Sovos’ tax and regulatory reporting experts explain how the changing workforce can lead to new tax reporting and compliance gaps
ATLANTA – August 16, 2022 – In the last several years, the American workforce has seen a major shift of in-office to remote work. In fact, global compliance vendor Sovos announced today that it saw a 33% increase in 1099-K forms filed from the tax year 2020 to 2021, and a 17% increase in 1099-NEC tax forms, both signaling an increase in gig and contract work. With new tax reporting requirements set to take effect next tax season coupled with the changing labor force, Sovos’ tax and regulatory reporting experts will host a webinar on August 23, 3 p.m. EDT to discuss how businesses can overcome the tax implications and compliance challenges of a changing workforce.
Workforce changes affect more than 1099s
The pandemic forced many companies to find alternative ways to keep businesses running. As a result, employees realized that they were just as effective at home as in the office. While many companies have shifted to hybrid models, 70% of office workers globally are now going back in the office at least one day a week. However, workers continue to demand flexibility in how, where and when they choose to work, leading many to switch to companies that are willing to meet their needs.
As a result, Sovos saw an increase of 1099-K and 1099-NEC tax forms created, indicating that workers are moving to gig and contract work. With so many forms being processed annually, the IRS continues pushing for lower e-filing thresholds for 1099 forms to close tax gaps and increase revenue. Consequently, businesses of all sizes will need to prepare for:
- Increased volume of tax reporting forms: With the IRS lowering the threshold to report earnings and payment transactions for gig workers, freelancers and contractors, businesses must now complete hundreds of thousands more tax forms by January 31, 2023.
- The fees and penalties from missing or incorrect information: Improper tax documentation collection and validation processes often lead to incorrect information, such as names and TINs, being reported on tax forms and incorrect withholding tax calculations, which can be costly for businesses.
“The tax compliance implications of this shift in the workforce combined with updates to IRS filing requirements is creating a real challenge for businesses of all sizes, and we’re seeing it in the tax withholding payments and filing processes with our customers’ instead,” said Wendy Walker, solution principal, Sovos. “It is imperative that organizations understand how the future of work will affect not only their business but also their tax reporting obligations, so we’re hosting a webinar to ensure that companies are prepared for the next tax season.”
To learn more about the tax implications of workforce changes and how to manage new tax reporting obligations, sign up for Sovos’ upcoming webinar on August 23, 2022, at 3 p.m. EDT time by visiting www.sovos.com.
Sovos was built to solve the complexities of the digital transformation of tax, with complete, connected offerings for tax determination, continuous transaction controls, tax reporting and more. Sovos customers include half the Fortune 500, as well as businesses of every size operating in more than 70 countries. The company’s SaaS products and proprietary Sovos S1 Platform integrate with a wide variety of business applications and government compliance processes. Sovos has employees throughout the Americas and Europe, and is owned by Hg and TA Associates. For more information visit http://www.sovos.com and follow us on LinkedIn and Twitter.