Construction is experiencing a huge financial upheaval, and more than $1 billion in IRS penalties were reported for a single year, mostly because of compliance breakdowns in processing contractor payments. At the heart of the problem is one key challenge: cracked 1099 processes. That’s why this Zenwork event, dedicated solely to construction compliance failures, is worth an entry on your calendar.
Though this can look like a vertical issue, it hints at a much deeper concern for fintech executives. The absence of automation, transparency, and compliance monitoring in construction AP processes is a compelling lesson on what goes wrong when financial processes do not evolve. For financial technology experts, the lesson here is too important to overlook.
Why Construction Compliance Breakdowns Matter to Fintech
The IRS has been intensifying its enforcement of tax compliance among industries that are most dependent on contract labor. The most vulnerable sector is the construction industry, which typically works with hundreds and eventually even thousands of vendors, subcontractors, and gig workers on each project. These relationships are intricate, and alas, so are the subsequent tax obligations.
A recent study indicates that misclassification of employees and not submitting correct 1099 forms were among the leading causes for the increase in penalties. But aside from that, most AP teams in construction continue to use siloed systems, manual processes, and aging procedures that just aren’t designed for today’s compliance landscape.
For tax automation tools vendors, AP software vendors, compliance intelligence companies, or also sometimes ERP integrators that happen to be fintech companies, this is an inflection point. What’s happening in construction today could easily happen in any contractor-heavy industry tomorrow.
The Bigger Picture: Automation, Risk, and Real-Time Visibility
What the construction industry is going through today is what fintech has been addressing in other spaces. Eventually, Boring, paper-based processes equal expensive mistakes. This compliance crisis is a case in point about why automation is important and why real-time visibility is not a luxury. When payment systems, tax form management, and compliance notices are separated, regulation accuracy becomes nearly impossible to maintain. Fintech platforms with the ability to digitize processes, verify contractor information in real-time, and auto-complete compliant filings are not only useful, they’re necessary.
This is where companies like Zenwork are stepping in with purpose-built platforms like Tax1099. So, their focus on solving compliance gaps through automation isn’t just about eliminating paperwork. It’s about empowering finance teams to work smarter and avoid damaging errors before they escalate.
A Billion-Dollar Problem That Demands Fintech Innovation
There’s a reason this story is gaining national attention. The volume of penalties alone signals a systemic problem, not isolated incidents. If a single sector can accumulate a billion dollars in fines due to compliance failures, imagine the cumulative risk across multiple verticals with similar dependency on non-payroll workers.
The IRS has made a public announcement that 1099 errors and late submissions will be handled less sympathetically in the future. Eventually, that adds even greater incentive for companies to automate the way they handle vendors and tax reporting.
Fintech innovators should take this as an unambiguous call to action. Basically, the world is already crying out for streamlined, audit-ready, scalable solutions for compliance. And with more stringent enforcement policies looming, the risk of doing nothing grows exponentially.
Fintech’s Role in Fixing Compliance at Scale
One of the best takeaways from this Zenwork event is the wider lesson for fintech businesses. Basically, Compliance is no longer an obligation; it’s a differentiator. The capacity to create products that automatically change in line with tax law, find gaps, and minimize human error is what distinguishes new platforms from old systems.
Zenwork has taken a position where automation and compliance intersect. Their solutions are engineered to operate within legacy ERP and finance infrastructures and provide real-time accuracy and IRS-conforming workflows. For fintech entrepreneurs, developers, or investors, this webinar provides an up-close examination of how deep domain expertise coupled with technical flexibility results in scalable influence.
Why This Zenwork Event Is So Timely
To discuss these issues further, Zenwork has a live webinar that specifically addresses the underlying causes of these penalties and compliance automation. Entitled:
“$1 Billion in Construction Compliance Penalties, Where Construction AP Workflows Are Falling Short”
This session will be spearheaded by Jeffery Cronin, Chief Strategy Officer at Zenwork, on June 25, 2025, at 1 PM, 2 PM CT. The session is set for CFOs, controllers, compliance experts, and fintech executives who are managing regulatory complexity in financial processes.
But beyond that, it’s a fact-based conversation about operational breakdowns and how technology, software such as Zenwork’s own Tax1099, is fixing those issues. This is not a sales pitch. It’s an overview of what’s not working, what’s evolving, and what fintech must do next.
FAQs
1. If this is happening in construction, could the same thing happen in industries we serve?
Yes, and that’s the point. Construction is just the canary in the coal mine. Any industry reliant on contractor payments, distributed AP workflows, or manual compliance tracking is exposed. Therefore, if your platform handles these use cases and lacks real-time compliance automation, you’re sitting on similar risk potential.
2. We already help clients with payments and tax forms, do we really need to rethink our compliance features?
Probably. Helping with tax forms isn’t the same as ensuring compliance. If your product doesn’t automate TIN matching, alert users to filing deadlines, or also flag classification risks, you’re offering convenience, not protection. This article makes clear: convenience is no longer enough.
3. What role should our finance or product teams play in solving this?
A collaborative one. Finance leaders should be mapping out risks in client AP workflows, while product teams explore how to embed compliance checks into the user journey. The article suggests that the best FinTechs don’t bolt on compliance; they bake it into the product architecture.
4. How urgent is this issue, really? Can we afford to wait?
The IRS is already tightening enforcement, and penalties are growing. As the article notes, this isn’t just a one-time failure; it’s systemic. Waiting means playing defense. Acting now gives you a strategic edge, especially if your competitors are still catching up.
5. What can we actually gain by attending the Zenwork webinar?
Real-world clarity. It’s a breakdown of what actually went wrong in construction, how automation tools like Tax1099 are fixing it, and also how these lessons apply to FinTech platforms. It’s not a product demo, it’s a chance to see what “compliance-first fintech” looks like in practice.
