Fully understand the new Form 1099-NEC and the new requirements and inputs that go along with it.
In July 2019, the IRS issued a release draft of a new Form 1099 for use commencing in the 2020 tax year (i.e., in 2021), a Form 1099-NEC to replace the Form 1099-MISC, Box 7 and Box 9 for reporting direct sales of $5,000 or more. This new Form 1099-NEC is being implemented in response to problems created by the PATH Act of 2015, when the due date for Form 1099-MISC, Box 7 items were moved to January 31, as compared to other 1099 items, which remained due March 31. In this topic, we will focus on the new Form 1099-NEC and how to fill it out properly, as well as focus on issues specific to nonemployee compensation that were previously the focus of Box 7 of the Form 1099-MISC. Learn what reconfiguration may be needed of your accounting systems, and ensure that you identify vendors that will now require the two different forms (e.g., for rents and lawn maintenance) and what training and communication will be needed to prevent confusion once the new forms are due to be issued by January 31, 2021. By this date, issuers of Form 1099-MISC will need to issue a new Form 1099-NEC that will replace IRS Form 1099-MISC (Box 7) specific to the reporting of nonemployee compensation. The IRS has issued two separate forms, a Form 1099-MISC and a Form 1099-NEC, to allow for the due date of the Form 1099-NEC (January 31) to stand separate from the due date for the Form 1099-MISC (March 31). Issuers need to plan now on how to reconfigure their accounting systems, train and communicate with vendors using best practices. Those best practices need to include Form W-9 preparation, and addressing backup withholding, and how to avoid penalties. There are hot spots that also need to be addressed, such as how to distinguish employee compensation from nonemployee compensation, addressing Section 530 issues, and spotting when fraudulent forms 1099 are issued implicating Section 7434 claims.
Agenda
Faculty
T. Scott Tufts, Esq.
CPLS, P.A.
- Senior Tax Counsel, CPLS, P.A. (d/b/a Private Corporate Counsel)
- Practice focuses on complex business, estate and trust and tax litigation
- Special emphasis on IRS forms that often lead to litigation
- Over 30 years of representation of taxpayers before the IRS and in litigating tax issues in the various courts
- Over 30 years of working with closely held partnership and other pass-through issues and impacts of the Schedule K-1
- Frequent speaker and host of Tufts on Tax podcast, discussing topics such as cryptocurrencies, corporate transparency, K-1s and IRS Form 8082, Form 1099-NEC, Form W-9, Form SS-8, as well as case law developments of interest
- Member of the Florida Bar; licensed in the states of Florida and North Carolina, and admitted to practice in various Federal courts, inclusive of the United States Tax Court and the Court of Federal Claims
- Board Certified in Tax Law, Florida Bar
- LL.M. degree in taxation, University of Miami School of Law; J.D. Degree, Wake Forest University School of Law; B.S. degree in accounting, Florida State University
- Can be contacted at [email protected] or (407-647-7887)
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