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For each reporting entity, you assign one or more balancing segment values. When you submit 1099 reports for a tax entity, Payables sums up the paid invoice distributions that have these company balancing segment values in their accounts.

   To create and report on 1099 supplier payments:

1. Set up Payables for 1099 reporting:

• If you want to use combined federal and state 1099 filing, and want to produce K-Records and B-Records, enable the Combined Filing Program Payables option. See: Supplier Payables Options.

• If you use combined federal and state filing, define your tax regions. See: Income Tax Regions.

• Define your tax reporting entities. See: Reporting Entities.

2. Enter 1099 details for suppliers:

• See: Setting Up Supplier Tax Information

3. Enter and pay 1099 invoices:

• When you enter invoices for 1099 suppliers, enter an Income Tax Type and Income Tax Region for appropriate invoice distributions, or accept the default from the supplier. See: Entering Invoices for Suppliers Subject to Income Tax Reporting Requirements.

• Pay invoices.

4. Identify and resolve 1099 exceptions:

• Submit for each reporting entity the 1099 Invoice Exceptions Report to identify the following exceptions:

• 1099 invoice distributions with no Income Tax Type

• 1099 invoice distributions with invalid or missing income tax regions

• non-1099 invoice distributions with an Income Tax Type

Resolve exceptions for each invoice distribution. See Adjusting Invoice Distributions or Update Income Tax Details Utility and Report.

• Submit the 1099 Supplier Exceptions Report to identify and resolve the following exceptions:

• suppliers with null or invalid state abbreviations

• suppliers that will be flagged as foreign in the 1099 Tape

• suppliers with missing or non-standard Tax Identification Numbers

Resolve any exceptions in the Suppliers window.

• Print a Tax Information Verification Letter for each supplier who has not yet furnished or confirmed its tax identification number or tax reporting region. See: Tax Information Verification Letter. After a supplier provides this information, update the Supplier Verification Date in the Tax Region of the Suppliers window.

5. Optionally withhold tax from suppliers if they have a missing or invalid Tax Identification Number (TIN) and if you have not met the legal requirements of requesting a valid TIN from them. See: Automatic Withholding Tax Overview.

6. Update 1099 Payment Information.

• Adjust Invoice Distributions manually in the Invoice Workbench, or use the Update Income Tax Details Utility. See: Adjusting Invoice Distributions, or Update Income Tax Details Utility and Report.

7. Generate 1099 Reports.

• 1099 Forms. Submit to the Internal Revenue Service for each 1099 supplier, and send a copy to the supplier. See: 1099 Forms.

• 1096 Form. Submit to the Internal Revenue Service for each 1099 MISC type paid during the calendar year. See: 1096 Form.

• 1099 Tape. If you submit 250 or more 1099 forms, the Internal Revenue Service requires you to file your 1099 payment information on magnetic media. See: 1099 Tape.

• Form 941. Send this form to the Internal Revenue Service to report total supplier withholding for a quarter. Your Accounts Payable department should create a manual payment for the total amount withheld, and you should remit this amount and the 1096 Form to the Internal Revenue Service. In a future version of Payables, you can generate the 941 Form as a standard report.

• 1099 Payments Report. Run this report for your reference to review 1099 payments by supplier or MISC type. See: 1099 Payments Report.

See Also

Updating a Supplier's Tax Status

Suppliers Subject to Income Tax Reporting Requirements

Automatic Withholding Tax Overview