Each January, the Internal Revenue Service requires businesses to provide 1099-MISC forms for payments made to independent contractors associated with non-employee compensation. The IRS also requires that a duplicate copy be filed at a later date with their office, so that the IRS can match the income on the individual’s personal return. Pennsylvania now requires that a 1099-MISC also be filed with the Pennsylvania Department of Revenue for the 2012 tax year.
Under Pennsylvania Act 85 of 2012, entities paying either nonemployee compensation for Pennsylvania-based work or Pennsylvania-source oil/gas lease payments are required to submit copies of federal forms 1099-MISC to the Pennsylvania Department of Revenue. The forms are required for payments of Pennsylvania-source income to resident and nonresident individuals, entities treated as partnerships for tax purposes or single-member limited liability companies from any entity required to provide form 1099-MISC to the federal government with respect to these payments. The same due dates apply for Pennsylvania as they do for the IRS as will be discussed below.
A business can file the 1099-MISC forms with the Department of Revenue in one of two ways:
- A business that has a Pennsylvania employer withholding account can submit the forms electronically through e-TIDES. The forms will have to be filed using a multi-import file upload. This method of transmission is required for these businesses if 250 or more 1099-MISC forms are submitted. Forms filed electronically are due March 31st (April 1st for this reporting year).
- If a business does not have a Pennsylvania employer withholding account, they must file the forms by paper and mail to the PA Department of Revenue, P.O. Box 280412, Harrisburg, PA 17128-0412. Businesses that have a Pennsylvania employer withholding account but file less than 250 1099-MISC forms can use either method. Forms filed by paper are due February 28th.
The same 1099-MISC form used to report Federal payments should also be used for Pennsylvania. Pennsylvania also follows Federal for applicable payment thresholds. Pennsylvania requires entities to report payments made to a nonemployee contractor when payments of Pennsylvania-source income exceed a total of $600 in a calendar year, similar to the IRS $600 threshold. As previously discussed, only Pennsylvania-sourced income should be reported to the Pennsylvania Department of Revenue. However, if this is not possible, Pennsylvania requests that boxes 16, 17 and 18 of the form 1099-MISC be completed.
To learn more about the new Pennsylvania 1099-MISC reporting requirement, please contact the construction professionals of McKonly and Asbury, LLP.