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Compliance Update - October, 2020

IRS & SSA Compliance Updates for TY2020

What a year! While you've been juggling remote work and your kid's remote school, we've been completing 2020 IRS/SSA changes in our award-winning software products. Changes are happening this tax season and Team 1099 Pro wants you to be in the know!

Tax Form Changes
1099 Pro software products for 2020 are available NOW and include updated tax forms, instructions and business rule validations. 1099 Pro has summarized these updates for you. Please select any of the below Compliance Update links to view our WIKI / knowledge base for a complete description of the IRS / SSA changes. Download 2020 Sample Import Files for all form types today! Compliance Updates for Tax Year 2020:


NEW FORM 1099-NEC
New for Tax Year 2020, report nonemployee compensation (NEC) on Form 1099-NEC Nonemployee Compensation. Prior to Tax Year 2020, NEC was reportable on Form 1099-MISC Miscellaneous Income (Box 7).

1099-NEC Quick Facts:
  • Recipient mailing deadline - February 1st.
  • IRS paper filing deadline - February 1st.
  • IRS electronic filing deadline - February 1st.
  • Automatic filing extensions are not available.
  • Not participating in the Combined Federal/State Filing Program (CF/SF).
  • State direct filing may be required - contact states now to determine your obligations.
1099 Pro 2020 software includes new Form 1099-NEC and all revised forms including 1099-MISC. Corporate Suite and 1099 Pro Enterprise software support state direct filing. The Service Bureau may offer 1099-NEC state direct filing later.

REVISED FORM 1099-MISC
For Tax Year 2020, Form 1099-MISC Miscellaneous Income has been extensively redesigned and renumbered. Do not report nonemployee compensation (NEC) on this form. Filers should review their accounts payable policy to ensure that they are prepared to report amounts in the correct boxes on the correct forms.

1099-MISC Quick Facts:
  • Recipient mailing deadline - February 1st.
  • IRS paper filing deadline - March 1st.
  • IRS electronic filing deadline - March 31st.

FORM W-2 SSN TRUNCATION
Employers may truncate social security numbers (SSNs) on employee copies of Form W-2 Wage & Tax Statements. For example, "999-99-9999" prints as "XXX-XX-9999". Truncation is not allowed on IRS Copy A. Corporate Suite and W-2 Pro software will include support for W-2 SSN truncation in an update.

FORM 1042-S ELECTRONIC FILING REQUIREMENTS
IRS electronic filing is required for any filer issuing 250 or more Form 1042-S Foreign Person's U.S. Source Income Subject to Withholding. Financial institutions, regardless of the number of Forms 1042-S, must file electronically. Partnerships required to file at least 100 Forms 1042-S or partnerships with more than 100 partners must file electronically.

EXPANDED ACA STATE FILING REQUIREMENTS
New for Tax Year 2020, California, Rhode Island and Vermont will require ACA state direct filing. This is in addition to the District of Columbia and New Jersey that adopted this requirement in Tax Year 2019. Massachusetts has had its own ACA mandate since Tax Year 2006, which requires the issuance of Form 1099-HC. Expect states to have different requirements, portals, deadlines and penalties for noncompliance. Contact states now to determine your ACA state filing obligations.

PENALITES
IRS penalties apply if you file after the deadline, file on paper instead of electronically, include incorrect information or report an incorrect TIN. Penalties range from $50 to $280 per return with an increased maximum of $3,392,000 per year ($1,130,500 for small businesses).
  • Review 1099 Pro's 2020 Filing Timeline now to help you stay on track and avoid penalties.
  • Download our 2020 Calendar Timeline (.ICS file) for quick reference throughout tax season.

NAME/TIN COMPLIANCE
The IRS requires filers to report accurate recipient Name/TIN data. Reporting inaccurate or missing Name/TIN data can result in IRS notices and ultimately, significant filer penalties. It is always in a filer's best interest to fully comply with IRS requirements - ideally, prior to filing information returns. 1099 Pro Name/TIN compliance options include:
  • Front End TIN Validations - Verify Name/TIN data when onboarding new recipients. TINCheck.com provides fast, affordable results.
  • Back End TIN Validations - Verify Name/TIN data at year's end. 1099 Pro's Bulk TIN Matching Service offer reliable results for only $135 per upload (include up to 100,000 Name/TIN combinations).
1099 Pro software includes a TIN Management Utility for filers unable to obtain accurate recipient Name/TIN data. This utility allows them to issue Forms W-9, track responses, and issue B Notices, as necessary.

The 1099 Pro Service Bureau now offers W-9 Only and B Notice with W-9 mailings for as little as $2.25 each plus setup fee. Performing your TIN compliance has never been so easy or cost-effective! Inquire today at SB@1099pro.com.

RETURN OF THE FAX
Effective immediately, fax requests for extensions of time to furnish statements to recipients. Submit requests no later than the due date of the return. See https://www.irs.gov/forms-pubs/faxing-request-for-extension-of-time-to-furnish-statements-to-recipients.

1099 PRO SERVICE BUREAU
The Service Bureau starts scheduling January upload dates in a few weeks. Customers who have purchased our Tax Year 2020 software receive priority scheduling! Call Sales at (888) 776-1099 today to get on track for a successful January tax season. New Service Bureau customers should contact the Service Bureau in mid-November to schedule January Upload Dates. Customers submitting Print/Mail uploads of 2,000+ forms can expect to be contracted and pay a deposit. Email the Service Bureau with questions at SB@1099pro.com.

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