North America

IRS Debuts Draft of 1099-NEC for 2020

Gerry Nelligan
July 25, 2019

This blog was last updated on January 31, 2024

In a monumental moment for tax reporting professionals, the IRS has released a draft of Form 1099-NEC, the form that will eventually replace Form 1099-MISC box 7 for reporting nonemployee compensation and box 9 for reporting direct sales of $5,000 or more. 

The NEC should alleviate confusion that resulted after the passage of the PATH Act in 2015. The PATH Act brought due dates for reporting Form 1099-MISC box 7 from March 31 to Jan. 31. However, the due date for non-box 7 Forms 1099-MISC remained March 31, effectively creating two different due dates for the same form. 

1099-NEC to replace 1099-MISC box 7 

The NEC would replace Form 1099-MISC box 7 altogether as the new form for reporting nonemployee compensation, likely leaving the Form 1099-MISC as the form for reporting other types of compensation, although the IRS has not yet released a draft of the new version of Form 1099-MISC. 

As such, the deadline for reporting Form 1099-NEC would likely be Jan. 31, and the deadline for Form 1099-MISC would remain March 31. The first due date for each would occur in 2021.

IRS responds to concerns about 1099-MISC

The new form should help payers avoid fines and penalties for late reporting. As regulations stand now, any late box 7 original forms filed with non-box 7 forms could cause the IRS to count all non-box 7 forms as late, even if they were filed on time. For example:

  1. A filer sends box 7 original forms to the IRS by Jan. 31, meeting the deadline.
  2. Some late box 7 originals trickle in after Jan. 31.
  3. The filer sends non-box 7 forms by March 31, meeting the non-box 7 deadline.
  4. In the same batch as the non-box 7 forms, the filer sends late box 7 forms.

Step 4 causes the problem. Because late box 7 forms arrive with non-box 7 forms, all forms—including non-box 7 forms sent on time—could be considered late and subject to penalties. The 1099-NEC should eliminate that confusion by separating the forms entirely, indicating a response by the IRS to concerns from filers in the wake of the PATH Act.  

Find the most updated information on Form 1099-NEC here.

Take Action

Find out how Sovos keeps companies out in front of changes to 1099 forms and regulations

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

Gerry Nelligan

Gerry Nelligan is a Regulatory Analysis Supervisor at Sovos, leading a team of counsels covering information reporting, including 10-Series IRS reporting, Affordable Care Act (ACA) reporting and Automatic Exchange of Information (AEOI). Gerry received his J.D. from Suffolk University Law School and his B.A. from Providence College. He is a licensed attorney in the state of Massachusetts.
Share this post

what is sales tax
North America Sales & Use Tax
May 16, 2025
What is Sales Tax? How it Works & Why It Matters

Uncover what sales tax is, how it works! This guide provides everything from rates and exemptions, to how it varies by location and product type.

consolidation in the wholesaler tier
North America ShipCompliant
May 15, 2025
When the Middle Shrinks: What Consolidation in the Wholesaler Tier Means for the Entire Market

Discover how consolidation in the wholesaler tier impacts market access in the U.S. beverage alcohol industry and explore alternatives like direct-to-consumer shipping.

unclaimed property laws
North America Unclaimed Property
May 14, 2025
From Crypto to NFTs: The expanding scope of unclaimed property laws

This blog was last updated on May 14, 2025 Last month, a cross-functional group of Sovos unclaimed property experts—including folks from product development, product marketing, managed services, our general counsel’s office, and the consulting team—traveled to Tucson, Arizona to the Unclaimed Property Professional Organization’s annual conference. We spent the week diving deep into all things […]

Finance Leaders
EMEA North America Tax Compliance
May 14, 2025
The Changing Indirect Tax Landscape: How Finance Leaders Are Adapting

This blog was last updated on May 14, 2025 We recently partnered with StudioID on a global survey of 150 finance leaders to reveal significant insights into how companies are navigating the increasingly complex world of indirect tax compliance. The research, which included CFOs, EVPs/SVPs/VPs of Finance, and Finance Directors from companies with revenues ranging […]

Mirror Visibility
North America Tax Compliance
May 7, 2025
Mirror Visibility™: The Future of Indirect Tax Compliance

This blog was last updated on May 7, 2025 We recently conducted a comprehensive survey of 150 finance leaders in partnership with studioID that sheds light on emerging strategies for managing tax compliance in an increasingly digital regulatory environment. The research, which included respondents from across financial services, manufacturing, technology, and other sectors, reveals how […]

See for yourself how the Sovos Compliance Cloud can meet your business' unique tax compliance challenges.
Book a Demo
© 2025 Sovos Compliance, LLC. All rights reserved.
Why Sovos?
Resources
About
Products
Indirect Tax Suite
Information Reporting and Withholding Suite
Specialty Products
Solutions
By Tax or Document Type
By Industry
By Team or Initiative
By Region