1099 Updates: March 2017

Regulatory and legislative updates to 1099 form requirements that took place in recent weeks. 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:

North Dakota Publishes Updated Guideline to Income Tax Withholding: Oil and Gas Royalty Payments

North Dakota released an updated version of its Guideline to Income Tax Withholding: Oil and Gas Royalty Payments. This guideline provides withholding criteria for oil and gas-related royalty payments, as opposed to ordinary non-wage withholding. There is one update from the previous version of this publication: If a remitter transmits federal Form 1099-MISC information under the federal program, it must separately submit any federal Form 1099-MISC containing North Dakota income tax withheld with Form RWT-1096.

Maine Publishes Updated Instructions for Employers’ Return of Maine Income Tax Withholding

Maine published updated instructions for the Employers’ Return of Maine Income Tax Withholding, Form 941-ME. Generally, Form 941-ME is used to report employee or payee income tax withholding to the Maine Revenue Service. The 2017 version of these instructions include a few changes which mostly relate to amended returns.

• Amended Returns: This section was expanded to include more details on using Form 941-ME in conjunction with filing amended returns.
  • Filers should not use a future version of Form 941ME to correct income tax withholding reported on a prior year return.
  • Do not correct over-withheld Maine income tax from an employee or payee if the end of the year has passed. Instead, the employee/payee should claim the withholding when filing his/her personal income tax return and receive the over-withheld portion directly from Maine Revenue Services in the form of an income tax refund.
  • If an amended return is filed after the end of the year that requests a refund, you must certify that the overpayment does not include amounts actually withheld from employees or payees. See instructions for line 4.
  • You must also attach copies of original or corrected annual statements (e.g. Forms W-2, W-2C, 1099) that reflect the corrected amount of withholding for the employees or payees listed on Schedule 2.
  • If an amended return is filed after filing the annual Form W-3ME, an amended Form W-3ME must also be filed.

• Specific Instructions: Several sections were added to this part of the instructions.
  • Instructions for Line B (Amended Returns) and Line C (Closing your Income Tax Withholding Account) were added.
  • Line 1: If the form is amended, enter the corrected withholding amount for the quarter from Schedule 2 Line 7b.
  • Line 2: the 2017 instructions breaks this section into Line 2a and 2b; Line 2a remains the same, while 2b is reserved for amended forms based on overpayment claimed.
  • Line 3a: Added language indicates that if the amount in Line 2c is negative, treat it as a positive number and add it to the amount in Line 1.
  • Line 4: Added for amended returns. Check all boxes that apply and include sufficient explanation of overpayments (including documentation).

• Specific Instructions, Schedule 2: Language was added to sections Column C and Line 7 in order to address amended returns.

Arizona Releases Updated A1-QRT: Quarterly Withholding Tax Return

Arizona released its 2017 Quarterly Withholding Tax Return, which serves as its quarterly reconciliation and reporting form used for withholding payments made over the course of a quarter. The form has undergone extensive formatting changes, but relatively few material changes.  It now requests more detail related to business closures and successive businesses. It also requests  information on any predecessor employer if the filer is a surviving employer. The instructions have also undergone similarly broad formatting changes, but with few material changes. They now explicitly state payroll service companies must include their TINs on any returns they prepare for employers, and any return prepared by a payroll service company must be filed electronically. The revision also includes instructions on who must sign the return, and omit the example of the form previously provided at the end of the instructions.