In the past, non-employee income was reported on the 1099-Misc form. That form is used for many types of income that you must report your tax return. The IRS requires the businesses that use the 1099-Misc to file it with the IRS and its customers by March 31 each year.
The Protecting Americans from Tax Hikes (PATH) Act of 2015 requires reporting non-employee compensation (NEC) by January 31. All the other types of income that are reported on the 1099-Misc still have the March 31 deadline. The result? IRS computers couldn’t handle the different deadlines (and penalties that result from missing the deadlines.) So the IRS created the 1099-NEC.
Independent contractors should be on the lookout for this form in late January and early February. Small businesses will need to work with their bookkeepers and their payroll providers to meet the January 31 deadline.