Based on guidance recently issued by the Department of Revenue, we felt that it would be helpful to issue this tax alert to address any uncertainties you may have about your Pennsylvania 1099 reporting requirements. You can access the Department's guidance by visiting www.revenue.state.pa.us and clicking on the Hot Topics tab.

In 2012, Pennsylvania passed Act 85 relating to 1099-MISC reporting. Under Act 85, all entities paying Pennsylvania source non-employee compensation or making Pennsylvania payments under an oil or gas lease are now required to send a copy of federal Form 1099-MISC to the PA Department of Revenue.

The forms are required for payments of Pennsylvania source income to both resident and non-resident individuals, entities treated as partnerships for federal income tax purposes, and single member limited liability companies.

One of the more significant questions raised by taxpayers in the recent course of preparing their 1099-MISCs is whether a copy of the federal form 1099-MISC could be filed or if it needed to reflect Pennsylvania source income only.

The statute only requires that a taxpayer file a copy of federal Form 1099-MISC for payments of non-employee income or payments under an oil or gas lease with a Pennsylvania source, that are also required to be filed with the Secretary of the Treasury of the United States. However, Pennsylvania suggests that for payments that are entirely Pennsylvania source income, the 1099-MISC should reflect that amount on the 1099-MISC, line 18. In situations where the source of income cannot be determined or is made for services that are performed in more than one state, the taxpayer should simply file a copy of the 1099-MISC filed with the federal government.

FILING REQUIREMENTS

  • Businesses that are registered to report Pennsylvania employer withholding and that are required to electronically report employer withholding must submit their Forms to the Department of Revenue electronically, using the State's e-Tides system.
  • Businesses that are registered to report Pennsylvania employer withholding electronically, but that are not required to report employer withholding electronically, can submit their forms either electronically or by paper. However, the Department is strongly encouraging the use of the electronic filing method.
  • Businesses without a requirement and/or a registration to report employer withholding electronically must file their Forms 1099-MISC by paper.

DUE DATES

  • Forms 1099-MISC filed using e-Tides are due by March 31, 2013 (April 1, since March 31st is a Sunday).
  • Forms 1099-MISC filed by paper are due by February 28, 2013.

PENALTIES

A penalty was established for willfully furnishing a false or fraudulent form or for willfully failing to file the form. The penalty is $50 for each such failure. A $50 penalty is also imposed for the willful failure to furnish the form to the payee.

Please feel free to contact Thomas Frascella, Director, Tax Strategies with any questions about your Pennsylvania 1099 reporting requirements.  Tom can be reached at 215.734.0092 or Email. 

Information contained in this alert should not be construed as the rendering of specific accounting, tax, or other advice. Material may become outdated and anyone using this should research and update to ensure accuracy. In no event will the publisher be liable for any damages, direct, indirect, or consequential, claimed to result from use of the material contained in this alert. Readers are encouraged to consult with their advisors before making any decisions.