As of October 1, Florida businesses are now required to report services received from independent contractors, a significant change brought about by legislation signed into law by Governor Ron DeSantis in June. This update, known as Senate Bill 1532, has amended Fla. Stat. § 409.2576, making it obligatory for any «service recipient» to report contractors earning $600 or more per calendar year to the Florida Department of Revenue. For a deeper understanding of how this new requirement impacts Florida businesses and how to ensure compliance, read on.

The Shift: What’s Changed and Why?

Previously, reporting for independent contractors was optional, while businesses were obligated to report employees to the State Directory of New Hires. This discretionary aspect has been eliminated, and reporting for contractors is now a mandated practice. However, an important exemption exists for employees and individuals contracted with federal or state agencies involved in intelligence or counterintelligence functions, prioritizing their safety.

The motivation behind this legislative adjustment is to streamline Florida’s child-support collection system. By aligning reporting requirements for contractors with those for employees, the state aims to enhance the enforcement of child support benefits through income deduction orders, closing a previous loophole that allowed circumvention through independent contractor payment structures.

Compliance: What Businesses Need to Do

For businesses accustomed to the new hire reporting process, the process for reporting independent contractors largely mirrors the existing procedure and can be accomplished through the same online reporting tool. Here’s an overview of the reporting requirements under the new law:

• A business (referred to as the service recipient) must report to the State Directory of New Hires any individual who, although not an employee, is paid $600 or more per calendar year for services rendered in the course of its trade or business.
• The report should include essential information: Independent Contractor’s Name, Address, Social Security Number, and Date of Birth (if available), along with details of the service recipient.
• Reports must be submitted within 20 days after the earlier of the date of the first payment necessitating an information return or the date the contract for such payments is established.
• Electronic reporting may be submitted in two monthly transmissions, spaced between 12 to 16 days apart.

Next Steps for Businesses

Florida businesses utilizing independent contractors should promptly assess whether individuals are likely to meet the $600 threshold by year-end to ensure timely reporting. For those engaging new contractors, it’s essential to determine whether the arrangement will trigger the reporting threshold. If your business is new to the reporting system, registration for electronic reporting can be completed here.

Conclusion: Stay Informed and Compliant

The Fisher Phillips team is committed to monitoring ongoing developments related to this new Florida law. To receive the latest updates and insights, ensure you’re signed up for the Fisher Phillips Insight System. For further information and personalized assistance, don’t hesitate to reach out to your Fisher Phillips attorney or contact any of our attorneys in our Florida offices. This article was presented by Fisher Phillips.

Remember, staying informed and compliant with these new reporting requirements is crucial to ensure the smooth operation of your business in Florida.