1099 Updates: Feb. 17 – March 1

This blog was last updated on June 26, 2021

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:

IRS Publishes 2017 Instructions for Form 1042-S

The IRS issued the instructions for use in conjunction with Tax Year 2017 filings of Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding. There are several notable revised provisions for filers and withholding agents:

• Revenue Procedure 2017-15: Setting forth the final Qualified Intermediary (QI) agreement, effective 1/1/17, the following four Chapter 3 status codes are no longer valid and withholding agents for Tax Year 2017 filings should NOT use Codes 33, 36, 37, or 38.
• Unique form identifier: Beginning in Tax Year 2017, withholding agents must assign a unique identifying number to each 1042-S form they file. It cannot be a recipient’s U.S. or foreign TIN, must be ten digit numeric in format, and may be used on new original forms in subsequent years.
• Amended forms: Beginning in 2017, withholding agents must include the amendment number on each amended 1042-S form (using a “1” for the first amendment, and increasing sequentially with each subsequent amendment).
• Pro-rata Reporting: the “Pro Rata Reporting” box was moved to the new Box 15.
• Qualified Derivatives Dealers (QDD): New Chapter 3 exemption codes and status codes have been added that apply to payments to a QDD in order to accommodate implementation of the relevant withholding requirements.
• A number of other codes were added or modified for 2017.
• Foreign Country Codes: For 2017 and beyond, 1042-S filers will use the same list of country codes used on other IRS forms.
• Foreign taxpayer identifying number and date of birth: Financial institutions that file Form 1042-S with respect to a payment on an obligation that it maintains at its U.S. office or branch must report the recipient’s foreign taxpayer identifying number (FTIN) and date of birth (if an individual).
• Amount repaid to recipients: The instructions have been clarified for over-withheld taxes to a recipient, which should be reported in Box 11.

Nebraska Publishes Updated Withholding Certificate for Non-Resident Individuals

Nebraska published an update to Form W-4NA, Nebraska Income Tax Withholding Certificate for Nonresident Individuals. This form is used by payors of nonresident individuals to compute income tax withheld from payments for personal services conducted in Nebraska. There is only one minor change to the form, which adds language to sections of the instructions regarding the 1099-MISC and nonresident individuals.

Louisiana Releases Updated EFT Guidelines

Louisiana recently published a revised version of R-20201, Electronic Fund Transfer (EFT) Guidelines. This publication provides details and procedures for taxpayers using EFT to submit payments to the Louisiana Department of Revenue. The latest version of the document has a few changes addressing payments made under protest, online payments via the department website, and tax type codes.

Michigan Releases Updated Form W-4P, Withholding Certificate for Michigan Pension or Annuity Payments

The Michigan Department of Treasury has issued a 2017 version of its Form W-49 (also called Form 4924), which is used to report income tax withheld from pension or annuity payments. The form itself is substantially the same as the prior version; however, there has been a change to the deductions for certain annuitants and pensioners. Depending on the age of the recipient and/or recipient’s spouse, the deduction amounts have changed for pension and annuity income in Tax Year 2017.