Fully understand the new form 1099-NEC and the new requirements and inputs that go along with it.
In July, 2019, the IRS issued a release draft of a new Form 1099 for use commencing in the 2020 tax year (i.e., in 2021), a Form 1099-NEC to replace the Form 1099-MISC, Box 7 and Box 9 for reporting direct sales of $5,000 or more. This new Form 1099-NEC is being implemented in response to problems created by the PATH Act of 2015, when the due date for Form 1099-MISC, Box 7 items were moved to January 31, as compared to other 1099 items, which remained due March 31. In this topic, we will focus on the new Form 1099-NEC, and how to fill it out properly, as well as focus on issues specific to nonemployee compensation that were previously the focus of Box 7 of the Form 1099-MISC. Learn what reconfiguration may be needed of your accounting systems, and ensure that you identify vendors that will now require the two different forms (for e.g., rents and lawn maintenance) and what training and communication will be needed to prevent confusion once the new forms are due to be issued by January 31, 2021. By this date issuers of Form 1099-MISC will need to issue a new Form 1099-NEC that will replace IRS Form 1099-MISC (Box 7) specific to the reporting of nonemployee compensation. The IRS has issued two separate forms, a Form 1099-MISC and a Form 1099-NEC, to allow for the due date of the Form 1099-NEC (January 31) to stand separate from the due date for the Form 1099-MISC (March 31). Issuers need to plan now on how to reconfigure their accounting systems, train and communicate with vendors, using best practices. Those best practices need to include Form W-9 preparation, and addressing backup withholding, and how to avoid penalties. There are hot spots that also need to be addressed, such as how to distinguish employee compensation from nonemployee compensation, addressing Section 530 issues, and spotting when fraudulent forms 1099 are issued implicating Section 7434 claims.
- You will be able to identify PATH Act (2015) and its fundamental concepts
- You will be able to differentiate between the various due dates for Form 1099s
- You will be able to recognize the New Form 1099-NEC and Required Inputs
- You will be able to recognize Best Practices - The Form W-9 and Avoiding Backup Withholding
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IRS Brings Back IRS Form 1099-NEC
- Use of Form 1099-NEC Prior to 1983
- Use of Form 1099-MISC Box 7 From 1983 to 1999
- PATH Act (2015) and Creation of Different Due Dates for Form 1099-MISC
Understanding the New Form 1099-NEC and Required Inputs
- The Instructions to the New Form 1099-NEC
- Inputting the New Form 1099-NEC Information
- Best Practices - Reconfiguration, Training and Communication
Best Practices - The Form W-9 and Avoiding Backup Withholding
- Obtaining Proper NEC Information Using Form W-9
- Avoiding Backup Withholding Issues
- Penalties and Penalty Avoidance
Identifying the Hot Spots Pertaining to IRS Form 1099-NEC
- Issues Surrounding Employee vs. Nonemployee
- Issues Surrounding Section 530
- Section 7434 and the Fraudulent Form 1099-NEC
- Other Developments
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This course was last revised on April 3, 2020.
Call 1-866-352-9540 for further credit information.
- CPE/NASBA - QAS Self Study 3.0 including Taxes 3
- Lorman Education Services is registered with the National Association of State Boards of Accountancy (NASBA) as a QAS Self Study sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its web site: www.nasbaregistry.org. For more information regarding administrative policies such as complaint and refund, please contact our offices at 866-352-9539. CPE Credit: Maximum Credit Hours: 3.0 each session (based on a 50 minute credit hour). You must attend at least 50 minutes to obtain credit. Field of Study: Taxes for 3.0 hours. Prerequisite: basic knowledge of taxation. Level of Knowledge: Intermediate. Teaching Method: Seminar/Lecture. Advance Preparation: None. Delivery Method: QAS Self Study. Please refer to the information in this advertisement for outline, course content and objectives. Upon completion of this course, you will receive a certificate of attendance. Final approval of a course for CPE credit belongs with each state's regulatory board.
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T. Scott Tufts, Esq.
- Senior tax counsel, CPLS, P.A.
- Practice emphasizes helping clients who are faced with the filing of certain IRS forms that lead to disputes, as well as tax disputes with the IRS, probate and Federal and state court disputes involving partners and members and estates
- Practice areas include the handling of IRS tax disputes, expert witnessing, and consultation with partners, members, and their practitioners that pertain to IRS Forms 8082 (notice of inconsistent treatment and erroneous K-1s), as well as IRS Forms 8886 (Reporting of Abusive Tax Shelters), SS-8 (worker classification), 1099-MISC (independent contractors), W-2c/ Form 4852 (Substitute Form W-2 or Form 1099-R); Form 211 (whistle-blowers), Form 3949-A (referral of alleged violations of the tax laws), Form 14242 (suspected abusive tax promotions or promoters), Form 14039 (stolen identity and use of your SSN), Form 14157 (reporting of fraud or abusive tax scheme by preparer), and Form 13909 (reporting of suspect misconduct or wrongdoing of tax exempt or employee plan)
- Conducts regular seminars and workshops on areas focused on whistle-blowers and the handling of IRS disputes, as well as in the areas of probate and tax, and partnership and LLC matters
- Wrote several publications: “Evaluating LLC Operating Agreements Containing 'Carte Blanche' Authority and Right to Rely Provisions Purporting to Release Third Parties from Any Duty to Inquire,” Tax Section Bulletin, Florida Bar, Tax Section, Vol. XXIX, No. 2, p. 7, 10-26 (Fall 2013); “AD Global and the Statute of Limitations for TEFRA Partnerships: Will the TMP Ever Have to Stop Looking in the Rear View Mirror for the IRS,” Tax Section Bulletin, Florida Bar, Tax Section, Vol. XXIV, No.2, p.14, pp.25-29 (February 2006); “It Ain’t Over ‘Til It’s Over: When Partnership Tax Vessels Make Ill-Advised Journeys and Wind-Up at Harbor Cove Marina.” Journal of Business Entities (September/October 2004); “What IRS Form 8082 Can Do For You (and to you!) and Your Closely-Held Partnership Now that the IRS’ K-1 Matching Program is Underway,” BNA Tax Management Real Estate, Vol. 19, No. 12 (December 3, 2003); and “Are Single-Member LLCs a Ticking Time-Bomb for Asset Protection?” (Are Single-Member LLCs of Any Utility for Asset Protection after the Florida Supreme Court’s Decision in Olmstead?), ABA Teleconference (August 24, 2010)
- LL.M. degree in taxation, University of Miami School of Law; J.D. degree, Wake Forest University School of Law; B.S. degree in accounting, Florida State University
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