1099 Updates: Dec. 13 – Dec. 27, 2016

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:

Mississippi Updates Electronic Filing Due Date for 1099 Forms

Mississippi changed the due date for electronic filing of 1099 forms from March 31 to February 28. This brings the electronic version in line with the corresponding paper form, which is also due February 28.

Illinois Updates Employers Withholding and Filing Requirements Pub

Illinois has updated its Publication 131: Withholding Income Tax Payment and Filing Requirements. This publication proves employers information about requirements for employers to withhold and file returns. The Publication provides much of the same information provided in the February update. However, all employers must now file the IL-941 quarterly, as there will be no annual payment option going forward.

IRS Releases Several 1099 Forms and Instructions

Form 1099-Q The IRS released Instructions for the 2017 version of the 1099-Q form (Payments from Qualified Education Programs). There were a few changes to the language of the instructions:

• The instructions for Box 2 (Earnings) cite to Internal Revenue Bulletin 2016-13, which was issued in February 2016.
• This bulletin deals with transition relief for certain 529 Qualified Tuition Programs in relation to Form 1099-Q resulting from the effect of the Protecting Americans from Tax Hikes (PATH) Act, and can affect the figure entered in Box 2 if applicable.

Form 1099-S The IRS released the 2017 version of the 1099-S form (Proceeds from Real Estate Transactions) along with new instructions:

• Box 5: The language in the 2017 version now reads, “Check here if the transferor is a foreign person (nonresident alien, foreign partnership, foreign estate, or foreign trust).”
• Box 6: Added in 2017 to allow for the addition of Box 5, and now allows for entry of the Buyer’s part of the real estate tax data (formerly Box 5 prior to 2017).

IRS Updates Publication 5165

The IRS updated Publication 5165. There are a few changes which can be seen below:

• The first update provided links to Form 1094-B, Form 1095-B, Form 1094-C, Form 1095-C and Publication 5258 in Section 1, “Introduction”
• The second update changed the wording in Section 5.1.6. New wording provided below.
  • “Certain business rules (those with a severity of “Report Error and Reject if Over Threshold”) may cause a rejection of the entire transmission if violated in more instances than the threshold allows. If this happens, the Transmitter will receive an error file containing all the rules that were violated plus a generic “Threshold” error for each threshold that was exceeded. It is the responsibility of the Transmitter to correct all business rule errors and retransmit a replacement. Business rules for the AIR forms are posted to Affordable Care Act Information Returns (AIR) Program page.”
• The third update specifies that the XML Error Data File attached to the Acknowledgement is constrained to 200MB.
  • If the number of validation errors identified results in the XML File exceeding the 100MB constraint, the file will be truncated and a message will be inserted at the end of the file indicating that the file was truncated.
• The fourth update corrects a previous typo and states, “when a transmission or submission is rejected by AIR, a replacement transmission or submission must be submitted”