The IRS announced that it will be bringing back form 1099-NEC to report non-employee compensation separate from the 1099-MISC. This form 1099-NEC has been retired since 1983.
The change would go into effect for TY2020 (not the current 2019 tax year).
Since the PATH Act was passed in 2015, it effectively created two filing deadlines for the same tax form. The different deadlines depended on if the payer was reporting Box 7 non-employee compensation or a non-box 7 amount.
E-filing deadline for non-employee compensation: January 31st
E-filing deadline for non-box 7 payments: March 31st
Having two different deadlines for the same form was a pain point for many payers and led to a lot of confusion. Bringing back 1099-NEC appeared as a viable alternative to relieve some of this confusion. In turn it is expected to reduce the number of civil penalties issued because payers were unclear. This response would also alleviate bugs the IRS had in their FIRE system in dealing with the two deadlines.
What was that bug?
If a payer transmitted a box 7 record within a group of non-box 7 returns after January 31st but before March 31st ALL of those records were flagged for late filing. Those non box 7 forms were technically filed on time but, the two-deadline system had a glitch.
The TSC1099 platform will accommodate this new form into their product. Speak to your rep if you have any questions on Form 1099-NEC. We will publish information as file formats and IRS draft forms become official.