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IRS to Reinstate Form 1099-NEC; Requests Comments on Draft

BY: APA Staff | 08/01/19

On July 24, the IRS posted a draft of Form 1099-NEC, Nonemployee Compensation, for the 2020 tax year, which will be filed in 2021. The IRS then formally requested written comments on the reinstated form by September 30 [84 F.R. 37012, 7-30-19].

Background

The Protecting Americans from Tax Hikes Act of 2015 (PATH Act) accelerated the due date for the filing of Form 1099-MISC that includes nonemployee compensation (NEC) from February 28 to January 31 and eliminated the automatic 30-day extension for forms that include NEC.

Draft Form 1099-NEC

As proposed, filers would report this information on the Form 1099-NEC:

  • Box 1—Nonemployee compensation
  • Box 2—Payments made for direct sales of $5,000 or more of consumer products to a buyer for resale
  • Box 4—Federal income tax withheld
  • Boxes 5-7—State income tax reporting

The draft Form 1099-NEC includes checkboxes to indicate the payer is reporting payments subject to FACTA (Fair and Accurate Credit Transactions Act) and that the IRS notified the payer twice within three calendar years that the payee provided an incorrect taxpayer identification number (TIN). Box 3 is reserved.

The IRS plans to add instructions for the Form 1099-NEC to the General Instructions for Certain Information Returns.

Comments

Comments on the Form 1099-NEC should be sent by September 30 to: Laurie Brimmer, Internal Revenue Service, Room 6526, 1111 Constitution Ave. N.W., Washington, DC 20224.

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