In addition to filing information returns (1099 forms) with the IRS, many states also have compliance regulations that require information reporting and state income tax withholding on payments to vendors and independent contractors. Companies will need to determine whether they have state reporting requirements. Many states have requirements that differ from the requirements of the IRS.
The Combined Federal/State Filing (CF/SF) Program was established to simplify information returns filing for payers. Through CF/SF, the IRS electronically forwards information returns (original and corrected) to participating states.
The following information returns may be filed under the CF/SF:
- Form 1099-B, Proceeds from Broker and Barter Exchange Transactions
- Form 1099-DIV, Dividends and Distributions
- Form 1099-G, Certain Government Payments
- Form 1099-INT, Interest Income
- Form 1099-K, Payment Card and Third Party Network Transactions
- Form 1099-MISC, Miscellaneous Income
- Form 1099-OID, Original Issue Discount
- Form 1099-PATR, Taxable Distributions Received From Cooperatives
- Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.
- Form 5498, IRA Contribution Information
It is important to note that the new IRS Publication 1220 was updated in September 2020 and did not include the 1099-NEC in the CF/SF program. 1099-NEC filers will need to verify that this form was added prior to filing their calendar year 2020 1099-NEC forms and review any state requirements.
Some participating states require separate notification that the payer is filing in this manner. The IRS acts as a forwarding agent only. It is the payer’s responsibility to contact the appropriate state(s) for further information.
Each state’s filing requirements are subject to change by the state. It is the payer’s responsibility to contact the participating state(s) to verify their criteria.
If you withhold any state income tax from a payee, you may be required to file the 1099 form directly with the state.
The following table provides codes for participating states in the CF/SF program.
Participating states and corresponding valid state codes are listed below in Table 1, Participating States and Codes. The appropriate state code must be entered in fields requesting a CF/SF code. Do not use state abbreviations
The following states have no state income tax and, therefore, no state 1099 filing requirement.
Alaska, Florida, Nevada, New Hampshire, South Dakota, Texas, Washington, and Wyoming. Tennessee only has a flat income tax on interest and dividends, however, it doesn’t require 1099 reporting with the exception of Form 1099-K.
The following states have an income tax but do not participate in the CF/SF program. See the “State Compliance” tab on the left menu for more detailing state filing information on each specific state.
Illinois, Iowa, Kentucky, New York, Oregon, Pennsylvania, Rhode Island, Utah, Vermont, Virginia, West Virginia, and Washington D.C.
For additional information see Section 12 in IRS Publication 1220.