What is the requirement to obtain consent for paperless delivery?

Generally, you must deliver Forms 1099 via mail to your users, unless you’ve obtained consent to only deliver forms electronically. You can always deliver an electronic copy in addition to a paper copy which doesn’t require consent.

High-level requirements for obtaining consent include:

• Platforms can obtain the consent electronically, or on paper
• Platforms should keep electronic information returns available at all times for inspection by the IRS
• Platforms will need to provide specific disclosures to users
• Platforms will need to notify the recipients of any changes to the distribution method

Users are allowed to withdraw consent. Please note, that if a user withdraws their consent prior to the platform having delivered the 1099, then the platform must issue a paper copy to the user in the year the consent is withdrawn and all subsequent years.

Required Disclosures to the User

• Generally speaking, before obtaining consent from the user, you must provide a clear disclosure statement that must include the following:
  • A notice that the user will receive a paper copy if they do not consent
  • The scope and duration of consent. For example, whether the consent applies to all information returns indefinitely until it is withdrawn
  • How to withdraw consent
  • How to receive a paper copy after consenting to electronic delivery
  • The conditions under which an electronic information return will no longer be provided
  • How the user updates their information including contact information
  • A description of the hardware and software required to access, print and save the information return
  • The date the information return will no longer be available

Operational Considerations

Generally, the user needs to provide consent in the way they are going to receive their forms.

For example, if a user is going to receive their Forms 1099 through a secure website, then the user should provide their consent through a website as well (it does not have to be the same site).

This article is neither legal advice nor tax advice. We recommend that you speak to your lawyer or accounting firm with any questions or concerns around tax reporting.