts.

Updating Your TCC Application

What if we need to add or remove responsible officials or contacts after submitting our application?

Publication 1220 says that you (by “you,” I believe they are referring to the responsible officials, not the contacts) can access your TCC application and make changes to it in FIRE. The publication isn’t clear as to the extent of those changes, but I assume it includes changing the responsible officials and contacts, as well as updating business entity information. If you know how this works, I’d love to hear from you.

Deadlines

By when do we need to submit a new TCC application?

The application needs to be submitted by August 1, 2023.

What if we don’t submit a new TCC application by August 1?

Your current TCC will no longer be active. The IRS doesn’t really say what happens after that, but I assume you’ll be able to submit an application for a new TCC, which, as far as I can tell, isn’t that much different/more difficult than applying to update your current TCC. If anyone knows what will happen, I’d love to hear from you.

So how long can we realistically put this off?

Assuming I'm correct that if you don't meet the August 1 deadline, the solution is to apply for a new TCC, it looks like November 1 is the longest you want to wait on this. Publication 1220 says that applications submitted after November 1 may not be processed in time for the applicant to submit e-filings for that year.

Can we still get an automatic 30-day extension on filing forms 3921 and 3922?

Yes, you can get an automatic 30-day extension on filing forms 3921 and 3922 by submitting Form 8809. This form can be submitted online through FIRE and does not require a TCC. So, by my math, that gives you until December 1 to submit a new TCC application.

This seems complicated. Is there some way I can avoid applying for a new TCC?

Sure! If you are open to outsourcing your form 3921 and 3922 filings, you can find an filing provider that will relieve you of the obligation to apply for a TCC (but don't leave this to the last minute).

More Information

For more information on Form 3921 and 3922, check out our complete guide to Section 6039 filings.

Thanks to Kimberlyn Diemer of Take Stock LLC for bringing this matter to my attention.