1099 TRAINING

Department of AdministrationDivision of Finance

Phillip Subeldia – Presenter Susetta Beattie - 1099 Contact Tina Martin - 1099 Contact

Prepared by Tina Martin

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Assist agencies to understand 1099 reporting from a high-level perspective.

How does 1099 reporting affect you?

OVERVIEW

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OVERVIEW

Vendor Records & 1099 Reporting Reference Material Your Role in 1099 Reporting 1099 Timeline Stats – 1099 MISC Common Account Code Errors Contacts What’s New for Tax Year 2011 Question & Answer Session Evaluation

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VENDOR RECORDS & 1099 REPORTING

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VENDOR RECORDS & 1099 REPORTING

Two factors determine whether a payment must be reported to the IRS (i.e., 1099 reportable).

1. The vendor’s business type.

2. The type of payment to the vendor.

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VENDOR RECORDS & 1099 REPORTING

1. Reportable Business Types: Partnership, Sole Proprietor, Non Employee,

Legal & Medical Svcs Corporations, Limited Liability Companies (LLC).

2. Payment Types: Rents, services (including parts & materials),

other income payments, medical and health care payments, and gross proceeds to an attorney.

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VENDOR RECORDS & 1099 REPORTING1. Business Type Example: LLC

AKSAS – IV Vendor Inquiry

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VENDOR RECORDS & 1099 REPORTING2. Payment Type Example: AC 72112

AKSAS – IE Entity and CC/LC Inquiry

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VENDOR RECORDS & 1099 REPORTING

The two factors together determine if the payment is 1099 reportable:

If Vendor Record 1099

Status is:

And Account Code 1099 Status is:

Then Payment is:

N N N=Not reported on 1099-MISC

N Y N=Not reported on 1099-MISC

Y N N=Not reported on 1099-MISC

Y Y Y*=Reported on 1099-MISC

*When the State of Alaska has paid a vendor a cumulative (statewide) taxable amount of $600 or more, a 1099-MISC is then issued by January 31st.

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VENDOR RECORDS & 1099 REPORTING

1099-MISC Example:

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VENDOR RECORDS & 1099 REPORTING

APM Section 14 Exhibit 14.A: 1099 Misc Tax Code Table

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Accounting Procedures Manual (APM):Section 14. Special Processes: 1099 Tax Reporting

REFERENCE MATERIAL

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REFERENCE MATERIAL – APM SEC. 14

a) Overview – Everyone should read.b) Users with trans code 350-10 (i.e., 1099 Override

Data) on their RD code have access to the Tax Reporting Subsystem (TR) and should read the remaining sections.

http://doa.alaska.gov/dof/manuals/apm/index.html

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REFERENCE MATERIAL – APM SEC. 14

Sections i-iv pertain to the TR screens.

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YOUR ROLE IN 1099 REPORTING

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YOUR ROLE IN 1099 REPORTING

Keep a Pending File:

In January of each year, make a pending file for 1099 corrections.

In December, make sure your 1099 department contact is aware of the corrections.

Departments are responsible for accurate 1099 reporting.

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YOUR ROLE IN 1099 REPORTING

Examples of Pending File Documentation:

1. AJEs that adjust account codes across 1099 tax types or reportable status.

2. Payments needing PVN corrections.3. Payments mailed to third parties.4. Abatement of a reportable payment.

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YOUR ROLE IN 1099 REPORTING

Know Your Agency Specific Issues

1. Grant reporting.

2. Program system that interfaces with AKSAS.

3. Agencies that use zero-net field warrants to include payments issued from sub-systems in 1099 reporting.

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YOUR ROLE IN 1099 REPORTING

Educate Agency Staff:

1. Staff coding invoices/TAs for payment.

2. Staff entering payment transactions in AKSAS.

3. Staff certifying payments in AKSAS.

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1099 TIMELINE

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1099 TIMELINE

Current Calendar Year:

January thru December–Keep pending file.

December 1st–TR system open for corrections and review by users with 350-10 capability.

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1099 TIMELINE

Next Calendar Year:

By the beginning of January - Process all prior calendar year transactions in AKSAS, so they can be picked up by TR.

End of 1st week of January–TR closed for agency corrections.

After TR closes to agencies any corrections are done through Finance.

Middle of January – 1099-MISC forms are printed. Jan 31st - Vendors receive 1099-MISC forms by mail. January to June 30th – TR is available for previous

calendar year (view only for research).

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STATS – 1099 MISC

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STATS – 1099 MISC

Year Originals Printed

Originals Added

Corrections Printed

2004 6753 Included in corrected count

190

2005 6624 Included in corrected count

149

2006 6487 6 46

2007 7146 4 56

2008 6779 6 151

2009 6191 3 90

2010 6070 4 46

Original 1099-MISC Forms vs.

Corrections After Forms Mailed

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STATS – 1099 MISC

Percentage Correction Description

8% Payment Retuned/Refunded

16% Posted to Wrong PVN

20% Incorrect TIN/Legal Name

56% Wrong Account Code Other Exp Reimbursement = 2% Travel Reimbursement = 8% Misc Wrong

Acct Code = 46%

2010 Form Corrections

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COMMON ACCOUNT CODE ERRORS

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COMMON ACCOUNT CODE ERRORS

Travel reimbursement for board members and other non-employees.

Reimbursements should be posted to “NONTAX REIMBURSEMENT” account codes.

Exception: When travel reimbursement terms fall under a professional service contract and differ from AAM 60.200.

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COMMON ACCOUNT CODE ERRORS

Prepaid account codes:

AC 10613 – PREPAID RENT reports as TT01-Rents.

AC 10603 – PREPAID EXPENSE reports as TT07 – Non-employee Compensation.

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CONTACTS

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CONTACTS

1. 1099 Department Contacts and/or

Department Finance Officer

2. DOA-Finance 1099 Support Team doa.dof.1099.support@alaska.gov

465-2462 Susetta Beattie

Tina Martin Phillip Subeldia

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WHAT'S NEW FOR TAX YEAR 2011

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WHAT'S NEW FOR TAX YEAR 2011

New 1099 reporting rule:

One Card payments will not be reported by the state.

Instead, banks and merchant services will report annual gross payments processed by credit or debit cards to the IRS and to merchants.

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Vendor Records & 1099 ReportingReference Material

Your Role in 1099 Reporting1099 Timeline

Stats – 1099 MISCCommon Account Code Errors

ContactsWhat’s New for Tax Year 2011

QUESTION & ANSWER SESSION

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to better serve you. Department of Administration, Division of

Finance. THANK YOU!

EVALUATION