Why Conduct a Pilot Season for Tax Information Reporting?

This blog was last updated on September 25, 2023

Another tax information reporting season is just around the corner and now is the time to start preparing your teams handling forms such as Series 1099, 1098, 1042-S, 3921, 5498, W-2, W-2G and more. Getting your teams ready and testing your reporting process ahead of January ensures you are set up for a successful season. Conducting a pilot process prior to reporting season, either internally or with Sovos, can lessen the burden on internal teams and help create a smooth reporting process year-after-year.

What is a pilot season?

A pilot season can be thought of as a warmup lap before a big race. During this process, you should align with your internal team to ensure you know where each piece of your reporting sits internally. Running a set of test data is a crucial part of a pilot process. Testing your transmittals and validating that all data is being consumed and presented on forms correctly can help avoid costly delays during reporting season. You want to ensure your data can work agilely with your system and fix any errors you may run into along the way.

Testing your vendor name/TIN combinations is another crucial step.  This allows you to get ahead of any mismatches and fix them before submitting to the IRS and states in January.

Organizations can also test any applicable logins for IRS or state portals, ensuring they have appropriate Transmitter Control Codes (TCCs) and are communicating with any external vendors involved in the reporting process.

Key benefits of pilot season

• Test source data
  Test for inputting, mapping and print outputs. This gives your team time to make any internal changes to data or systems far before filing starts. January filings require a quick turnaround time for many, so getting ahead of these issues is always a best practice for compliance.
• Handle errors before season
  If you do find any errors while inputting your data and/or name/TIN combinations, these can be easily addressed and fixed to avoid major hiccups when you go to file. Running into an input error or name/TIN mismatches when you file can lead to late filings and costly penalties.
• Complete process alignment
  Aligning on your reporting process with your team allows your internal parties to focus on other business critical tasks during season and gives you peace of mind that every step of the reporting process is done without errors.

Pilot season timeline

Reporting season starts ramping up for many businesses in early January, so it is important to start your pilot process months in advance. This can help your teams adjust to any new processes and align cross-functionally (operations, tax, compliance, finance, customer service, etc.).

How can Sovos help with pilot season?

Sovos conducts pilot processing with our service-based customers to ensure there is mutual understanding of the end-to-end information reporting process. We take the time to ensure there are no errors in the process, creating a successful reporting season each year. Gain true confidence in your tax information reporting process by working with Sovos.

With a pilot season in place, our clients can create a consistent and repeatable tax information reporting process year after year. With Sovos as your partner in tax information reporting, you can conduct all of your checks and balances before filing, making reporting and compliance easier than ever before.