Pharmaceutical and Biotech Quick Check | InfoReporting Solutions

Question 1 of 13 CRITICAL

For every U.S.-person physician, HCP, or key opinion leader (KOL) engaged for consulting, speaking, or advisory board services — including those engaged through a speaker bureau or medical communications agency — does your organization obtain a completed Form W-9 before any payment is issued, and does it separately identify foreign HCPs/KOLs for the Form W-8/8233 track (Question 11) rather than defaulting them into this process?

Without a W-9, TIN accuracy cannot be confirmed, the correct reporting form cannot be determined, and backup withholding cannot be triggered when required. Form W-9 only applies to U.S. persons — a foreign HCP or KOL (for example, an international speaker invited to a U.S. medical congress) is not a W-9 payee and requires the separate documentation and withholding track covered in Question 11.

Question 2 of 13 CRITICAL

Does your organization correctly report HCP consulting, speaking, and advisory board fees on Form 1099-NEC (or apply the general corporate exemption if paid to a corporation) — rather than applying the "medical and health care services" Box 6 that applies to payors receiving patient care, such as hospitals and insurers?

The Reg. §1.6041-3(p)(1) exception to the corporate exemption applies to payments for medical and health care services rendered to the payor — the hospital/insurer fact pattern. A pharma company paying an HCP for consulting or speaking is purchasing professional services, not receiving medical care. Misapplying hospital-style Box 6 logic is one of the most common classification errors in pharma AP systems.

Question 3 of 13 CRITICAL

Does your organization separately track and correctly report royalty payments (Form 1099-MISC Box 2, $10 threshold under IRC §6050N) apart from HCP consulting and speaking fees (Form 1099-NEC, $2,000 threshold under IRC §6041) — rather than commingling both payment types under a single threshold?

OBBBA raised only the §6041(a) threshold to $2,000; it did not amend §6050N, which remains reportable at $10. A KOL who is both a paid consultant and a royalty-earning inventor requires separate characterization of each payment stream. This dual-threshold structure is unique to industries with heavy IP licensing activity and is a leading source of underreported royalty income.

Question 4 of 13

Does your organization have a process or system that captures HCP payments across all engagement types — consulting, speaking, advisory boards, and honoraria — spanning medical affairs, commercial, and R&D, so the $2,000 threshold is applied correctly across the full relationship rather than per department?

HCPs frequently engage across multiple functions simultaneously. Siloed tracking by department causes under-threshold payments in each silo to go unreported even though the aggregate exceeds $2,000 (TY2026 under OBBBA).

Question 5 of 13 CRITICAL

Does your organization identify and report payments to clinical trial participants — including cash, gift cards, prepaid debit cards, and other incentives — on Form 1099-MISC Box 3 when aggregate payments to a single participant reach $2,000 or more in a calendar year?

Participant stipends are frequently administered by clinical operations or a CRO rather than corporate AP, creating a reporting blind spot. Gift cards and prepaid debit cards are treated as cash equivalents and are reportable at the $2,000 threshold (TY2026 under OBBBA), aggregated per participant across all sponsored studies.

Question 6 of 13

If your organization uses a CRO to manage and disburse clinical trial participant or investigator payments on its behalf, has it confirmed contractually who holds the Form 1099 filing obligation, and does it retain visibility into that payment data regardless of who ultimately files?

A CRO administering payments as the sponsor's agent does not automatically relieve the sponsor of its §6041 filing obligation. Without contractual clarity, sponsor and CRO can each assume the other is filing, and no return gets filed.

Question 7 of 13 CRITICAL

Does your organization correctly exclude from Form 1099 reporting all payments made for the purchase of goods, product, or inventory — including chargebacks, rebates, and distribution fees paid to wholesalers, distributors, specialty pharmacies, and GPOs for product sold, not services rendered?

IRC §6041 reporting applies to payments for services, not goods or merchandise. Rebates and chargebacks are price adjustments on product sales, not service fees, and are not reportable. Overclaiming Box 6/1099-NEC on these payment streams generates unnecessary vendor inquiries.

Question 8 of 13

Does your organization run TIN/Name matching through an IRS-approved method (such as IRS TIN Matching or an approved third-party service) before filing information returns, across all reportable payee populations — HCPs, licensors, trial participants, and vendors alike — not only newly onboarded payees?

TIN mismatch is the leading cause of IRS CP2100 B-Notices. Matching only at onboarding misses legal name changes, entity conversions, and restructurings that occur mid-relationship — particularly common among individual HCPs who incorporate or licensors who assign rights to a new entity.

Question 9 of 13 CRITICAL

When your organization receives an IRS CP2100 or CP2100A B-Notice, does it follow the required two-notice process — sending the First B-Notice to the payee within 15 business days; and, if a Second B-Notice is received within a 3-year window, requiring the payee to validate their Name/TIN directly with the SSA or IRS (a new Form W-9 does not cure a second notice) and beginning 24% backup withholding if a validated TIN is not received within 30 business days?

The B-Notice process is a statutory obligation under Reg. §31.3406(d)-5, and the two notices have different cure requirements. A First B-Notice is resolved with a corrected Form W-9. A Second B-Notice within 3 years is not — it requires SSA/IRS Name-TIN validation, and treating both notices the same (just requesting another W-9) means required backup withholding never actually begins, exposing the organization to liability for the unwithheld tax plus associated penalties.

Question 10 of 13 CRITICAL

When a reportable payment is made to any payee — HCP, licensor, trial participant, or vendor — without a valid Form W-9 or W-8 on file, does your organization withhold and remit 24% backup withholding (or the applicable Chapter 3 rate for foreign payees) to the IRS?

IRC §3406 requires backup withholding whenever a payee has not provided a valid TIN for a reportable domestic payment. This arises most often with newly enrolled trial participants and newly engaged HCP speakers paid before administrative onboarding is complete.

Question 11 of 13 CRITICAL

For non-U.S. HCPs, licensors, investigators, or service providers whose payments are U.S.-source income (not merely foreign persons in general — see note below), does your organization collect the correct withholding documentation — Form W-8, or Form 8233 for a treaty-exempt nonresident alien performing personal services in the U.S. — before the first payment, apply the correct Chapter 3 withholding rate, and file Form 1042-S — not Form 1099 — for those payments?

Without valid, current withholding documentation, the default withholding rate is 30% and reduced treaty rates cannot be applied. Form W-8 does not, by itself, support a treaty exemption for compensation attributable to personal services performed in the U.S. — Form 8233 is required for that purpose. Source matters as much as residency: a foreign HCP, investigator, or licensor whose services or IP use are entirely outside the U.S. generally has foreign-source income requiring no U.S. withholding or Form 1042-S at all, while the same payee performing services in the U.S. (or licensing IP used in the U.S.) creates U.S.-source income that is reportable. Defaulting every foreign payee onto the 1042-S track, or assuming every foreign engagement is outside U.S. reporting, are both common and costly errors.

Question 12 of 13 CRITICAL

Has your organization confirmed that its IRIS filing universe includes every reportable payment population — HCP consulting/speaking (1099-NEC), royalties (1099-MISC Box 2), clinical trial participant payments (1099-MISC Box 3), and foreign payments (Form 1042-S) — and that no population is excluded because it originates outside the core AP workflow?

The most common IRIS filing failure in multi-system organizations like pharma and biotech companies is not a data format error — it is an entire payment population (often clinical trial payments or HCP royalties) missing from the filing universe because it lives in a system never connected to the central filing process. FIRE was decommissioned for Form 1099 and 1042-S filing beginning with Tax Year 2026 returns.

Question 13 of 13

How does your organization currently file its information returns, and has it confirmed that filing is happening through IRIS — not the legacy FIRE system?

The IRS decommissioned FIRE for Form 1099 and Form 1042-S filing beginning with Tax Year 2026 returns filed in 2027. All filers must now use IRIS. Select the option that best describes your situation.

ⓘ Your answer determines which final question applies to your situation.

Question 13a of 13

Has your organization tested your IRIS connection with a representative sample covering every source system — AP, HCP platform, clinical/CRO platform, and licensing system — before the filing deadline, and confirmed your TCC is active and in good standing?

IRIS TCC credentials can lapse or require reactivation. A failed submission or population gap discovered at the deadline results in a late filing penalty under IRC §6721. Testing every source system before peak season, not just core AP, is the minimum best practice for direct IRIS filers in a multi-system environment.

Question 13b of 13

Has your filing provider confirmed in writing that it files through IRIS, and have you verified that your data extract includes all required HCP, royalty, clinical trial participant, and Form 1042-S payments — not only core AP vendor payments?

Outsourcing filing does not transfer penalty liability. Under IRC §6721, the payor organization remains responsible for penalties arising from late, incorrect, or missing returns regardless of who files. Provider confirmation of IRIS filing and a complete, multi-system data extract review are required controls for outsourced filers.

Pharmaceutical & Biotech | Information Reporting Quick Check

Pharma & Biotech Information Reporting Quick Check — Results

Findings & Priority Actions

Ready for a Full Assessment?