Higher Threshold, Same Process: Keeping Your Vendor Master File 1099-Ready

In this episode, AP expert Debra Richardson joins host Grace Berube to explain two 2026 IRS changes that touch the vendor master file: the higher 1099 reporting threshold, rising from $600 to $2,000, and the move from the FIRE system to IRIS. Debra makes the case for keeping vendor setup practices exactly as they are, including collecting W-9s and running the TIN match, since annual payment totals are hard to predict, some payments are always reportable, and the W-9 doubles as a fraud prevention tool. She then covers the vendor data clean-up that IRIS’s XML files call for, from legal name formatting to address characters and duplicate vendors, and closes with advice on handling internal stakeholder pushback.

WHAT YOU’LL LEARN IN THIS EPISODE

• What the increased 1099 reporting threshold, from $600 to $2,000, means for the vendor process, and why Debra recommends no change to your collection practices.
• Why collecting the W-9 and running the TIN match at vendor setup still matters, from payments that are always reportable to the lost leverage once the tax year has passed.
• How the W-9 serves as a fraud prevention step, and why it helps to have a tax ID on every vendor record.
• What the shift from FIRE to IRIS means for vendor data, including combined legal name fields, special characters in addresses, and standard USPS formatting.
• How to respond when internal stakeholders push back on W-9 collection, and why your team can set requirements stricter than the IRS, illustrated by the husband and wife W-9 example.

Debra Richardson
Accounts Payable Consultant | Speaker | Trainer – Debra R. Richardson, LLC

Debra is an Accounts Payable speaker, consultant, and trainer with over 20 years of experience in AP, AR, general ledger, and financial reporting for Fortune 500 companies including Verizon, General Motors, and Aramark.

For over a decade, Debra has focused on Global Vendor Maintenance.  As an Senior AP Manager at a Global 15 company she lead a team of 17 that over 2,000 vendor requests per month and maintained 140k+ global vendors across seven ERPs. In her consultancy, she focuses on working with vendor teams to add authentication techniques, internal controls best practices and vendor validations to reduce the potential for fraud, compliance fines and bad vendor data in the vendor master file.  She is the President of the Central Atlantic Region IOFM Chapter and the IOFM Ask the Expert for the Vendor Master File Category.  

A Certified Fraud Examiner (CFE), Debra works with vendor management teams to clean their vendor data and update their vendor processes so they pay the right vendor.

She has a YouTube channel where she posts vendor master file tips every Tuesday and hosts a weekly podcast: “Putting the AP in hAPpy”. 

Grace Berube
Senior Content Manager, IOFM

Grace is the Senior Content Manager at the Institute of Finance & Management (IOFM), where she has led content strategy and development since 2022. In this role, she oversees all aspects of IOFM’s digital and event-based content, ensuring it remains timely, relevant, and actionable for all financial operations professionals.

Grace manages IOFM’s robust library of site content, leads the organization’s editorial and member webinar programming, and hosts IOFM’s podcast series. She also oversees a team of subject matter experts who contribute thought leadership and educational articles. In additional, Grace curates and manages all speaker content for IOFM’s in-person and virtual events, ensuring consistency and quality across every touchpoint. With nearly three years in the role, Grace brings a deep understanding of the financial operations landscape and a passion for delivering content that empowers professionals to excel in their roles.

Transcription

Grace Berube: Welcome to the IOFM podcast, the go-to show for accounts payable professionals who want to stay ahead of the curve. Whether it's automation, artificial intelligence, career growth, compliance, leadership, or the trends shaping the future of AP, we're bringing you the real conversations with the professionals driving this industry forward.

Hey, Debra. How are you?

Debra Richardson: Hi, Grace. I am doing fine, how are you?

Grace Berube: I'm doing great. It's great to have you back on the podcast. We are talking today about the IRS and 2026 changes that you should make to your vendor process and your vendor master file. Because this episode should be coming out right around when 1099 and compliance season really starts to ramp up, people start to look at their processes. So, this is a really good time to take a peek into these things.

00:00:56  

Debra Richardson: Yeah. The IRS never fails to keep us all employed because they're always coming up with new things and we have to adjust to them. And unfortunately, a lot of the new regulatory or any regulatory changes, they just affect the vendor master file. And so, this is no different.

Grace Berube: Yeah. No, absolutely. So, talk to me a little bit about what is new for 2026. We have a lot of webinars and podcasts and articles from Jason Dinesen, but not really on the vendor process and how all of that will affect the vendor master file. So, what is new in 2026 that people should be looking out for and how can we start today?

Debra Richardson: Yeah, so what's new? Really two things that I consider affecting the vendor master file. The first one is the increase in the threshold for reporting from $600 to $2,000. And so, that's new.

00:02:01 

And then, the second thing that's new is IRS said they were going to retire FIRE and I didn't believe them. 

Grace Berube: I know. No one did.

Debra Richardson: But yes, they did retire FIRE. So, for tax year 2026 and tax season 2027, we're going to be using IRIS, the new IRIS portal, either the portal or the A2A filers process for both volumes. And so, that's going to require some changes to the vendor master file because FIRE used a totally different file format than IRIS does. And so, that's driving the change.

Grace Berube: Yeah, that is definitely a big change. So, let's walk through the first one here, the increased reporting threshold from $600 to $2,000. What will that mean for the vendor process?

00:03:01

Debra Richardson: So very short, absolutely nothing. This is something that you should not change your processes for. And I know this is going to be hard because I know that vendor teams already get pushback from internal stakeholders, team members saying, why do you have to collect a W-9? They're only going to be paid $599.99. It's under the $600 threshold.

Now, you have even bigger thresholds. So, you may have even more stakeholders saying that or internal team members saying that. But the thing that they don't understand or the reasons why I think you should still collect a W-9 even though they might be under that threshold, or at least you might think they're under that threshold when you're first setting them up, is number one, some types of payments were always reportable anyway.

00:03:59 

Even if they are a corporation, even if they are exempt based on their tax status, and I don't know why I can't think of the word of it, but maybe they are a corporation. If they make certain types of payments, you still have to report them. So, you still need that W-9, you still need the tax ID. And so, you do still need to collect the W-9.

Also, how do you know—and this could be different for some vendor teams that maybe have a relationship with the vendor or know in detail what you're purchasing, what services there are. But if you set up a vendor at the beginning of the year, how do you know how much you're actually going to pay them throughout the whole year? Especially if it's a service, you might have—I guess it could be with products too.

00:05:02 

You might need more products. You might need different products to work with the products you just—I mean, you just never know how much you're going to pay those vendors. And so those teams, vendor teams, AP teams that have a relationship with the vendor, maybe they will know.

But I will tell you, when I was a practitioner setting up those vendors, we never had a relationship with the vendor. We relied on the buyer, or the purchase order process, or the internal team member that had a relationship with the vendor as far as how much the payment was going to be. But we never knew. I mean, that's not set in stone. So, you just don't know.

And then, anyone that has ever heard of Debra Richardson in the past, you know that I think you should collect a W-9 anyway because it's not just about tax reporting. It's also about fraud prevention.

00:06:06 

Don't make it easy for a fraudster to get set up in your system just because—and I used to say just because they say they're a corporation, because some folks won't collect W-9s because they're a corporation, thinking that they won't ever be reportable. Now I have to say, don't make it easy for a fraudster to get set up in your system just because they or the internal says, we're only going to pay you $1,999.99. 

Grace Berube: Right. Right. Exactly.

Debra Richardson: That goes up. So, that's my recommendation. You always collect that W-9.

And for that matter, you still do the TIN match too. So, nothing has changed with that either.

00:06:55 

And one thing that IRIS does do, and I think it's going to be good, is at the time that you submit or process your tax reporting file, they will do the IRS TIN match at that time. And so not only that, but they give you 60 days to correct it. And I'm like, why would they say that? Because now the thought process is well, you know what, I'll just do it. And whatever comes out as not a match, I'll just go ahead then, and I will collect the W-9s from my vendors and then fix it within the 60 days. 

But you know what the biggest problem with that is? When you are doing that process, it is after the tax year, which means you have already paid that vendor.

00:08:01  

And if you don't have any business with that vendor in the current tax year and they don't respond to your request, you have no leverage anymore because you've already made the payments, and they've gone on and they're going to service other clients. So at that point, you don't have any leverage. And so yes, still collect the W-9 and still do the IRS TIN match at vendor setup. 

Grace Berube: That's really good info. So really, just keep your processes as you normally would have, even though that reporting threshold is increasing.

Debra Richardson: That is correct. And that way, you can continue to always have a U.S. tax ID for those U.S. vendors in your vendor master file, which does help. Because if you follow what I recommend, which is have a unique tax ID per vendor record, that means that you have to have a tax ID on the vendor record. And how do you get that? You collect the W-9. So, yeah.

00:09:03

Grace Berube: Right. Gotcha. Okay. That's really great to know. So, FIRE to IRIS. As you said, you didn't expect this to happen, and they mentioned it and I think we were all a little hesitant to see that change come. So, talk to me about how vendor teams may be having a little bit more cleanup to do with that change coming in the next tax season.

Debra Richardson: Yeah. And I don't know that it would be as big of a change for those folks that are going to use the IRIS portal because the IRIS portal has a upload file. So, they have a template that can be populated. But the A2A filers, those application-to-application filers, where you’re going to be or they're going to be producing a file the same way that they will produce a file for FIRE, the difference is that the IRIS files are XML files.

00:10:03 

And Grace, don’t ask me what that means because I'm going to tell you. 

Grace Berube: Yep. I'm not sure either.

Debra Richardson: I just know that they're quote-unquote XML files and they require different things.

Grace Berube: Okay. Perfect. That's all we need to know.

Debra Richardson: So, the first thing is the vendor's legal name. FIRE could combine the first name and the last name fields into a single line, but IRIS can't do that. The XML files won't do that. And so, you have to generate them with that combined first and last name. Yeah, so that is definitely a change.

Grace Berube: Yeah, absolutely.

Debra Richardson: And then, the second change is the address field. So, you do have to make sure that you remove special characters because that can break XML parsing, whatever that is.

00:11:05  

But that means special characters like ampersands, angle brackets, those types of things. And so, I actually remember having to deal with special characters anyway when you have an implementation of some tool and you have to give them a file of your vendor, your vendor data, your vendor list to upload in the tool. Well, you have to deal with the special characters then too. So, it's the same thing here. Yeah, it's the same thing here. 

What they do recommend is a standard format, a standard USPS, United States Postal Service, formatting. But I would definitely recommend that they work directly with their IT team or third-party provider to make sure that they are setting up the vendor master file fields as necessary so that there are no issues with that XML field.

00:12:08  

Grace Berube: Okay, that makes sense too.

Debra Richardson: And then, the last thing that always has caused problems, and it'll cause problems here too, is removing those duplicate vendors. Because duplicate vendor records for the same payee, same form will just cause some issues. And so, it already causes issues around duplicate payments, right? So, duplicate vendors causes duplicate payments. It can also be an indicator of fraud. And then now, it can cause issues with your tax filings.

00:12:56 

And it's caused issues with tax filings before too. But I think it's even more in these XML files. And duplicate vendors should just be removed anyway. 

Grace Berube: Yeah. No, absolutely. So, big—I was going to say big changes, but really for the first one, we're making sure that we're standardizing keeping your process the same and just making sure you're following those slight changes for FIRE to IRIS. So, it's actually mildly good news, I would say. I feel like people, they sense change, especially with anything regarding compliance, and they get really scared for good reason, or hesitant, and just not sure how to make sure that they're compliant. So, it seems like, with the vendor process and vendor master file, that's really all you need to know.

Debra Richardson: Yeah. And one of the things, too, I think the biggest thing, I think the changes to the vendor master file for the XML files of IRIS, I think that will be fine.

00:14:04 

I think keeping their process the same, as you say, I think that will be fine. You know what I think the biggest problem is going to be is the internal stakeholders, especially over continuing the collection of the W-9, no matter what the expected payment is going to be. Because they don't always understand why you have to collect the W-9. It's something else to do, another checklist item. 

And so again, they're always quick to tell you what the IRS requires. I mean, we used to receive some screenshots about what the IRS required, if it was different than what we require. But, I always had to push back to them saying, we have to require what the IRS requires.

00:15:02 

But we can be more strict and require more than what the IRS requires. You just need to make sure that you communicate that to your internal stakeholders. And one great example of that is when you have a husband and wife, you can put them on the same W-9 form, that's fine. And the IRS says that the Social Security number, because you can only put one on the W-9. So what they say is, they tell the vendors to circle the name of the person whose Social Security number is on the W-9. So, they tell them to do that, but nobody ever reads that part. 

00:15:55 

So, what the IRS says, they tell the requesters of the W-9, so us, if we receive the IRS form W-9 for a husband and wife, and no one is circled, then assume that the Social Security number is of the first person listed. But the way our processes were set up, we could not do that. Because we set up in our accounting system, in the vendor legal name field, that we would put the spouse's name first of whose Social Security number was on the form. And that way, we would always know whose it was, so we wouldn't have to go back to the W-9. 

Grace Berube: Okay, that makes sense.

00:16:57

Debra Richardson: And so, what we would do if we received one where one of the spouse's name was not circled, we would actually send that back. I don't even know how they found it. But yes, we would get a screenshot back from the internals saying well, the IRS doesn't require it. But again, we can be more strict than the IRS is so that we can have best practice processes.

And so, I encourage every vendor master file, vendor team member, accounts payable team member that handles the collection of the W-9, that handles the entry of vendor records in the vendor master file, to stand your ground and make sure that your collection practices are in line with avoiding fraud, fines, and bad vendor data.

00:17:58  

And if you need to, it is a great time to start communicating to your internal stakeholders now. They need to understand that your processes are not going to change. 

Grace Berube: Right, right. Absolutely. That's really good advice, Debra. Thank you so much for being on the podcast again today, Debra. It's always wonderful to have you on. And I am sure we will talk again shortly.

Debra Richardson: I am sure as well. I love coming to this podcast.

Grace Berube: Thank you, Debra. Have a great rest of your day.

Debra Richardson: All right. You too. Bye.

[music playing]

Grace Berube: That's a wrap for this episode of the IOFM podcast. Thank you so much for tuning in. If you enjoyed today's conversation, do us a favor and subscribe, or follow the show so you never miss an episode. And to stay up to date on everything happening in our world, including upcoming events, head on over to IOFM.com.

Continuing Education Credits available:

Receive 1 CEU per hour of listening time towards IOFM programs:

Receive 1 CEU per hour of listening time towards maintaining any AP and P2P related program through IOFM! These programs are designed to establish standards for the profession and recognize accounts payable and procure-to-pay professionals who, by possessing related work experience and passing a comprehensive exam, have met stringent requirements for mastering the financial operations body of knowledge.

Continuing Education Credits available:

Receive 1 CEU per hour of listening time towards IOFM programs:

Receive 1 CEU per hour of listening time towards maintaining any AP and P2P related program through IOFM! These programs are designed to establish standards for the profession and recognize accounts payable and procure-to-pay professionals who, by possessing related work experience and passing a comprehensive exam, have met stringent requirements for mastering the financial operations body of knowledge.