Episode 49: USPS Postmark Changes: What 1099 Filers Need to Know

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Welcome to this week's episode of Information Return Intelligence, all about 1099s. We do this every week, and yes, there really is enough to talk about where we can do a weekly podcast on 1099s, and you are here. So welcome. This week's episode is all about new rules that are in place at the Postal Service for when mailings get postmarked. And that has a big implication whenever you're mailing something that's time sensitive, and that would include things that you're mailing to the IRS. Before we get into our episode, the disclaimers, this is not tax advice. I'm not your accountant. Never make final decisions based on things you see or hear in this podcast. Always pay your own advisors before making final decisions. This week we're talking about the US Postal Service making a change to their postmark rule. This happened on Christmas Eve last year, and it hasn't necessarily gotten a lot of attention. So this was a Christmas gift that you might have missed. So let's unwrap it again together on this podcast. It involves when the postal service will postmark a piece of mail. That's a bigger deal than you might think if you're mailing anything time sensitive. Especially if it's something that's going, say, to the IRS. It's a mailing where you have a deadline. As long as you get it postmarked by the deadline, it counts as being filed on time, even if the IRS receives it later. Let's start by talking about the old way that the Postal Service did things with postmarks. This is not the way it is now. But the way it used to be is if you dropped an envelope in the mail before the posted pickup time on the box, it would be postmarked that day. So if you look at the drop boxes that the postal service has, there's a pickup time. Sometimes there are multiple pickup times during the day. As long as you got it in the box by whatever that last posted pickup time was, it would be postmarked that same day. So say you were filing your 1099s on paper with a due date of January 31st. You put all of your 1099s in an envelope with a Form 1096, and you drop it in the mail. As long as you dropped it in the mail before the posted pickup time, it would be postmarked the same day you dropped it in the mail. So you could drop it in the mail on January 31st, and it would have been postmarked January 31st. And when it arrived to the IRS several days later, they would count it as being filed on time because they would look at the postmark date. And it was postmarked by the due date. Now that part is still true that the IRS still looks at the postmark on it. But what has changed is the way that the Postal Service deals with postmarking envelopes. The new rule at the Postal Service is that they will postmark a piece of mail when it's processed at a regional facility and it goes through their automated machines there, then it'll get postmarked. And the problem is that that may be the day after you put it in the mail. So you've got it in the drop box by the posted pickup time when your local post office collects the mail. But it's not going to be postmarked by your local post office. It's going to be shipped off to the regional processing center, and the regional processing center is going to postmark it, and that might be the next day or I don't know how long in some places it would take to get from a post office box, like a drop box, to the regional facility, but it might not be the same day, it might not even be the next day. It might be a day or two. At any rate, that's a problem for mailing of things that are time sensitive, such as things being filed with the IRS, because it means if you're waiting until the last minute to mail something to them, you gotta be careful about when is it going to be postmarked. And while it's easy to say, well don't wait till the last minute, I'm not gonna say that because I know how it is in the real world. Sometimes you just can't help it if it's the due date and you're just getting it in the mail on that date. Sometimes that's just how it is. Now we'll talk about solutions to this after our break, but first let's hear a word from our sponsor, IOFM. The Institute of Finance and Management has certified over 25,000 financial operations professionals worldwide through its four certification programs. These programs include accredited payable specialist or manager with US and Canadian specific versions available, accredited receivable specialist or manager, certified professional controller, and certified payment reporting specialist. That's the 1099 specialist certification that I teach. These globally recognized AP and AR certifications are available in English, simple Chinese, and Spanish. Learn more at IOFM dot com. And now back to the show. Before the break we talked about the problem now with postmarks and how the postmark might not happen on the same day that you drop something in the mail. There are two solutions to this. One is to e file, the other is to send things in a way that gets a postmark on it right away. Let's start by talking about that. If it's something that is time sensitive, now we're talking here specifically about things going to the IRS, but I suppose that this would be something that would apply to anything that's time sensitive where the postmark matters. Don't just drop it in the local drop box. Take it to the post office, go up to the counter, and have them stamp it at the counter. That counts as it being postmarked. And that cuts out the whole transit time to the regional facility. That gets it postmarked right away when you leave it at the counter at the local post office. And even better, along with doing that, so do that, but then also have them send it by certified mail with return receipt. So you not only get it postmarked, but you also get proof of delivery and proof of receipt. So with this audience, we're talking about 1099s here. If you're mailing 1099s to the IRS and the due date is January 31st, and you're up against that deadline and you want to make sure that you don't get hit with late filing penalties, take that envelope to the counter at your local post office and have them stamp it right there and send it by certified mail with return receipt. And then you're good to go. Now an even better solution to this is to simply file electronically. That cuts out all of this postmark stuff. And did you get it in the mail in time? I know some people still do file their 1099s on paper because that's what they want to do. And you still can, by the way, if the number of total information forms, that's all of your W-2s and all of your 1099s, is less than 10, you can still file on paper. And if that's what you want to do, that's fine. Just be aware of this change in the postmark rules. Filing electronically is a lot simpler though. You still do technically have a postmark rule though with electronic filings. E-filing is considered timely filed if you submit it by the end of the day that the filing is due. And realistically, when you're e-filing, it's when do you on your side push submits on the e-filing? Now the regulations, of course, get more technical than that. The regulations talk about that the filing time is based on when your transmitter is received by the electronic return transmitter. So the way to think about that is what system are you using for e-filing of your 1099s? You might be doing it yourself in Iris, or you might be using Avalera or some other platform or software solution. Whatever it is that you're using, you prepare your filing and you push submit. And when you push submit, your e-file is based on when does your transmitter, that would be whoever you're using to help you with filing, it might be Iris directly or Avalera or whoever, when do they receive your submission? So it's technically not when is it sent to the IRS, it's when did you send it to your transmitter? And it's based on your local time, is when that's considered to be done. In my experience, whether it's 1099 filing or it's e-filing of an income tax return or whatever, it's right away, like you push submit and it goes off to your transmitter, your software company or whatever solution you're using. But I suppose you would want to double check on that, on when really is this all happening, and just make sure of that. So I think the point is electronic filing makes your life a lot easier in a lot of ways, including this whole postmarking thing and making sure that your filings get submitted on time. It's a lot easier than running around trying to get to the post office before it closes so they can stamp it at the counter because you can't trust that it's gonna get postmarked in time if you just drop it in the mail. You can forego all of that by just e filing. That'll do it for another episode of Information Return Intelligence, powered by IOFM and produced by Dynason Media Ventures. Find all of our podcasts at podcasts.dynasonmedia.com. We'll talk to you again next week. Dinason Media Ventures.