If you’re not even sure what an independent contractor is, you’re not alone! The IRS has a longstanding tradition of sending confusing messages to taxpayers. This is especially true when it comes to determining exactly what constitutes an independent contractor as well as the respective reporting requirements. Now it seems that Florida has joined their cause.
“If you really don’t care about the gory details included below, here’s what you really need to know. Beginning October 1st, 2021, if you hire anyone, employee or contractor alike, you should register and file a new-hire report with the state of Florida using this site. You should also be in the habit of collecting W-4’s (for employees) or W-9’s (for contractors) for everyone you employ or engage.“
Governor Ron DeSantis recently signed legislation that amends and expands Fla. Stat. § 409.2576, which sets forth requirements for employers to report new hires and rehires to the State Directory of New Hires of the Florida Department of Revenue.
State and federal laws have historically required new-hire reporting for organizations with 250 or more employees. Smaller businesses used to be exempt from this requirement and the reporting of independent contractors used to be optional. The new Florida amendments now require all employers to report new-hires, and they also include independent contractors in that requirement.
These changes were purportedly enacted to help with child support collections and enforcement—online filing occurs on the state’s Child Support Services website. There’s always the chance that they will share info with other agencies, so it’s a good idea to use this opportunity to revisit your vendor approval process and hiring guidelines to ensure compliance with state and federal hiring laws.
The law only requires reporting independent contractors who are paid—or will be paid—more than $600 during the calendar year. Because the report is due within 20 days from the start of the contractual relationship or the first payment—whichever is earlier—we recommend filing a report for all newly-hired contractors unless you are certain it will not exceed the dollar threshold in any calendar year.
Fortunately, the form is fairly simple and straightforward, and all the information that you will need to provide is already included on the IRS Form W-9. The W-9 is the form that you already gather from all of your independent contractors before issuing a payment. (You do that, right??) Not coincidentally, 1099s are required for non-incorporated contractors if you pay them more than $600 in a calendar year. This emphasizes the need to collect W-9’s s part of your vendor approval process, as a W-9 is the required “proof” that you issued a Form 1099 to the appropriate SS# or EIN, and now serves the dual purpose of gathering the information needed to fulfill this new Florida requirement. (You can read more about 1099 filing requirements here.)
If you need any assistance in understanding or complying with this new requirement, please feel free to contact us. We are happy to help!