Alert: PA 1099 Requirements
Important Information: PA 1099 Requirements
Due to Pennsylvania Department of Revenue reporting changes in 2019 (see summary of these changes at the end of this article), employers that file PA 1099 income via E-TIDES may potentially create year end filing rejections or override a previously filed reconciliation when attempting to submit the combined W-2/1099 annual reconciliation (REV-1667).
The new regulations require the W-2s and 1099s be filed prior to the submission of the REV-1667, which must include the accurate count of each form, plus the total income and tax withholding.
Entities that file 1099 income statements (i.e., federal 1099-NEC, 1099-MISC, 1099-R, etc.) with PA must select one of the filing options below:- Process all PA 1099 payments through their third-party payroll system, if applicable, which will include the filing of the 1099 payments and inclusion in the PA-1667 filing.
- Entities that use a third-party payroll company that does not /will not file their 1099s and would prefer to file their own 1099s via E-TIDES will need to file under a separate withholding account number - apply for an additional employer withholding account specifically for 1099s by completing the online PA-100 Enterprise Registration Form (see the steps below)
- Entities that use Herbein + Company to file their 1099s will need to apply for an additional employer withholding account specifically for 1099s by completing the online PA-100 Enterprise Registration Form (see the steps below).
Steps to register in PA:
PA-100 Enterprise Registration Form Link and Instructions
Go to https://www.pa100.state.pa.us to complete the required registration information. The PA-100 is a combined registration so complete Sections 1 through 10 only to register an additional Employer Withholding Account. This information may have been furnished with the original registration, but the state requires that all the applicable fields be completed to ensure accuracy.
1. Access the online application
- Employers with existing accounts will enter their user ID and password to start the registration process
- Employers that do not currently have an account will need to set up a user ID and password to create an account
2. The current PA-100 application starts with the quest ions below in Section 1 but should still apply to future versions of the application:
- Indicate Reason for this Registration: Adding Additional Taxes
- Acquire all or part of another Business Entity, Click No
- Result from a change in legal structure (for example from Individual proprietor to corporation, partnership to corporation limited liability company), Click No
- Undergo a merger, consolidation dissolution or other restructuring, Click No
3. Complete Section 2 with your applicable business information
4. Section 3 - check Employer Withholding Tax/ 1099-MISC only
5. Complete Sections 4 through 8 with the requested information
- 6. Section 9 - Part I
Answer NO to the first two questions as 1099 payees are not employees - Answer YES to the third question regarding persons that are not employees
- Answer YES to the fourth question, Do you need a 1099 MISC/NEC account? For establishments reporting non-resident withholding on non-employee compensation, business or lease payments OR wanting to separate 1099 MISC/NEC reporting from its' W-2 reporting. (1099-MISC)
7. Section 9 - Part II
- Answer NO to Is this registration a result of a taxable distribution from a benefit trust, deferred payment, or retirement plan for PA residents?
- Enter the Explanation of services performed on the following screen {clarifies answer to the fourth question in Section 9 Part 1)
8. Section 10 - answer NO to both questions
9. Submit when complete and expect notification of your additional employer withholding account via email within 24 to 48 hours
SUMMARY OF PA REPORTING REQUIREMENTS FOR FORM 1099-MISC/1099-NEC
Pennsylvania Reporting Requirements and Withholding on PA source Non-Employee Compensation, Business Income and Lease Payments
The Form 1099-MISC which reports amounts as non-employee compensation is also required to be filed in paper with PA Department of Revenue by January 31.
New withholding requirements are effective as of January 1, 2018. PA tax withholding is required for anyone that pays PA source non-employee compensation or business income to a non-resident individual or disregarded entity that has a non-resident member and is required to file a Federal Form 1099-MISC/1099-NEC with the PA Department of Revenue. Withholding from such payments is at a specified tax rate which is currently 3.07%. However, withholding is optional for payors paying payees less than $5,000 annually on a calendar year basis.
In addition, anyone leasing Pennsylvania real estate who makes lease payments during their trade or business to a non-resident lessor is also required to withhold from such payments at a specified tax rate which is currently 3.07%. However, withholding is optional for lessees paying a non-resident lessor less than $5,000 annually on a calendar year basis. Lease payments include, but are not limited to, rents, royalties, bonus payments, damage rents and other payments made pursuant to a lease.
Payors that withhold from a payee will be:
- Required to apply for a 1099-MISC/NEC withholding account by completing a PA-100 Pennsylvania Enterprise Registration Form electronically at: pa100.state.pa.us.
- Required to electronically file quarterly withholding returns and annual reconciliations with the Department via e-Tides.
- Required to electronically remit the withheld monies via e-Tides.
- Liable for withheld taxes in the same manner as employers withholding employee compensation.
- Liable for taxes not withheld in the same manner as employers withholding employee compensation.
Article contributed by Christel Wenrich. For additional information contact us at info@herbein.com.
