February 25, 2020 North Carolina requires use of new Form NC-1099M for reporting nonemployee compensation The North Carolina Department of Revenue has announced that effective January 1, 2020, businesses are required to use new Form NC-1099M, Compensation Paid to a Payee,to report the nonwage compensation paid to a payee for services performed in North Carolina and the North Carolina income tax withheld from that income. Note that if a business is required to complete a federal Form 1099-MISC or Form 1099-NEC to report the non-wage compensation paid to a payee, the filing of Form NC-1099M is not required. Businesses are reminded not to use NC-1099M to report wages (Form W-2 is used for that purpose). Currently, Form NC-1099M is not available for electronic filing through the Department's eNC3 and Information Reporting application; therefore, taxpayers filing Form NC-1099M in 2020 should file a paper copy of the form with the Department. For additional details, see instructions on Form NC-1099M and Directive TA-19-1, Expansion of Requirement to Withhold State Income Tax from Certain Non-Wage Compensation Recipient. If you have any questions, call the Department's Contact Center at +1 877 252 3052 (8:00 am until 5:00 pm EST, Monday through Friday), or write the Department at PO Box 1168, Raleigh, NC 27602. Ernst & Young Insights Starting in 2020, the IRS will require that nonemployee compensation be reported on new Form 1099-NEC, rather than on Form 1099-MISC. The new form was created because Forms 1099-MISC are required to be filed by February 28 (March 31 if filed electronically) unless the Form 1099-MISC was reporting nonemployee compensation, in which case it must be filed by January 31. With the separate Form 1099-NEC, it will be easier for businesses to comply with the differing filing due dates. ———————————————
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