Organizations reporting tax information to Vermont might have been surprised to find that the state is no longer part of the Combined Federal/State Filing (CF/SF) program for form 1099.
Previously, organizations could report 1099 information to the IRS, and the IRS would send that information directly to the department of revenue in Vermont. The reporting deadline for the combined program is March 31, unless an organization is reporting 1099-MISC forms with non-employee compensation (or NEC, represented by box 7 on the form). In that case, the deadline was Jan. 31.
A subtle change
For tax year 2017, however, Vermont has pulled out of the CF/SF program, meaning organizations that reported 1099 information to the IRS now have to report that information to Vermont separately. The change came as a surprise to many organizations, as Vermont did not formally announce a switch but simply took a reference to CS/SF off if its department of revenue website. Muddying the waters further, IRS publication 1220, which lists states taking part in the CF/SF program, still listed Vermont as a participant as of Jan. 4.
Due to the resulting confusion, Vermont appears to be providing a grace period for reporting 1099-MISC NEC information, encouraging organizations to transmit forms by March 2 despite the normal due date having been Jan. 31. Forms reported after March 2, however, may still be subject to penalties and a late filing fee. The due date for non-NEC forms remains March 31, but organizations will have to submit to the IRS and Vermont separately.
Constant regulatory adjustments
The Vermont change is one of many taking place as states readjust filing deadlines and make other moves in the area of 1099 reporting. In order to keep up with constant regulatory change, organizations need a third-party vendor that monitors changes in regulations closely and informs clients when they happen.
With more than 30 years of experience in 1099 reporting, Sovos has a full team of legal professionals at clients’ disposal to keep them updated on regulatory developments.
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