> ## Documentation Index
> Fetch the complete documentation index at: https://docs.encoreos.io/llms.txt
> Use this file to discover all available pages before exploring further.

# Tax Reporting & Compliance — Admin Guide

> This guide helps administrators configure and oversee tax reporting and compliance workflows.

> **Purpose:** This guide helps administrators configure and oversee tax reporting and compliance workflows.

***

## Overview

The Tax Reporting module manages the complete lifecycle of federal tax forms (1099-NEC, W-2, Form 941, Form 940) and state-level tax reporting. As an admin, you control tax year creation, form generation workflows, and delivery tracking.

### Key Responsibilities

* Create and manage tax years
* Configure tax module settings
* Oversee form generation and filing
* Monitor document distribution
* Ensure IRS Pub 1075 compliance

### Who Should Use This Guide

| Role                   | Responsibility                                    |
| ---------------------- | ------------------------------------------------- |
| Accounting Manager     | Create tax years, approve forms for filing        |
| Tax Compliance Officer | Monitor generation workflows, track distributions |
| Organization Admin     | Configure settings, manage permissions            |

***

## Permissions Required

To administer Tax Reporting, you need:

| Permission          | Description                                               |
| ------------------- | --------------------------------------------------------- |
| `fa.tax.view`       | View-only access to tax module data                       |
| `fa.tax.admin`      | Full access to tax module settings and all forms          |
| `fa.tax.generate`   | Authority to generate 1099, W-2, and quarterly reports    |
| `fa.tax.distribute` | Authority to distribute generated forms (1099, W-2, etc.) |
| `fa.tax.close`      | Authority to close tax years (irreversible)               |

> **Note:** Contact your Organization Administrator if you don't have these permissions.

***

## Getting Started

### Accessing Tax Reporting

1. Navigate to **Finance & Revenue** in the main menu
2. Click **Tax Compliance**
3. You'll see the Tax Compliance Dashboard

### Understanding the Dashboard

| Card              | Purpose                                                           |
| ----------------- | ----------------------------------------------------------------- |
| **Tax Years**     | Current and historical tax years; view status and filing progress |
| **1099 Forms**    | Vendor tax forms; track generation and distribution               |
| **W-2 Forms**     | Employee tax forms; synchronized with payroll                     |
| **Tax Reports**   | 941, 940, and state-level quarterly/annual filings                |
| **Distributions** | Email delivery tracking for all tax documents                     |

***

## Tax Year Management

### Creating a Tax Year

1. On the Dashboard, click **Tax Years**
2. Click **+ New Tax Year**
3. Enter the **tax year** (e.g., 2025)
4. Select **start date** and **end date**
5. Click **Create**

**Status Flow:**

* **Active:** Year is open; you can generate forms
* **In Review:** Forms are being reviewed by accountants
* **Closed:** Year is locked (irreversible); no further changes allowed

### Closing a Tax Year

1. Navigate to the tax year detail page
2. Click **Close Tax Year**
3. Confirm the action:
   * All forms must be marked **Ready to File**
   * All distributions must be **Sent**
4. Click **Close**

<Warning>
  Closing a tax period cannot be undone.
</Warning>

**What happens after closing:**

* Tax year becomes read-only
* Historical forms remain accessible for audit
* Archival data is preserved in `pf_audit_logs`

***

## Form Generation Workflows

### 1099-NEC Generation (Vendors)

**When to use:** End of fiscal year, to report payments to vendors ≥ \$600.

**Steps:**

1. Navigate to **1099 Forms**
2. Select the **tax year**
3. Click **Generate 1099 Forms**
4. System retrieves all vendor payments from **Accounts Payable** (FA-03)
5. Review generated forms:
   * **Vendor name** and **EIN**
   * **Gross payments** (sum of all payments for the year)
   * **Form type** (1099-NEC default)
6. Click **Review Completed** when all forms are verified
7. Forms move to **Ready to File** status

**Tips:**

* Ensure vendor EINs are complete before generation
* Review thresholds (\$600 minimum) with your accountant
* Amended forms can be regenerated for the same vendor

***

### W-2 Generation (Employees)

**When to use:** End of calendar year, synchronized with HR Payroll.

**Steps:**

1. Navigate to **W-2 Forms**
2. Select the **tax year**
3. Click **Generate W-2 Forms**
4. System fetches employee wage and tax data from **HR Payroll** (HR-07):
   * Wages, tips, and compensation
   * Federal tax withheld
   * Other deductions (401k, health insurance, etc.)
5. Review forms:
   * Verify **employee names** and **SSNs** (encrypted; only visible to tax admins)
   * Confirm **year-to-date totals**
6. Click **Review Completed**
7. Forms move to **Ready to File** status

**Tips:**

* Ensure payroll is finalized before W-2 generation
* Coordinate with HR on any retroactive adjustments
* W-2s are typically filed by January 31st

***

### Tax Reports (941 / 940)

**When to use:** 941 (quarterly payroll tax) and 940 (annual unemployment tax).

**Steps:**

1. Navigate to **Tax Reports**
2. Select the **tax year**
3. Click **Generate Tax Reports**
4. Choose **report type:**
   * **941:** Quarterly (Q1–Q4)
   * **940:** Annual
5. System aggregates payroll tax data and calculates liabilities
6. Review:
   * **Filing period**
   * **Calculated tax liability**
   * **Quarterly breakdown** (for 941)
7. Click **Mark for Filing**
8. Forms move to **Filed** status (with `filed_date`)

**Tips:**

* 941 deadlines: Q1 (Apr 30), Q2 (Jul 31), Q3 (Oct 31), Q4 (Jan 31 next year)
* 940 deadline: January 31st (annual only)
* Use the **filing\_date** field to track submissions to IRS

***

## Tax Document Distribution

### Sending Tax Forms

**1. Via Email**

1. Navigate to **Distributions**
2. Select the forms to distribute (1099, W-2, etc.)
3. Click **Send to Recipients**
4. Review recipient list:
   * **Vendor emails** for 1099-NEC
   * **Employee personal emails** for W-2
5. Click **Send**
6. Status updates to **Sent**; timestamp recorded

**2. Tracking Delivery**

1. View the **Distributions** page to monitor:
   * **Sent:** Emails dispatched successfully
   * **Read:** Recipient opened the email
   * **Failed:** Delivery errors (invalid email, bounce)
   * **Resend:** Resend to recipients with failed deliveries

***

## Module Settings

Access **Settings** from the Tax Compliance Dashboard to configure:

| Setting                 | Purpose                                                 | Default            |
| ----------------------- | ------------------------------------------------------- | ------------------ |
| **Auto-generate 1099s** | Automatically generate 1099 forms when closing tax year | Off                |
| **W-2 sync frequency**  | Sync employee data from payroll                         | Daily              |
| **Delivery method**     | Email or secure portal for document access              | Email              |
| **Retention policy**    | How long to retain tax documents                        | 7 years (IRS req.) |

***

## Compliance & Security

### IRS Pub 1075 (Federal Tax Information)

* **SSN/EIN Storage:** All sensitive tax identifiers are encrypted at rest
* **Access Control:** Only users with `fa.tax.admin` can view decrypted SSN/EIN
* **Audit Trail:** All form generation and distribution logged in `pf_audit_logs`
* **Retention:** Tax documents retained for 7 years minimum (IRS requirement)

### Best Practices

✅ **Do's:**

* Verify all vendor EINs and employee SSNs before form generation
* Review generated forms with your CPA or tax accountant
* Test email deliveries in sandbox mode before going live
* Archive signed tax forms per IRS retention policy
* Monitor **Failed** distributions and resend proactively

❌ **Don'ts:**

* Don't close a tax year unless all forms are filed and distributed
* Don't modify SSN/EIN directly in forms (regenerate from payroll)
* Don't delete tax years (soft-delete only; use archival workflows)
* Don't share unencrypted SSN/EIN data via email or reports

***

## Troubleshooting

### Issue: Form Generation Fails

**Symptoms:** "Generation failed" error when clicking Generate 1099/W-2

**Causes:**

* Missing payroll data for the tax year
* Vendor/employee records incomplete (missing EIN/SSN)
* Tax year not in **Active** status

**Solution:**

1. Verify tax year is **Active**
2. Check HR Payroll or Accounts Payable for missing data
3. Complete vendor/employee records
4. Retry generation

***

### Issue: Email Distribution Fails

**Symptoms:** Distributions show **Failed** status; recipients don't receive forms

**Causes:**

* Invalid email address
* Email server blacklist
* Recipient email opted out

**Solution:**

1. Verify email addresses in Contacts or Payroll
2. Use **Resend** to retry failed deliveries
3. Contact your email provider if repeated failures occur

***

### Issue: Tax Year Cannot Be Closed

**Symptoms:** "Cannot close tax year" error

**Causes:**

* Not all forms marked **Ready to File**
* Outstanding distributions

**Solution:**

1. Navigate to **1099 Forms** and **W-2 Forms**
2. Verify all are marked **Ready to File**
3. Check **Distributions** for any **Pending** status
4. Complete remaining tasks, then retry closing

***

## Related Documentation

* **User Guide:** `docs/fa/tax-reporting-user-guide.md` - For staff generating and reviewing forms
* **Specification:** `specs/fa/specs/FA-10-tax-reporting-compliance.md` - Technical architecture
* **Integration Guide:** `docs/architecture/integrations/FA-10-tax-reporting-INTEGRATION.md` - Cross-core data flows

***

**Last Updated:** 2026-02-13\
**Questions?** Contact your Organization Administrator or Finance Manager.