A 1099 vendor is a vendor for whom you must report payment for services to the Internal Revenue Service (IRS). All reporting of 1099 information must be in accordance with Internal Revenue code.
The following are categories of 1099 vendors that may need to receive a 1099:
1099 Trade Vendors
Trade vendors are people and companies outside of your agency who provide goods and services to your agency. Trade vendors are primarily engaged in providing the goods and/or services typically purchased by your agency.
Before entering a document in the NCAS, a trade vendor must exist in the Central Trade Vendor File. This file is established and maintained by the Office of the State Controller (OSC). In order to establish a trade vendor, the vendors tax identification number (TIN) must be known.
After the OSC has added a trade vendor to the Central Trade Vendor File, OSC sends a questionnaire to the vendor. The vendor indicates whether he/she is a 1099 vendor and returns the questionnaire to the OSC. If the vendor is a possible 1099 vendor, the OSC sets the 1099 code on the Vendor Payable Information (VPN) screen to NO. The NO code indicates to the agency that the vendor may be a 1099 vendor and prompts the agency to enter an appropriate 1099 code for each 1099 reportable invoice line. For all invoices for this vendor, the 1099 NO code will default to the 99 field on the Invoice Worksheet 1 (IWS-1T) screen. Also, the message 076-VENDOR MAY BE 1099 ELIGIBLE will appear at the top of the screen.
A non-trade vendor is a vendor to whom payments are made for other than purchased goods or services. For example, awards are typically made to non-trade vendors. As with a trade vendor, a non-trade vendor must exist in the NCAS before a transaction can be entered. Since non-trade vendors are not shared with other agencies, each agency is responsible for correctly setting up its non-trade vendors. 1099 information for non-trade vendors is set up using the VPN screen.
For a non-trade vendor, a 1099 code can be entered on the VPN screen. If entered, the 1099 code will default to every transaction for that vendor. You can also enter a NO on the VPN screen to flag the vendor as a possible 1099 vendor.
|It is very important to match the vendor's name with his/her federal identification number or social security number for 1099 reporting. The IRS can fine your agency for each 1099 that is issued incorrectly.|
An employee that has been established under an employee paying entity should not be a 1099 vendor. However, an employee established as a trade or non-trade vendor may be a 1099 vendor. (Expense reimbursements that are not related to an employees job should be reported in a trade or non-trade paying entity.) For example, an employee in your agency provides catering services to other agencies. If this employee has been established as a non-trade vendor in order to receive expense reimbursements, he/she may be 1099 reportable for payment of catering services.
Entering 1099 Codes on Invoices
If a 1099 code was entered on the VPN screen, that code will default on the 99 field on the IWS-1T screen. For each transaction that is a 1099 transaction, you must either accept the default 1099 code or override it with the appropriate 1099 code for that invoice line.
For all transactions, a 1099 code may be entered on the IWS-1T screen. This code will apply to the individual invoice line to which it is attached and will override any code entered on the VPN screen. It is important to verify that any default 1099 code on the IWS-1T screen is the appropriate code for that invoice line. On any statewide vendor that you know is reportable, and a 1099 "no" code or message did not default, please call the OSC Help Desk so that the vendor can be identified as a possible 1099 vendor.
For instructions on how to enter an invoice, refer to the Entering Direct Invoices Step-by-Step or the Entering Matching Invoices Step-by-Step.