The IRS released Publication 1220, which says the 1099-NEC will not be included in the IRS 1099 Combined Federal/State Filing Program.
Publication 1220 from the IRS is a recent and detailed announcement about the “Specifications for Electronic Filing of Forms 1097, 1098, 1099, 3921. 3922, 5498, and W-2G”. While you may not wish to read the full, 162-page PDF, some important new information has been shared about how to file the new form 1099-NEC.
Publication 1220 “helps employers and tax professionals understand the specifications for filing certain information forms electronically with the IRS, including the requirements under the Combined Federal/State Filing Program (CF/SF),” as reported in this Forbes article.
Federal and State Filing of 1099-NEC
For 2020, the CF/SF Program has a list of which 1099 and other forms can be filed electronically. A key part of this program is the ability for these federal returns to be forwarded automatically to participating states, simplifying and streamlining the federal and state filing process.
According to Publication 1220, however, the 1099-NEC is not among the approved forms. This means it’s on the individual business to make sure these forms are submitted to the state by the January 31 (or in 2021’s case, February 1) deadline.
Past Payments Still Need to be Filed Under Form 1099-MISC
In the past, those who filed the 1099-MISC were able to take advantage of the CF/SF Program. With that in mind, any non-employee compensation you report that took place prior to the tax year 2020 – say, if you forgot to report a 2019 payment or compensation – will need to still be reported on a 1099-MISC, which is a part of the CF/SF Program.
1099-NEC Filing Extension
Another new change for the tax year 2020 is the process for requesting a filing extension on these forms. Publication 1220 says “a request for an extension of time to file can be submitted on paper form 8809.” Filing this paper form is simply a request for a non-automatic, 30-day extension request. There is not currently an option for electronically filing the extension in this case.
Keeping track of which forms are eligible for the combined filing program and which aren’t is an important and necessary part of doing business with freelancers, contractors, and other non-employees. And since the number of freelancers and other independent workers is growing, it’s a part of doing business that is only going to become more prevalent moving forward.
eFile360 can help you file your 1099-NECs and other 1099 forms. Sign up for a free account.