Connecticut Legislature Passes House Bill No. 7312, Moving Up 1099 Deadlines and Requiring Additional 1099 Reporting

Adam Rivera
July 26, 2017

The Connecticut Legislature has passed new legislation that will move up certain Form 1099 deadlines and require additional Form 1099 reporting. Some of the essential changes can be found below.

  • Effective January 1, 2018, Connecticut will require payers of pensions or annuity distributions, including distributions from an employer pension, an annuity, a profit-sharing plan, a stock bonus, a deferred compensation plan, an individual retirement arrangement, an endowment or a life insurance contract, that (A) maintains an office or transacts business within this state, and (B) makes payment of any mounts taxable under this chapter to a resident individual, to deduct and withhold from the taxable portion any such distribution.
    • The method of determining the amount to be withheld shall be the same as the method used by employers with respect to the payment of wages, except that a lump sum distribution shall be taxable at the highest marginal rate unless
      • Any portion of the lump sum distribution was previously subject to tax, or
      • The lump sum distribution is a rollover that is effected as a direct trustee-to-trustee transfer
    • Previously, payers were only required to notify Connecticut resident recipients of the availability of Connecticut income tax withholding and withhold income tax from payments if the Connecticut resident submitted a request in writing
  • Effective January 1, 2018, Connecticut will require all payers that are required to deduct and withhold tax under this chapter from nonpayroll amounts shall furnish to each payee on or before January 31^st^ of the next succeeding year, a written statement showing the amount of nonpayroll amounts paid to the payee, the amount deducted and withheld as tax and such other information as said commissioner shall prescribe.
    • Each such payer shall file a copy of such written statement with said commissioner on or before January 31^st^
    • Nonpayroll amounts include
      • (A) Gambling winnings, other than Connecticut lottery winnings, that are paid to a resident, or to a person receiving payment on behalf of a resident, and that are subject to federal income tax withholding;
      • (B) Connecticut lottery winnings that are required to be reported by the Connecticut Lottery Corporation to the Internal Revenue Service, whether or not subject to federal income tax withholding, whether paid to a resident, nonresident or a part-year resident, and whether paid to an individual, trust or estate;
      • (C) pension and annuity distributions, for which the payer is required to deduct and withhold tax under this chapter;
      • (D) military retired pay, where the payee is a resident individual and has requested that tax be deducted and withheld under this chapter;
      • (E) unemployment compensation, where the recipient has requested that tax be deducted and withheld under this chapter; and
      • (F) payments made to an athlete or entertainer, where the payments are not wages for federal income tax withholding purposes and where the commissioner requires the payer to deduct and withhold tax under this chapter;
    • Effective July 1, 2017, and applicable to all 2017 information returns, reporting entities must now file copies of all 1099-K information returns with the Connecticut Department of Revenue Services not later than thirty days after the reporting entity files information returns with the IRS
    • Filers whose total tax liability is less than $1000 shall now remit tax on an annual basis, and filers who whose total tax liability falls between $1000-$3999 shall now remit tax on a quarterly basis
    • Effective July 1, 2017, the Commissioner of Revenue Services shall not consider any penalty waiver request received more than one year from the date a notice of such penalty was first sent to the person on whom the penalty imposed

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Adam Rivera

Adam Rivera is a member of the Regulatory Analysis Team’s Direct Tax division at Sovos. His main areas of focus are Federal and State Tax Withholding and Affordable Care Act (ACA) Reporting. Prior to Sovos, Adam worked as a legislative aide in the Florida House of Representatives. He also has experience in securities law, focusing on securities litigation and researching emerging crowdfunding methods of raising capital. Adam is a member of both the Massachusetts and Florida Bars. He earned his B.A. from the University of Florida and his J.D. from the University of Miami.
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