06 January 2021 Most states conform with federal requirement to report nonemployee compensation on Form 1099-NEC starting in tax year 2020 Our survey of state revenue department websites shows that effective with the 2020 tax year (filed in 2021) all states except Alabama, Arizona, Idaho, Louisiana, Maine, Minnesota, South Carolina and Utah specifically provide that nonemployee compensation is reported on Form 1099-NEC, Nonemployee Compensation, rather than Form 1099-MISC, Miscellaneous Information. Businesses will need to keep in mind that Form 1099-NEC is not included in the IRS combined federal/state reporting program. Accordingly, if the state requires the filing of Forms 1099-NEC, businesses will need to directly file them with the state department of revenue. (See Publication 1220.) The IRS announced that starting with tax year 2020 (filed in 2021), nonemployee compensation of $600 or more is reported on Form 1099-NEC rather than box 7 of Form 1099-MISC. Use of Form 1099-NEC resolves the issue of differing federal filing due dates that applied to Forms 1099-MISC that reported nonemployee compensation and those that did not. Going forward, Form 1099-NEC is required to be filed with the IRS by January 31 and all Forms 1099-MISC are required to be filed by February 28 (March 31 if filed electronically). For tax year 2020, Forms 1099-NEC must be filed with the IRS no later than February 1, 2021. See the attached pdf for a chart summarizing our state survey of conformity with the federal Form 1099-NEC filing requirement.
Document ID: 2021-0023 | |||||||||
