By Susan Crockett, Senior Tax Associate | Family, Entrepreneur & Executive Advisory Services Team
Important Reporting and Tax Deadlines for Virginia Businesses
In preparation for year-end 2020, following are a few reminders and suggestions to help your business wrap up the year.
Payroll Reporting 2020
The following payroll returns are due February 1, 2021 (since January 31 falls on a Sunday):
- Provide copies of Form W-2 to employees
- File Form W-3 and Forms W-2, Copy A, with Social Security Administration
- File Payroll tax returns with appropriate agency:
- Form 941, Employer’s QUARTERLY Federal Tax Return (or Form 944, Employer’s ANNUAL Federal Tax Return)
- Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return
- Form VA-6, Employer’s Annual or Final Summary of Virginia Income Tax Withheld (or annual withholding report for applicable state)
- Form VEC-FC-20/21, Employer Quarterly Payroll and Tax Report (or SUTA report for applicable state)
- File Form 945, Annual Return of Withheld Federal Income Tax (if income tax was withheld on non-payroll items)
Form 1099 Information Returns 2020
Form 1099-NEC (Formerly Form 1099-MISC)
Beginning with tax year 2020, payments for non-employee compensation are reported on Form 1099-NEC in Box 1. Form 1099-NEC (formerly Form 1099-MISC) is due to recipients and the IRS on February 1, 2021 (since January 31 falls on a Sunday):
- Provide Form 1099-NEC to unincorporated independent contractors to whom you have paid $600 or more for services used in a trade or business during calendar year 2020
- File Form 1096 and Forms 1099-NEC, Copy A, with the Internal Revenue Service
- Attorneys’ fees for services of $600 or more paid in the course of a trade or business are reported in box 1 of Form 1099-NEC, regardless of legal classification (unincorporated, LLC or Corporation).
- Payments made by debit or credit should not be reported on Form 1099-NEC. These electronic payments are reported on Form 1099-K, Payment Card and Third-Party Network Transactions, by the merchants and third-party networks who collect the payments.
Other Forms 1099
Forms 1099 which report payments other than non-employment compensation are due to recipients on February 1, 2021 (since January 31 falls on a Sunday) and to the IRS on March 1, 2021 (since February 28 falls on a Sunday).
- Provide Form 1099 to recipients
- The type of Form 1099 depends on the amount and type of payment made.
- File Form 1096 and Forms 1099 with the Internal Revenue Service
- Changes to note: Due to the creation of Form 1099-NEC, Form 1099-MISC as revised, Box 7 Non- employee compensation was moved to Form 1099-NEC and some other boxes were changed.
- Gross proceeds paid to attorneys of $600 or more paid in the course of a trade or business in connection with legal services are reported in box 10 of Form 1099-MISC, regardless of legal classification (unincorporated, LLC or Corporation).
- Gross proceeds are not reported on Form 1099-NEC.
- Payments made by debit or credit should not be reported on Form 1099-NEC. These electronic payments are reported on Form 1099-K, Payment Card and Third-Party Network Transactions, by merchants and third-party networks who collect the payments.
IMMEDIATE ACTION REQUIRED: It is recommended that businesses review their records prior to December 31, 2020 to make certain that a Form W-9 is on file for any contractor needing a Form 1099. Best practice would be to collect the Form W-9 during the year and prior to payment.
Electronic Filing Requirements for Information Returns
Taxpayers filing 250 or more information returns must file them electronically via the FIRE System (Filing Electronic Returns Electronically). The 250-or-more requirement applies separately to each type of form. For example, if you must file 300 Forms 1099-NEC and 100 Forms 1099-Misc, you must file Forms 1099-NEC electronically, but you are not required to file Forms 1099-Misc electronically. The Taxpayer First Act of 2019 authorized the IRS and Treasury to issue regulations that could reduce the 250 return limit to 100 and then to 10 in future years. The electronic filing requirement does not apply if you apply for and receive a hardship waiver.
Local Tax Reporting
Business License Renewal Applications for License Year 2021 must generally be filed and taxes paid by March 1, 2021. Some localities, such as Hanover County, do not have a business license while other localities require a license for just certain types of businesses. Contact your locality for more information. Keep in mind that if your business operates in multiple localities, multiple licenses may be required.
Returns of Business Tangible Personal Property have filing dates which vary depending on the locality:
- Chesterfield County March 1, 2021
- County of Hanover May 1, 2021
- County of Henrico March 1, 2021
- City of Richmond March 1, 2021
IMMEDIATE ACTION REQUIRED: Since the tax due is calculated on the assessed value of assets available for use as of January 1, 2021, the asset listing should be reviewed each year to confirm that assets disposed of during the year have been removed by December 31 and assets acquired have been added.
Additional IRS and County/City Government Resources
- IRS Publication 15, Employer’s Tax Guide
- IRS General Instructions for Certain Information Returns
- IRS Instructions for Form 1099-Misc and Form 1099-NEC
- IRS Estimated Tax Payments
- Chesterfield County Business
- Hanover County Business
- Henrico County Business
- City of Richmond Business
Additional Tax Planning Resources
The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.