Form 1099 filing for 2022 tax year

As you prepare for the 1099 filing season, note the changes effective for the 2022 tax year:

• Form 1099-NEC: Beginning in year 2022 and forward, IRS released a continuous use format version of Form 1099-NEC to be used.
• Form 1099-MISC: Box 13 is now checkbox to report the Foreign Account Tax Compliance Act (FATCA) filing requirement. As a result, Boxes 13-17 have now been renumbered as 14-18.

Please review this alert for important information and deadlines.

EMPLOYER REQUIREMENTS

Form 1099-NEC

• Report payments of $600 or more made to nonemployee service providers, such as independent contractors, consultants, accountants, cleaning professionals, landscapers, and other self-employed individuals, as well as non-incorporated entities, which includes any partnership, limited liability company (LLCs), limited partnership (LP), or estate. This also includes professional fees paid to attorneys (including law firms established as corporations).
• Report backup withholding. 

Form 1099-MISC

• Report all other types of miscellaneous compensation paid in the amount of $600 or more in your ordinary course of trade or business, such as rents, prizes and awards, certain medical and healthcare payments, and other income, as well as royalties paid over $10.

ELECTRONIC FILING REQUIREMENT UPDATE

The IRS is considering reducing the threshold for e-filing from 250 returns to 100 in 2022 and to 10 in 2023. But until IRS regulations are issued, the threshold remains unchanged. We will provide updates on any changes to these requirements.

EXTENSIONS

While the IRS allows an automatic 30-day extension for certain Forms 1099, there is no automatic extension for filing Form 1099-NEC. Contact your CohnReznick engagement team or other trusted tax advisor with any questions.

PENALTIES

Failure to comply with the various filing deadlines and requirements may expose a business to the following significant penalties:

• Failure to file the correct information returns or furnish the correct payee statements by the due date:
  • Small businesses (average annual gross receipts of $5 million or less for the most recent three taxable years): $50-$290 per recipient, depending on when you file/furnish, with a maximum penalty of $1,177,500 per year
  • Large businesses (average annual gross receipts of more than $5 million): $50-$290 per recipient up to a maximum of $3,532,500 per year
  • For failure to provide a correct information return or payee statement due to intentional disregard, the penalty is at least $580 per 1099 or statement with no maximum penalty.
• Intentional disregard of filing requirements:
  • Small businesses: $580 per statement, no limitation
  • Large corporations: $580 per statement, no limitation

If you have received Form 1099 non-matching notices, be vigilant and follow up with your vendors or you may be penalized for the maximum amount per incorrectly filed recipient.

2022 DUE DATE SUMMARY CHART

_{*The due date for submitting to the IRS is the same as for providing it to the recipient, regardless of whether filing by paper or electronically
**Submission to the IRS if filing by paper is February 28, 2023}

IMPORTANT CALENDAR REMINDERS

To timely prepare and e-file your Forms W-2 and/or 1099-NEC, provide your data to your tax team by January 16.

_{Any advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues. Nor is it sufficient to avoid tax-related penalties. This has been prepared for information purposes and general guidance only and does not constitute legal or professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice specific to, among other things, your individual facts, circumstances and jurisdiction. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its partners, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.}