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Draft form issued for nonemployee compensation

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Tax Hot Topics newsletter The IRS issued an early release draft of the 2020 Form 1099-NEC on July 24 for reporting payments made for services performed by someone who is not an employee (nonemployee compensation or NEC), cash payments for fish, and withholding of federal income tax under the backup withholding rules. The form is also used to indicate whether a payer made direct sales of $5,000 or more of consumer products to a buyer (recipient) for resale. Such information is currently reported on Form 1099-MISC.

The IRS explained in a comment request issued on Aug. 2 that Form 1099-NEC is being reinstated (from the early 1980s) to alleviate the administrative burdens and eliminate confusion regarding changes to the Form 1099 filing due dates made by the Protect Americans from Tax Hikes (PATH) Act. The PATH Act accelerated the filing due date for Forms 1099 that include nonemployee compensation from Feb. 28 to the following Jan. 31, and eliminated the automatic 30-day extension for forms including nonemployee compensation. Comments on the draft Form 1099-NEC are due on or before Oct. 4, 2019.

Contacts:
Jeff Martin
Partner
Washington National Tax Office
T +1 202 521 1526

Keith Mong
Managing Director
Washington National Tax Office
T +1 202 521 1554

James Sanchez
Senior Associate
Washington National Tax Office
T +1 202 861 4107

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