A Leading University Relying on TaxBandits to Seamlessly Manage 1099 Compliance

This success story explores how a leading university streamlined its tax filing processes by partnering with TaxBandits.

• Client Profile: A Top-tier University

  The leading university in Texas is one of the state's oldest and most esteemed higher education institutions, renowned for its academic excellence and lively campus community.

• Challenges Faced

  

  As a major institution with diverse financial operations, the university's tax reporting obligations are equally significant. The university handled substantial tax reporting, managing around 10,000 1099 forms annually
  across 22 entities.

• The university faced several significant challenges in its tax filing process. Finding a reliable and efficient e-filing solution was urgently needed to streamline the tax reporting process, enhance compliance efforts, and reduce the university's administrative burden.

  Here are some of the primary challenges that the university was looking to address:

  Compliance with IRS regulations:

  

  Compliance with IRS regulations was a critical concern for the university. Due to the volume of forms filed annually, the university needed help to stay updated with IRS rules and requirements. Any changes in tax regulations or adjustments to reporting requirements could have far-reaching implications, making it challenging to maintain compliance on such a large scale.

  Managing filings for different entities:

  

  The university had to manage filings for multiple entities, each with its own unique requirements. The university had to deal with different 1099 form types to report various payments made by the entities. This made the workload for the tax compliance team more complex, as they had to ensure that each entity's specific needs were met.

  Distributing form copies:

  

  Besides e-filing the tax forms, the university was responsible for distributing copies of the 1099 forms to the recipients, including vendors, contractors, and other payees. This requirement added another layer of complexity, as the university had to handle the process of printing, mailing, and tracking the distribution of thousands of forms each year.

  Data management and security:

  

  The university faced a significant challenge in managing and protecting sensitive financial data required for tax reporting. It needed to securely store and transmit large quantities of confidential information to prevent breaches and
  unauthorized access.

  “To simplify this complicated process, the university pursued a reliable and efficient e-filing service provider to streamline its 1099 reporting while ensuring compliance with IRS regulations. After considering various options, the university opted for TaxBandits due to its seamless e-filing solution, user-friendly platform, and
  advanced security.”

• Requirements of the University

  The university has identified several essential requirements to improve its 1099 filing process while ensuring efficiency, compliance, and security.

  Here is a breakdown of the requirements that the university had.

  1 A software solution that manages all types of 1099 forms and corrections

  The university needed a flexible e-filing solution to handle 1099 forms, such as 1099-MISC, 1099-NEC, 1099-INT, and others. They also required the ability to correct previously filed 1099 forms to fix errors promptly and
  avoid penalties.

  2 Printing and mailing services for delivering 1099s to vendors

  As part of its tax reporting obligations, the university required a comprehensive solution to efficiently handle the physical delivery of 1099 forms to vendors. This involved managing the entire process, from accurately printing the forms to ensuring timely and precise mailing to recipients.

  3 Electronic delivery of 1099s to recipients

  In addition to mailing physical copies, the university needed a solution enabling the electronic delivery of 1099 forms to recipients. This requirement aimed to reduce the reliance on paper-based processes, improve the speed of form delivery, and provide a convenient option for recipients to access their tax documents.

  4 Import of data in a single data file

  The university needed a solution to import all the filing data in a single, consolidated file. By centralizing the data into one file, the university aimed to minimize errors from handling multiple files and ensure the accurate capture of all necessary information for preparing and filing 1099 forms.

  5 Single Sign-On system

  To improve accessibility and security, the university needed a Single Sign-On (SSO) system to connect with its current IT setup. This system would enable authorized users to log in to the e-filing platform using their university credentials, simplifying the login process and ensuring secure access.

  6 Clear timeline for reporting 1099 returns

  To comply with IRS deadlines, the university required a solution to provide a clear and structured timeline for preparing, filing, and distributing 1099 forms. This timeline would help the university plan and execute each process stage efficiently, ensuring all forms were filed and delivered within the required timeframes.

  7 Training session and implementation of project plan

  The university required comprehensive training sessions for its staff to ensure a smooth transition to the new e-filing solution. These sessions should provide the necessary knowledge and skills to use the tax filing system effectively. Additionally, the university needed a detailed project plan for the implementation, outlining each step of the process, including setup, testing, and deployment. This requirement aimed to minimize disruptions and ensure a seamless adoption of the new system.

  8Retention of forms

  The university required that all 1099 forms be securely retained for at least four years, or for a longer duration if specified by the IRS, from the end of the tax year in which the forms were filed. This requirement ensured that the university maintained compliance with IRS regulations regarding document retention. Furthermore, they needed these forms easily accessible through the e-filing portal, allowing authorized personnel to retrieve and review historical filings as required.

  9Testing and QA environment

  The university needed the e-filing solution provider to offer dedicated testing and quality assurance (QA) environments to validate data integrations and ensure the system functioned correctly before
  live implementation.

  10Accessibility

  The leading university required e-filing solutions to meet specific accessibility standards based on Texas laws and system regulations. It also required that electronic and information resources comply with these standards to ensure usability for individuals with disabilities. These measures aimed to confirm that the e-filing software adhered to accessibility guidelines and was accessible to all users.

• Solution We Offered

  TaxBandits proposed a comprehensive solution tailored to the leading university's needs, ensuring a streamlined and efficient e-filing process for 1099 returns.

  Compliance Services

  1 Streamline Data Import:

  TaxBandits offered two different import options for the university.

  • Bulk Upload: Enabled the university to upload the filing data in bulk using TaxBandits standard CSV template or their own file.
  • Full-Service option: This enabled the university to securely upload all their 1099 data in a single file by logging into the TaxBandits platform. Once the data is uploaded, TaxBandits will begin the pre-processing, where our system will validate and segment the data into separate files for each entity. The admin and authorized members of the respective entity can access these data files. They can either upload these data to generate 1099 forms or let TaxBandits do that process
    for them.

  In addition, per the university’s preference, TaxBandits facilitated data transfer through simple encrypted file transfer over Secure FTP (SFTP).

  2 Data validation:

  TaxBandits implemented data validation at various stages of form preparation for the university to identify potential errors on 1099 forms. This includes,

  • IRS Business Rules: Ensuring that all forms meet IRS standards and guidelines by validating the 1099 information based on the IRS business rules to improve accuracy and ensure completeness before transmission.
  • TIN Matching: Validating the Taxpayer Identification Numbers of the entities (payers) and recipients with the IRS records to ensure they match the name and format provided reduces the need to file corrections and the risk of IRS penalties due to incorrect TINs.
  • USPS Address Validation: Ensuring that the addresses of both the payers and the recipients are correct and standardized.
  3 Federal and State filing:

  TaxBandits supported federal and state 1099 form filings, ensuring the university could meet all regulatory requirements. This solution simplified their filing process by providing a single platform for all
  necessary submissions.

  4 Recipient copy distribution:

  TaxBandits gave the university different options for sending out 1099 forms to recipients.

  • Postal Mailing - Form copies are printed and mailed to the recipients from a SOC 2
    Certified facility.
  • Online Access - Digital copies of the forms are made available through the secure TaxBandits Portal after prompting the recipients for their consent to receive electronic copies.
  5 Corrections:

  In case of errors in filed forms, TaxBandits offered an efficient corrections process. This ensured that the university could quickly amend any inaccuracies in their 1099 filings, maintaining compliance and minimizing potential penalties.

  5 Record keeping:

  TaxBandits retains all 1099 forms for seven years, ensuring compliance with IRS regulations. This met the university’s need to maintain filing records for a specific period.

  Technical Support and Resources

  6 Single Sign-On Solution:

  We offered a robust solution for the leading university by enabling Single Sign-On (SSO) through Federated Identity Management (FIM). This solution seamlessly allowed the university to integrate its existing authentication model, enhancing security and user experience.

  7 Testing and QA environment:

  TaxBandits provided a dedicated user acceptance testing (UAT) environment for the leading university, enabling beta testing of new features before their release. Managed by the Admin, this environment ensured a structured testing process, allowing for thorough evaluation and feedback from selected users. Additionally, TaxBandits offered a sandbox environment, which provided a safe space for validating data integrations and training end-users.

  8Accessibility:

  TaxBandits met the accessibility requirements of the leading university by providing features such as keyboard navigation and screen reader compatibility. Their users could easily access these options through the menu, where they could adjust the accessibility settings. By implementing these features, TaxBandits aimed to create an inclusive experience for all individuals, including those with disabilities.

  9Implementation of project plan:

  TaxBandits is committed to collaborating with the leading university to develop a customized implementation project plan that caters to their unique needs and requirements. This project plan outlined key milestones, tasks, and timelines for the implementation process, ensuring a smooth transition to the TaxBandits platform.

  10Conduct training sessions:

  TaxBandits offered comprehensive training sessions for approximately 75 users at the university. These sessions aimed to familiarize users with the platform and its features, covering essential topics such as navigating the TaxBandits Dashboard, inputting data, generating reports, accessing support resources, and reviewing updates relevant to the current tax year. The training was designed to be role-based, ensuring each user received tailored instruction specific to their responsibilities.

  11Training materials:

  Besides live training sessions, we provided extensive training materials, including user guides, tutorials, and video demonstrations. These resources served as valuable references for users, helping them become acquainted with the TaxBandits platform and ensuring they had the information needed to navigate the system effectively.

  12Ongoing support:

  We unequivocally dedicated ourselves to providing unwavering support to the university throughout and beyond the implementation process. Our responsive support team was readily available to address questions or concerns, ensuring swift assistance to facilitate a seamless transition to the TaxBandits platform. This relentless commitment to ongoing support firmed TaxBandits' partnership with the university and aimed to instill unwavering confidence in using the new system.

• The Wrapping Line

  TaxBandits not only met but exceeded the unique requirements of the leading university, delivering customized solutions that streamlined their tax filing processes, improved accuracy, and promoted seamless collaboration among staff.

  The partnership between TaxBandits and the leading university exemplifies the transformative impact of innovative e-filing solutions on tax compliance. By addressing the specific challenges faced by the university, TaxBandits provided a comprehensive platform that enhanced efficiency and ensured compliance with IRS regulations, ultimately making the university's tax reporting process more effective and manageable.