Answered: partnership was issued a 1099-nec with the NY state marked. They are not located in NY nor was the work done in NY

DTNY07 · ‎09-14-2025

A partnership was issued a 1099-nec with the NY state marked. They are not located in NY nor was the work done in NY

The partnership used to be located in NY. But, when the two partners (a married couple) moved to Spain about 7 years ago, we moved the partnership from NY to Delaware

The work was done in Spain.

They did work for this company years ago when the partnership was based out of NY.

So they still had their NY address. They did mark box 8 as NY payer and had the full 1099-NEC amount allocated to Box 7 state income

The issue is that I didn't know about this when I did the IRS and DE extension. There is a $50 penalty per shareholder per month for the NY return. Which would be $600.

I highly doubt the payer is going to change it now on September 13. Client didn't notice it when they received it. They just sent me their documents about 10 days ago, so even if I noticed it then, it was already past the time the payer would probably change it

So, is this something where i should file NY. Then try and fight the penalties when they get a notice.

Or just file IRS and DE and not bother with NY. I'm sure the correct thing to do is file NY

I've never had this issue with a partnership outside the US before that files in Delaware. Which is why I am asking

There wouldn't be any tax due with the NY partnership return. The 1099-NEC is a small amount.

It is just the not filing an extension penalty I would be dealing

BobKamman · ‎09-14-2025

I can't find anything that says 1099-NEC is even required to be filed with New York -- especially by out-of-state payers.

View solution in original post

BobKamman · ‎09-14-2025

What is the location of the payer?

Where do the taxpayers bank in the US? Do they own any US property? Are they registered to vote?

How often do they return to the US for visits? To what states do they travel?

DTNY07 · ‎09-14-2025

When I wrote the work was done in Spain. I thought I had also put that is where they live

Sorry about that

They weren't back in the US last year. Looking at their personal returns, they weren't back in the US in 2022 or 2023 either

They don't own any US property. Nor do they rent any US property

No clue about the voting registration

Thanks for the response

BobKamman · ‎09-14-2025

I didn't ask where the work was done. I asked where the payer is located.

"If the nonresident’s business, trade, profession, or occupation was previously carried on wholly in New York State, the entire amount of income must be included in New York source income."

There appear to be some rules where this is phased out after three years, at least for employees, so it's not a case of "once a New Yorker, always a New Yorker." It doesn't really matter if they are in New Jersey, or New Zealand. Remote workers who used to work in New York, can always argue they shouldn't be taxed there, and the state can always argue that they should be.

Was there an address on the 1099, but it didn't matter because it was only emailed?

DTNY07 · ‎09-14-2025

In my reply, I didn't mean that you were asking where the work was performed. I had said where the work was done in my original question. I meant to also put where they lived in my original question.

Company address is in Colorado.

Thanks for your responses.

BobKamman · ‎09-14-2025

I can't find anything that says 1099-NEC is even required to be filed with New York -- especially by out-of-state payers.

DTNY07 · ‎09-14-2025

Thanks for everything

I won't file a NY return

partnership was issued a 1099-nec with the NY state marked. They are not located in NY nor was the work done in NY

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