Intelligent Broker Tax Reporting Statements

Introduction

At the end of each year brokers provide to clients a tax reporting statement. It may be labeled Consolidated IRS Form 1099, Form 1099 Composite, Consolidated Tax Statement, Tax Reporting Statement, or similar name.

The statement contains information related to the following IRS tax forms:

Form 1099-B — Proceeds From Broker and Barter Exchange Transactions
Form 1099-DIV — Dividends and Distributions
Form 1099-INT — Interest Income
Form 1099-OID — Original Issue Discount
Form 1099-MISC — Miscellaneous Income
Form 1099-NEC — Nonemployee Compensation

Most brokers allow clients to download the statement from the broker website in portable document format. Some also print and mail the statement to clients.

Clients or their tax preparers use the information on the statement to prepare their annual income tax return.

The Problem

Getting the information from the broker statement into the tax return of the client is a tedious, error-prone process.

Currently, there are two alternatives:

(1)

Taxpayers or their tax preparer manually enter the information into tax software

But manual entry is slow, tedious and subject to transcription errors

(2)

Tax software uses Optical Character Recognition (OCR) or PDF file parsing technology to import the information.

OCR and PDF file parsing software is expensive to develop and maintain and also subject to error. As such many tax software applications do not develop this capability.

The Solution

Brokers should provide the tax data in structured, industry-standard JSON format.

PDF

Not structured
Not easy to parse
Scores of proprietary formats

JSON

Structured
Easy to parse
One industry-standard format

Brokers can deliver the JSON data either as a separate file or embedded in the PDF.

Separate JSON File

Two files to download
One file for humans
One file for computer applications

Embedded in PDF

Only one file to download
Readable by both humans and computer applications
Uses technology prescribed by the Financial Data Exchange organization. More information...
We call PDFs with embedded tax data, Intelligent Tax Documents^®. Technical information...

Resources Available to Brokers from TaxDataExchange.org

1. Intelligent Broker Tax Reporting Statement testing and validation services

Upload test documents for validation and receipt of Tax Data Exchange certificate of validation.

2. License to use Intelligent Tax Document^® trademark

Use trademark to let your clients know you are producing leading-edge electronic tax documents. License is separately priced at $10.00 per 10,000 documents.

3. Java code to convert data from OFX format (XML) to FDX format (JSON). Uses Java 17.

Provide your GitHub or Bitbucket user email to be granted access to the code.

4. Java code to embed JSON in PDF file

Provide your GitHub or Bitbucket user email to be granted access to the code. Uses Java 17 and Apache PDF Box.

Order the above bundle of resources and services.

Introductory pricing available through June 30, 2025.