1099 Processing Overview

In order to comply with Internal Revenue Service (IRS) tax requirements, all state agencies must report non-employee compensation to the IRS on a calendar-year basis. Accurate reporting of 1099 information is dependent upon decisions made by your agency throughout the year. For example, every time a vendor is set up or an invoice is created, 1099 information is required. Paying special attention to these and other activities throughout the year will reduce the amount of year-end work necessary to complete 1099 processing.

The following steps are critical for proper 1099 processing:

Establishing Vendor 1099 Information

Establishing vendor 1099 information is the first step in the 1099 process. Based on information supplied by a trade vendor, OSC establishes the appropriate 1099 code for that vendor. Agencies are responsible for setting the appropriate 1099 code for non-trade vendors.

Verifying and Correcting NCAS Information Prior to 12/31

The second step in 1099 processing is ensuring the accuracy of NCAS information before calendar year-end. This process entails the following tasks:

Verifying and Making 1099 Corrections After Calendar Year-End

After calendar year-end, corrections may still be made to 1099 information. The corrections may entail performing invoice maintenance on IMW or entering a zero-dollar invoice, recording a manual check and possibly issuing a corrected 1099 to the vendor and the IRS.

Distributing and Filing 1099s

After the NCAS produces vendor 1099 forms, agencies are responsible for ensuring that the forms are correct and are mailed to the vendors by January 31. In addition, your agency must report Information Returns to the IRS by February 28.  OSC will create one tape which includes all NCAS agency's information returns that will be sent to the IRS by March 1.  No paper reporting should be done to the IRS by the agencyThe only exception to this is corrections done to a vendor after the March 1 deadline has passed.  Please call the OSC Help Desk with any exceptions to ensure accuracy.

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