New IRS 1099-NEC Form and Changes to 1099-MISC

24 November 2020

New IRS 1099-NEC Form and Changes to 1099-MISC

Effective starting with Calendar Year 2020 reporting , the IRS has implemented a new form 1099-NEC and made changes to form 1099-MISC that affect State of Vermont 1099 reporting.

New 1099-NEC Form

Payments for non-employee compensation that have historically been reported on a 1099-MISC form in box 7 will now be reported on new form 1099-NEC in box 1.  Non-employee compensation is the only type of payment reported on this new form.

Changes to 1099-MISC Form

Payments for non-employee compensation will no longer be reported on a 1099-MISC form in Box 7 but will now be reported on new form 1099-NEC in box 1.

Payments of gross proceeds to an attorney will no longer be reported in box 14 of a 1099-MISC form but will now be reported in Box 10 of a 1099-MISC form.

What These Changes Mean for Department A/P User Responsibilities

Vouchers Entered through 12/31/2020:

No change will be required by department A/P users for vouchers entered or interfaced through 12/31/2020.  Department A/P users will continue to code voucher lines through 12/31/2020 using:

  • Type 1099M and class 07 for non-employee compensation

  • Type 1099M and class 14 for gross proceeds paid to an attorney

The Department of Finance and Management will convert all voucher and payment data as needed to meet the new IRS reporting requirements for CY 2020.

Vouchers Entered Beginning 1/1/2021:

Department A/P users must begin coding voucher lines on 1/1/2021 using:

  • Type 1099N and class 01 for non-employee compensation payments

  • Type 1099M and class 10 for gross proceeds paid to an attorney

The requirement to begin coding vouchers on 1/1/2021 with the new coding applies to both manual voucher entry and interfaced vouchers.  Departments that currently interface voucher transactions were notified on November 20, 2020 of the IRS reporting changes and the need to begin sending the new correct codes on the voucher interface files as of 1/1/2021.

The Department of Finance and Management will be updating manuals and other applicable guidance with the new 1099 reporting requirements.  A reminder and link to the updated guidance will be sent out to all VISION users in late December.