1099 Compass Regulatory Update: Week of October 23, 2017

Changes to tax compliance requirements and legislation happen frequently at the state and IRS levels.  In order to provide customers with the updated and accurate information they need, Sovos documents each of these changes in its Compass portal. Here are some notable changes in 1099 reporting from this week.


North Carolina to Require 1042-S Reporting Beginning in TY 2017

The North Carolina Department of Revenue recently released specifications for reporting Form 1042-S information through the eNC3 web portal. These specifications are effective beginning on January 1, 2018, and reporting of Form 1042-S data is due on January 31, 2018 for TY 2017. Please note this is earlier than the federal due date for Form 1042-S, which is March 15, 2018 for TY 2017.


North Carolina requires reporting of 1042-S information if the information includes:

  • North Carolina income tax withholding, or;
  • Income information other than interest and dividend, which is North Carolina source income.

Considering the various types of income that can be reported on Form 1042-S, the taxpayer must make a determination on a case-by-case basis if a particular income item should be considered North Carolina source income.


North Carolina does not require 1042-S information if:

  • The information reported is interest and/or dividend income, and;
  • There are no North Carolina income tax withholdings, and;
  • The interest and dividend payments have been reported to the IRS.

North Carolina will release additional information on 1042-S reporting in the coming months. To review the specifications for filing 1042-S information through the eNC3 web portal, please visit the North Carolina eNC3 Web File Upload page by clicking here.


Ohio Releases Employer Withholding Due Dates for 2018

Ohio has released the 2018 due dates for employer withholding for state withholding and local school districts.  This includes due dates for monthly, quarterly, and partial-weekly filers.  The due dates largely remain the same as 2017’s with some modification for those dates that fall on a weekend or holiday.


To review Ohio’s 2018 Withholding Due Dates, please follow the link below.




IRS Releases 2018 Draft General Instructions for Certain Information Returns

The IRS has released the 2018 Draft General Instructions for Certain Information Returns. There are a number of changes from the previous revision:

  • Instructions for Form 1099-H are now included in the General Instructions
  • New definitions
    • Recalcitrant account holder
      • A recalcitrant account holder is an account holder (other than an account holder that is an FFI) of a PFFI or registered deemed-compliant FFI that has failed to provide the FFI maintaining its account with the information required under Regulations section 1.1471-5(g).
    • Qualified Intermediary (QI)
      • Expanded list of what qualifies as a Qualified Intermediary
  • New instructions
    • Extension of Time
      • For an extension of time to file, a signature or explanation may be required
      • For Form W-2, only one extension is allowed. No automatic extension is available
    • Generally, filers are not required to report payments smaller than the minimum described for a form, but the IRS encourages filers to file Copies A for all payments
    • Expired ITINs
      • Expired ITINs may continue to be used for information return purposes regardless of whether they have expired for individual income tax return filing purposes. Additionally, the third parties who file and furnish information returns with an expired payee ITIN will not be subject to information return penalties under sections 6721 or 6722 solely because the ITIN is expired.
    • Backup withholding
      • Backup withholding will apply if the payment is also a withholdable payment under chapter 4 (sections 1471-1474) that is made to a recalcitrant account holder that is a U.S. non-exempt recipient, and you are a PFFI (including a Reporting Model 2 FFI) that elects to withhold under section 3406 to satisfy your withholding obligation under Treasury Regulations section 1.1471-4(b)(1)
      • New example of payments not subject to backup withholding
        • Reportable payments that are withholdable payments made to a recalcitrant account holder that is a U.S. non-exempt recipient from which you have withheld under chapter 4. See Treasury Regulations section 1.1474-6(f).
    • Additional payments that are not subject to reporting by a non-U.S. payer
      • A payment made by certain FFIs for which an exception to reporting applies under Regulations section 1.6049-4(c)(4)
  • Online fillable forms Copies 1, B, 2, C , and D
    • Copies 1, B, 2, C, and D, as applicable, to be furnished to recipients and kept in filer's records, have been made on-line fillable at IRS.gov for many forms referenced in these instructions.
  • New mailing address for Kansas City, MO
    • New mailing address for paper-filed information returns

 To view the 2018 Draft General Instructions, please click the link below.




Take Action

Find out how Sovos facilitates 1099 reporting.


Get in touch to learn more about Sovos Compass.

About the Author

Gerry  Nelligan

Gerry Nelligan is a Regulatory Analysis Supervisor at Sovos, leading a team of counsels covering information reporting, including 10-Series IRS reporting, Affordable Care Act (ACA) reporting and Automatic Exchange of Information (AEOI). Gerry received his J.D. from Suffolk University Law School and his B.A. from Providence College. He is a licensed attorney in the state of Massachusetts.

More Content by Gerry Nelligan
Previous Article
How to Capture VAT from Offshore Sellers: New Guidance for Governments
How to Capture VAT from Offshore Sellers: New Guidance for Governments

The OECD released further guidance on how countries can implement effective VAT collection systems for cros...

Next Article
Evaluate Your Tax Team for Regulatory and Business Change
Evaluate Your Tax Team for Regulatory and Business Change

How to measure the readiness of your tax team to deal with regulatory and business change. Includes downloa...

Let's Connect!

Contact Us