OVERVIEW
What SAP Users Need to Know About the Tax Year 2026/Reporting Year 2027 Transition for IRS Reporting.
As we move into 2026, the IRS is implementing one of the most significant updates to its information returns filing infrastructure in decades. The legacy Filing Information Returns Electronically (FIRE) system, which many of you currently use for submitting 1099 forms and other informational reports, will retire on December 31, 2026.
Starting with Tax Year 2026 filings (due in early 2027), form submissions must be made through the Information Returns Intake System (IRIS). This change directly impacts how SAP customers generate, validate, and file forms such as 1099-MISC, 1099-INT, 1099-NEC, 1099-K, 1099-G, 1099-C, 1042-S, 1099-R, and 1098-T using SAP Document and Reporting Compliance in S/4HANA Cloud Public Edition/Private Edition/On-premise. SAP ERP (ECC) is supported by ABAP Program (RFIDYYWT).
We are here to help you navigate this transition smoothly. Below, we outline the key changes, benefits, and actionable steps to ensure continued compliance with minimal disruption.
JOIN OUR UPCOMING WEBINARS
SAP has planned two webinars for customers and partners which will provide an overview and awareness about the IRIS Transition. Please plan to attend one of these:
• June 2, 2026, 11 AM PST on SAP ON24 – Registration link here
• June 9, 2026, 11 AM PST at ASUG – Registration link here
WHY IRS IS MOVING FROM FIRE TO IRIS
The FIRE system, built on decades-old technology, is being replaced by IRIS — a modern, web-based platform designed to improve accuracy, security, and efficiency.
Key Differences:
| Aspect | FIRE(Legacy) | IRIS(New) |
| File Formats | Flat text files (Publication 1220 format) | Structured XML for automated e-filing (A2A) or CSV for portal uploads |
| Validation | Post-submission rejections | Real-time error checking and instant corrections |
| TCC Requirement | Existing FIRE TCC | New IRIS-specific TCC required (starting with ‘D') |
| Filing Options | Limited automation | IRIS Taxpayer Portal (manual/CSV uploads: up to 250 records per file, unlimited files) or XML A2A for high-volume automated filing |
IMPORTANT: You'll need a separate IRIS-specific Transmitter Control Code (TCC) starting with ‘D'. Existing FIRE TCCs won't work — apply early, as approval can take up to 45 days.
FIRE and IRIS will run in parallel during 2026 (for Tax Year 2025 filings due this year), giving you time to test and prepare. However, after December 31, 2026, FIRE will no longer accept submissions and reports must be filed via IRIS.
HOW THIS AFFECTS SAP CUSTOMERS
SAP continues to enhance SAP Document and Reporting Compliance (DRC) to align with evolving U.S. statutory requirements, including 1099 and 1042-S reporting. SAP-ERP Reports will also be enhanced to comply with IRIS regulations.
Key Change: No More Copy-A
A key change with the IRIS transition: Copy-A (the IRS-facing red-ink or pre-printable version for paper submission) is no longer necessary and will not be supported.
Two Primary Electronic Filing Methods
SAP Document and Reporting Compliance will provide:
1. CSV file generation — Optimized for direct upload to the IRIS Taxpayer Portal (ideal for manual filing scenarios)
Note: This option is supported only for Tax Year 2026/Filing Year 2027 to facilitate a smooth transition. It will be deprecated in Tax Year 2027 onwards.
2. Direct electronic filing via XML — For secure, automated submission through IRIS Application-to-Application (A2A) communication
Recipient copies (Copy-B PDFs) will continue to be fully supported for distribution to payees/recipients, ensuring you meet furnishing requirements without interruption.
Release Timeline
To support a smooth rollout, SAP plans to release updated DRC functionality for all reports by early October 2026. This will give you sufficient time to install, test, and be ready by early 2027.
This approach gives customers ample time to run thorough testing with the IRIS Assurance Testing System (ATS) during the parallel operation period in 2026 — well before the mandatory shift for Tax Year 2026 filings in 2027.
OUTPUT SUPPORT SUMMARY BY SAP SOLUTION
SAP S/4HANA Cloud Public Edition/Private Edition/On-Premise
Legal outputs to be filed with IRIS:
✓ Download of CSV file (Tax Year 2026/Filing Year 2027 only, This output will be deprecated beyond tax year 2026.
✓ E-filing via XML (requires DRC Cloud Edition license – contact your account executives for pricing)
✗ Copy-A (not supported – no longer necessary)
Business partner correspondence:
✓ Copy-B (fully supported)
SAP ERP (ECC)
Legal outputs to be filed with IRIS:
✓ Download of CSV file
✗ E-filing (not supported due to platform limitations)
✗ Copy-A (not supported – no longer necessary)
Business partner correspondence:
✓ Copy-B (fully supported)
BENEFITS YOU'LL SEE WITH IRIS VIA SAP DRC
• Fewer rejections and faster processing thanks to real-time validation
• Larger file capacities and automated bulk filing for high-volume submitters
• Better data accuracy with structured XML/CSV formats, reducing manual rework
• Long-term alignment with IRS modernization — positioning your organization for future form additions and compliance changes
IMMEDIATE NEXT STEPS FOR YOUR TEAM
1. Apply for an IRIS TCC Now
Visit the IRS IRIS portal and submit your application (irs.gov → search “IRIS Application for TCC”).
Required Reading:
• IRS Publications 5717, 5718, and 5719
• IRIS 101 and tutorial PDF (provides step-by-step instructions)
Do this ASAP to avoid delays in early 2027!
2. Review Your SAP DRC License and Configuration
Review your current 1099/1042-S/1099-R/1098-T report setups in DRC. Note that new configurations will be required for IRIS compliance.
3. Test Early
Use the time in 2026 to:
• Generate sample IRIS outputs (XML)
• Submit test filings through the IRIS Assurance Testing System (ATS)
Note: IRS will allow you to submit in production only after certification in their ATS system. IRS has not provided an ATS environment for CSV uploads.
4. Stay Updated
Monitor SAP Notes, SAP Community posts on DRC and U.S. withholding.
IRS RESOURCES
• IRIS Portal: irs.gov (search ‘IRIS')
• TCC Application: ‘IRIS Application for TCC'
– You will need Issuer & Transmitter roles
– TCC Application Tutorial
– After TCC approval, apply for API Client ID for XML (A2A) transmissions
– Complete A2A consent with IRS for e-filing
Key Publications:
• 5717: Taxpayer Portal User Guide
• 5718: Electronic Filing Application to Application (A2A) Specifications
• 5719: Test Package for Information Returns
• Follow “Submit ATS transmissions” to move from Test to Prod
• Instruction 1099-R and 5498
JOIN OUR COMMUNITY WORKSPACES
Stay connected and get the latest updates:
1. Open the Workspace link: USA — SAP Document and Reporting Compliance
2. USA – SAP Human Capital Management Localization
3. Click the “Request to Join” button
4. Use your work email to submit the request
5. Include your company name, your full name, and your role in the comment section
Subscribe to Regulatory Change Manager for US to follow the releases.
FINAL THOUGHTS
The shift to IRIS is an opportunity to modernize your reporting processes — and with SAP Document and Reporting Compliance's ongoing enhancements and phased rollout, you will be well-equipped to stay compliant effortlessly.
If you have questions about how this affects your specific SAP setup or need help with preparing, please contact our support team.
Thank you for your continued partnership. We're here to support you through this important transition.
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