In July 2019, the IRS released a draft of form 1099-NEC, which is designed to report non-employee compensation. While this may seem like a new form to many, it's actually a revival of a form used until the early 1980's, which was eventually replaced by form 1099-MISC.
What will be reported on the new 1099-NEC?
Why is this necessary?
The PATH Act of 2015 made changes to the due dates for form 1099-MISC. Certain types of compensation reported on the 1099-MISC were due by January 31st, whereas other types of compensation weren't required to be reported until February 15th. The different due dates for the same form were confusing for employers, taxpayers, IRS computer systems, and IRS employees. By bringing back form 1099-NEC, payers will have a dedicated form to use for reporting non-employee compensation.
When will this take effect?
Even though the IRS has released the draft in 2019, notice that the form is marked 2020. That means it's likely we won't see the forms issued until the 2020 tax year. Visit the IRS website to view the draft form along with the current filing instructions here.