The Changing Nature of State Reporting for 1099-NEC/MISC

Understanding the basics and changing nature of state reporting for 1099-NEC and 1099-MISC will help you stay compliant

State reporting requirements for 1099-NEC and 1099-MISC forms are growing increasingly complicated. Whether your business is undergoing mergers and acquisitions, working to keep pace with regulatory change or is just experiencing growth, knowing the basics of state reporting is crucial to maintaining compliance. 

Tax reporting for nonemployee compensation includes both federal and individual state reporting requirements. First, there is the Combined Federal/State Filing program (CF/SF), which is an IRS program that forwards information received on to the states that participate in the program (not all states participate). There is also the direct to state reporting (DSR) requirement. Filers must report to each applicable state, with the states providing the information requirements and reporting deadlines. How can your business keep pace with the details for each state in which it operates? 

Get the State Reporting e-book

This ebook compiles the basics of state reporting requirements for 1099-NEC and 1099-MISC, including the following:

  • A breakdown of the CF/SF program requirements versus the DSR requirements
    · Which states participate in each?
    · What are the potential downsides for each program?
    · If a state participates in one, does that mean they cannot participate in the other?
  • Discussion on recent changes to reporting requirements and what it may mean for certain states
    · How many states require 1099-NEC be filed to them directly?
    · Which states have issued guidance on the reporting requirements?
  • An explanation of common state filing issues
    · What are they and how can you avoid them?
    · Are all states facing the same issues?
  • Background on state backup withholding, including state-specific examples
    · What is the range of withholding rates?
    · Is it applied at the state or federal level?

The digitization of tax compliance and reporting is unavoidable. Additionally, businesses face increased filing complexity and lowered thresholds for e-filing. Small- to medium-sized organizations are especially seeing great challenges in meeting all 1099 form requirements. It’s important to understand that homegrown solutions or manual efforts cannot continue to keep pace with the changes.

The issuing and filing of 1099-NEC and 1099-MISC forms is an essential part of tax reporting. When you have a better understanding of the types of required reporting, why it is required and how those details impact your company, you can better achieve and maintain state reporting compliance.