Regulatory and legislative updates to 1099 form requirements between Dec. 28, 2016 and Jan. 11, 2017.

Individual states and the IRS introduce new 1099 form requirements and changes to existing legislation on a frequent basis. Sovos documents each of these updates in its Taxport Compass portal to arm clients with the most current and accurate information and ensure that they are on the right track in their compliance efforts.

Here are several recently updated requirements courtesy of Taxport Compass:

Iowa Publishes FAQs for Electronic W-2 Filing Requirements

The Iowa Department of Revenue recently published a set of Frequently Asked Questions for electronic reporting and W-2 form filing requirements. This is the first year Iowa is requiring W-2 reporting. The document details these new requirements, as well as clarifying previously released information. The FAQs address due dates, bulk filing and third-party filing procedures, electronic reporting thresholds and other topics.

Illinois Implements Major Withholding Changes for 2017

The Illinois Department of Revenue has announced major changes to withholding obligations and procedures, effective January 1, 2017. The most notable change is the elimination of annual filing and payment frequency. As of January 1, 2017, all withholding taxpayers are required to file quarterly returns. Filers must include all Illinois income tax withheld during the three months of each quarter.

The 2017 due date calendar is available here.

Oklahoma Announces W-2, W-3 Reporting Requirement

Oklahoma announced a new W-2, W-3 reporting requirement. For the first time, Oklahoma will require annual W-2 reporting for wages paid in 2017. These forms must be filed by February 28, 2017 and must be filed electronically.

Hawaii Releases 2016 Form N-1, Declaration of Estimated Income Tax for Individuals

The Hawaii Department of Taxation has released the 2016 version of Form N-1, the Declaration of Estimated Income Tax for Individuals. This form is intended for use in conjunction with Form HW-4 by individuals for whom withholding will not cover the entire tax liability or who have income that is taxable but not subject to withholding.

While there are no substantive changes regarding employer withholding obligations, there are some clarifications in the instructions relative to filing and payment requirements of estimated income tax for individual taxpayers.

Puerto Rico Releases 2016 Form 499R-2c/W-2cPR Electronic Filing Requirements Publication

Puerto Rico has released its 2016 Form 499R-2c/W-2cPR Electronic Filing Requirements Publication, adding new fields, altering several existing fields and adding new instructions and guidance.

An application developed by the Department of the Treasury is available for the filing of 2014, 2015 and now 2016 W-2cPR to every employer that has already filed the W-2PR (regardless of which program was used to file). This option will assign the control numbers for the W-2c’s automatically.

A W-2PR form must be filed before a W-2cPR can be processed. Otherwise, it will be rejected.

IRS Publishes Updated Guide for Electronically Filing ACA Information Returns

The IRS recently published an update to its Guide for Electronically Filing Affordable Care Act Information Returns for Software Developers and Transmitters (Publication 5165), which is significant due to the uncertainty currently surrounding the ACA’s future. This guide provides specifications for electronically filing forms 1094-B, 1095-B, 1094-C, and 1095-C with the IRS.

IRS Releases 2017 versions of 1099-INT and 1099-OID with Instructions

The IRS recently released 2017 versions of the 1099-INT (Interest Income), 1099-OID (Original Issue Discount) and the instructions for both forms. The 1099-INT pertains to interest income and backup withholding, while the 1099-OID is filed if the original issue discount (OID) includible in gross income was at least $10, or if backup withholding occurred in relation to an original issue discount.

Specific Instructions for 1099-INT:

  • New information under “When is a payment made”
    • A credit allowed from tax credit bonds reportable on Form 1099-INT is treated as paid on the credit allowance date. For information on credit allowance dates, see Interest to holders of tax credit bonds under Box 1, Interest Income, later.
  • New information under “Reporting Interest and Bond Premium”
    • For a covered security acquired with OID and bond premium, if you choose to report qualified stated interest in Box 2 of Form 1099-OID, you must report any bond premium amortization on that security in Box 10 of Form 1099-OID. You may not report the qualified stated interest on Form 1099-OID and the bond premium amortization allocable to the interest on Form 1099-INT.

Specific Instructions for 1099-OID:

  • For a debt instrument with OID that is a covered security, if you choose to report qualified stated interest in box 2 of Form 1099-OID, report any bond premium amortization allocable to the interest in box 10 of Form 1099-OID and not in boxes 11 through 13 of Form 1099-INT.
  • Box 6, Acquisition Premium:
    • You may, but are not required to, report the acquisition premium for a tax-exempt obligation that is a covered security acquired before January 1, 2017.
  • Box 10, Bond Premium:
    • For a tax-exempt covered security acquired at a premium, enter the amount of bond premium amortization allocable to the interest paid during the tax year. If you are required to report bond premium amortization and you reported a net amount of interest in box 2, leave this box blank.
  • Box 11, a new box added in 2017:
    • For a tax-exempt obligation that is a covered security acquired on or after January 1, 2017, enter the OID for the part of the year it was owned by the record holder. You may, but are not required to, report the OID for a tax-exempt obligation that is a covered security acquired before January 1, 2017.

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