Procedures for 1099 and 1042-s reporting




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PROCEDURES FOR 1099 AND 1042-s REPORTING

The IRS requires the State of Tennessee to report certain payments made to vendors on a Form 1099 or a Form 1042. The procedures in this document are dealing with Form 1099-MISC, 1099-G and Form 1042-S.




Finance and Administration Division of Accounts

Phone: 615-253-5234

Email: Vendormaint@tn.gov
Send 1099 reports to:

F&A.Accounts@tn.gov




Table of Contents

Purpose...........................................................................................................................................................1





General Guidelines for 1099 Reporting..........................................................................................................1


Explanation of Reportable and Non-Reportable Business Types....................................................................2


Examples of Non Reportable Payments..........................................................................................................2


Examples of Reportable Payments–Form Type & Category...........................................................................3


Flowchart for 1099 Reporting.........................................................................................................................4


Working with Queries.....................................................................................................................................5


Query 1: TN_1099_TO_REPORT........................................................................................................6

Query 2: TN_1099_SLGP_VCHR_PAYMENTS.....................................................................................7

Query 3: TN_1099_RPRT_VDR_NORPRT_PAY...................................................................................8

Query 4: TN_1099_RPRT_VDR_NORPRT_PAY...................................................................................8


General Guidelines for 1042 Reporting..........................................................................................................9


Edison- Steps to Schedule a Query...............................................................................................................10


Microsoft 10 Users – How to Save the Query...............................................................................................10


Edison – To Schedule A Query (screen prints)..............................................................................................11


Contact Information.....................................................................................................................................24





Procedures for 1099 and 1042 Reporting

Purpose

The IRS requires the State of Tennessee to report certain payments made to vendors on a Form 1099 or a Form 1042-S. There are several types of 1099 forms that must be filed annually. The procedures in this document are specifically dealing with Form 1099 Misc., Form 1099-G, and Form 1042-S. Vendor Maintenance will work with specific business units for other types of 1099 forms that must also be filed.

In November, business units will receive notice to run various queries for the months of January through October. There will be another notice in January for the months of November and December. These queries have payment information that must be reviewed to determine if the payments are subject to reporting on a Form 1099 Misc., Form 1099G or a Form 1042.

General Guidelines for 1099 Reporting

When deciding whether a Form 1099 should be issued to a vendor, consider the following:



  1. Business Type: Is the vendor reportable? See chart on page 3.

  2. Payment Type: Is the payment reportable? See example charts of non-reportable payments and reportable payments on pages 3 and 4.

  3. Product: If the vendor sold a product to the State, it is not reportable on a 1099.

  4. Service: If the vendor provided a service to the State, it is reportable on a 1099 if the vendor is also reportable.

  5. Other Reportable Payments: Rent, Prizes and Awards, Court Settlements, Certain Grants

IMPORTANT: Vouchers cannot be split: Generally, if part of a payment on a voucher is reportable and the rest of the payment is not, then we must consider the entire voucher as reportable on a 1099. However, sometimes part of the payment that would be reportable is incidental to the purchase and should not be reported on a 1099. Business units must use professional judgment in these cases. If you have any questions call vendor maintenance at 615-253-5234. See the examples below.

  • Example to report payment on a 1099: If the state purchased computers and part of the agreement was for the company to maintain service on the computers, we have to consider the entire payment as reportable on a 1099. Normally, the computers would not be reportable on a 1099 because it is a product and the maintenance would be reportable because it is a service. However, if it is all on one voucher, then the entire voucher should be reported on a 1099.

  • Example not to report payment on a 1099: Copy paper was purchased for $800, delivery charge was $50. A 1099 is not issued to the vendor because copy paper is a product and the deliver charge is incidental to the product.

Explanation of Reportable and Non-Reportable Business Types
Vendors with business types 01, 02, 03, 04, 05, 06, 07, 09, 10, 15 and 16 are all 1099 reportable vendors. NOTE: Business type 15 is unknown because there is not a W-9 on file for the vendor and must be reported, even if the vendor has INC in the name of the business.
Corporations, (business type 08), are generally not 1099 reportable unless the payments made were for medical or legal services.
Vendors with business type 13 are tax exempt therefore payments made are not reportable on a 1099 unless the payments are for settlements. Business type 17 is not a reportable vendor.


Business

Type

Taxpayer (IRS) Identification

Reportable Vendor

01

Individual (not a business)

Yes

02

Joint Account(two or more individuals)

Yes

03

Custodian account of a minor

Yes

04

Trust Account (any type)

Yes

05

Sole Proprietorship with SSN

Yes

06

Sole Proprietorship with FEIN

Yes

07

A Valid Trust, Estate or Pension Trust

Yes

08


Corporation or LLC (Limited Liability Company) electing corporate status on IRS Form 8832 or 2553

No, except for medical or legal services

09

Association, club, religious, charitable, educational or other non-profit organization

Yes

10

Partnership or Multi Member LLC (Limited Liability Company)

Yes

13

Tax Exempt Organizations or Governments

No, except for settlements and legal fees

15

Unknown ( There is not a W-9 on File)

Yes

16

Owner of a Single Member LLC/Disregarded Entity

Yes

17

Owner of a Single Member LLC/Disregarded Entity

No


Examples of Non Reportable Payments

Payments processed with location Main or location with a city name, for example NASHVI-001 will not be reported on a 1099, unless you ask us to correct the locations when submitting the reports. The examples are not all inclusive.




Type of Payment

Travel Claims that are detailed and submitted within 60 days of the date of travel

Membership Dues

Subscriptions

Payments for foster care, guardianship, etc.

Medical Records unless they are included with another medical service ( it is up to the business units to use professional judgment in making a decision to report or not to report)

Utilities including electricity, gas, propane, phone service (cell or landline) and internet service

Materials, products, or supplies

Prescription Drugs

Scholarships

Examples of Reportable Payments–Form Type & Category

Payments processed with locations of CAT1, CAT3, CAT6, CAT7, CAT14 and CATG will be reported on a 1099, unless you ask us to correct the locations when submitting the reports. The examples are not all inclusive.



Reportable Payments

Form Type

CAT

Rent: Real Property (such as land, buildings, warehouses, direct billed hotel rooms or other facilities), Equipment (office equipment, machinery, etc.)

1099-MISC

1

Prizes and Awards: (not compensation for services) Premiums, Awards, Prizes, Honorarium (see non-employee compensation if for speaker fees) , Punitive Damages, Beneficiary Payments for Annual/Comp time in the year following death, Independent Living payments

1099-MISC

3

Medical Services – Services provided by medically licensed personnel. Medical and Dental Services, Hospitalization, Medical Assistance Benefits, All payments to Medical Services Corporations, Veterinary Services, Autopsy Services, Lab Work, Ambulance Service

1099-MISC

6

Non-Employee Compensation:

Professional Services Payments (contractors)

Advertising

Appraisal

Architectural

Armored Car

Auditing

Computer Programming

Construction

Consulting, Engineering, Architecture

Court reporters, Court appointed workers, Expert witnesses, Legal services and Process servers

Expense Allowance (Not Itemized reimbursement, ie.travel claim)

Funeral homes

Garbage Collection, Recycle Services

Home and Community Based Services that are not medical

Janitorial Services (cleaning)

Laundry

Maintenance and Repairs on buildings, computers, grounds, machines, vehicles and other equipment



Program Administration

Security


Sponsorships

Temporary Staffing including Medical Personnel

Speaker Fees or Training

Stipends for services provided.

Travel not submitted within 60 days


1099-MISC


7


Gross Proceeds Paid to an Attorney (Settlement payments)

1099-MISC

14

Taxable Grants (Grants are taxable unless otherwise stated in the legislation of the grant)

1099-G

G





Working with the Queries

The 1099 queries provide detailed data of each payment made during the year. The queries must be reviewed to determine if the payment was coded correctly.


Each of the queries below must be run using the Query Scheduler in Edison for the appropriate period. Instructions for using the Query Scheduler can be found on page 11, screen prints with instructions can be found on pages 12-24.

Requirement: Columns may be hidden but NOT deleted. Also, columns may be added ONLY to the right side of the spreadsheet.

TIP: Sorting data by business type and vendor number will aid in the review of the queries.

After reviewing each of the queries, make sure all the steps below are completed.



  • Unhide all the columns and unfreeze all panes.

  • Save the report with your business unit and the name of the query, for example: “30101 TN_1099_TO_REPORT”.

  • The subject line of the email should be your business unit and name of the report for example 30101 TN_1099_TO_REPORT” or, if you are submitting multiple reports, the subject line should have your business unit and the term “1099 reports” or “1042 reports”, for example: “30101 1099_Reports” or “30101 1042_ Report”.

Email the 1099 and 1042 reports to F&A.Accounts@tn.gov

Query 1:  TN_1099_TO_REPORT

Vendor payments on the TN_1099_TO_REPORT will receive a 1099 for the category listed unless you ask Vendor Maintenance to remove or correct the payment coding. Pay close attention to the business type of the vendor and the location on which the payment was originally paid. The tables on pages 3 and 4 of this document will help you determine if the payments are subject to 1099 reporting.

Run the query following the instructions on page 11. After opening the query in Excel, add two columns to the right of the spreadsheet titled "Exclude or Correct" and “Reason”.  


  • Exclude or Correct: Enter an “E” to exclude all payments that should not be reported on a Form 1099 or the correct CAT if a correction needs to be made. Also enter the reason why the lines should be excluded or corrected in the “Reason” column. For example, if the vendor is a corporation and the payments are not reportable, enter “not medical or legal” or if the payments are for supplies, enter “supplies”. Also use the following format for the CAT correction (1, 3, 6, 7, 14 or G6). Note: Do Not Exclude 1042 lines. See page 10 for instructions on 1042 processing.

  • Reason: Enter the reason for the exclusion or correction requests.

See the example below for guidance. Note: Some of the columns are hidden and the last two columns have been added to the query.

After reviewing the query and marking all payments to be excluded or corrected, sort on the "Exclude or Corrections" and “Reason” columns.  Copy and paste ONLY the lines to be excluded or corrected into ANOTHER spreadsheet. Save the report as the name of the business unit and name of the query, for example: “30101 TN_1099_TO-REPORT” and submit it to F&A.Accounts@tn.gov.



Example of the “TN_1099_TO_REPORT”



Query 2:  TN_1099_SLGP_VCHR_PAYMNTS

This query provides information on payments made without a Vendor ID number and charged to an expenditure account. These payments will not be reported on a Form 1099 unless your business unit specifically instructs the Division of Accounts to include them. This query must be carefully reviewed to ensure IRS reporting requirements are met.

Run the query following instructions on page 11. After opening the query in Excel, add four columns on the right of the spreadsheet titled “TIN”, “Format”, “Type” and “CAT”. These four columns must be completed for payments that are 1099 reportable.


  • TIN: Enter the vendor’s tax ID into the column.

  • Format: Enter an “S” for the Social Security Number (000-00-000) or “F” for Federal Employer Identification Number (00-0000000) into the column. Note: The TIN must be formatted as either an FEIN or SSN by entering the appropriate dashes into each cell individually. Do not format the entire column as an SSN or FEIN.

  • Type: Enter “1099” or “1099G” into the column to indicate the type of form on which the payment should be reported.

  • CAT: Enter the 1099 category (1, 3, 6, 7 or 14) into the “CAT” column for 1099 MISC or category G6 for 1099G.

Only payments indicated as 1099 reportable will be included on a 1099 from this report. See the example below for guidance. Note: Some of the columns are hidden and the last four columns have been added to the query.

After reviewing the query, sort and copy ONLY lines to be reported on a 1099 and paste into ANOTHER spreadsheet. Save the report as the business unit and name of the report, for example: “30101 TN_1099_SLGP_VCHR_PAYMNTS” and submit it to F&A.Accounts@tn.gov .



Example of the “TN_1099_SLGP_VCHR_PAYMNTS



Query 3: TN_1099_RPRT_VDR_NORPRT_PAY

Query 4: TN_1099_RPRT_VDR_NORPRT_PAY2
The above queries provide information on payments made to typically reportable vendors based on business type that have not been processed as 1099 reportable payments. Each query provides information on a different group of these payments. This query must be carefully reviewed to ensure IRS reporting requirements are met.
TIP: Combining the results from these two queries will aid in reviewing and correcting payment information.
Run the query following instructions on page 11. After opening the query in Excel, add two columns on the right of the spreadsheets titled “Type” and “CAT”. These columns must be completed for payments that are 1099 reportable.

  • Type: Enter “1099” or “1099G” into the column to indicate the type of form on which the payment should be reported.

  • CAT Enter the 1099 category (1, 3, 6, 7 or 14) into the “CAT” column for 1099 MISC or category G6 for 1099G.

From this report, only payments indicated as 1099 reportable will be included on a 1099. See the example below for guidance. Note: Some of the columns are hidden and the last two columns have been added to the query.

If there are CAT locations on the TN_1099_NORPRT_PAY or the TN_1099_RPRT_VDR_NORPRT_PAY2 queries, these should be included on the file you submit. The payments did not post to the 1099 table correctly and must be corrected.

After reviewing the queries and marking all payments to be included, sort and copy ONLY lines to be reported on a 1099 and paste into ANOTHER spreadsheet. Save the report as the business unit and name of the report, for example: “30101 TN_1099_PAY” and “30101 TN_1099_PAY2”. If the two reports have been combined, save the report as “30101 Pay-Pay2_Combined.” Submit the finished spreadsheet to the Division of Accounts at F&A.Accounts@tn.gov .

Example of the “30101 TN_1099_PAY” and the “30101 TN_1099_PAY2”



General Guidelines for 1042-S Reporting

A Form 1042-S, “Annual Withholding Tax Return for U.S. Source Income of Foreign Persons”, is used to report the payments (product or service) made to foreign vendors.

There could be 1042 payments on the TN_1099_TO_REPORT or the TN_1099_SLGP_VCHR_PAYMNTS queries. After the queries have been reviewed, copy ALL 1042 lines found and paste them into a new spreadsheet using the headings from the query on which the payments lines were found. Any vendors with foreign addresses found on the TN_1099_SLGP_VCHR_PAYMNTS should be included on a spreadsheet as well. Add three columns to the right side of the spreadsheet with the following titles:


  • Source of Income: Enter “U.S.” if the work was performed on U.S. soil. Enter “Abroad” if the work was not performed on U.S. soil.

  • Number of Days worked on U.S. Soil: Enter the number of days work was performed on U.S. soil.

  • Description of Service or Product: Enter the description of the service or product. It can be short for example, “software” or “rent”.

All payments on foreign vendors must be submitted to F&A.Accounts@tn.gov , regardless if it is a service or a product. See the examples below for guidance. Note: Some of the columns in the example are hidden and the last three columns have been added to the query.
Name the spreadsheet(s) using the header of the query on which the data was found. Then save the spreadsheet with the business unit-1042 in the name of the query. For example: “30101-1042 TN_1099_TO_REPORT”. After saving, submit the completed spreadsheet to Division of Accounts at F&A.Accounts@tn.gov
Example of the header from the TN_1099_TO_REPORT

Example of the header from the TN_1099_SLGP_VCHR_PAYMNTS (Must enter TIN if there is one)

Edison - Steps To Schedule a Query

The instructions to schedule a query are listed below. However, if you want to see what each screen looks like you can see the screen print of each step beginning on page 12.



  1. To schedule a query, navigate to FSCM Reporting Tools  FSCM Schedule Query

  2. To create a new run control, click on Add a New Value, type in the full query name and click “Add”.

  1. Complete the Schedule Query page. (If you selected a previous defined run control, the page will be populated.)

    • Search for query to run by entering part of the query name in Query Name box and click “Search”. Select the query.

    • Enter parameters for selected query and click “OK”. (See the Completed Parameter Page on page 18.)

  2. Click “Run” to run the query in the process scheduler.

  3. Click “OK “at the bottom of the Process Scheduler Request page. After clicking OK, the Schedule Query page is displayed. A process instance will be listed below the Process Monitor link and Run button.

  4. Navigate to Process Monitor. You may either do this through normal navigation or by clicking the link on the Schedule Query page. The query can be found on the process monitor.

  5. To view the results of the query, click on Details link from the Process Monitor after the Distribution Status stated “Posted”.

  6. To see the output from the query, click on View Log/Trace. The results of the query are in the CSV file listed.

Microsoft 10 Users - How to Save the Query

The instructions below work with Microsoft Office 2010 and will keep the format of the reports the same. To open the report, follow the steps below.



  1. Right click on the CSV file

  2. “Save Target As”

  3. Select a location to save it

  4. Leave as Excel and add .txt to the end of the file name

  5. “Save”

  6. Open Excel

  7. “Data” Tab

  8. “From Text” icon

  9. Import the report

  10. Make sure “Delimited” is marked then click “Next”

  11. Check “Comma” and leave “Tab” checked

  12. Change each of the columns to text

  13. “Finish”

  14. “OK”

  15. Review your report


TIP: After opening the query in Excel, you may format the columns with dollar amounts to “accounting” with no symbol and two decimals.

Edison - To Schedule a Query

  1. To schedule a query, navigate to FSCM Reporting Tools  FSCM Schedule Query


2. To create a new run control, click on Add a New Value, then type in the full query name and click “Add”.



To use an existing run control, search from Find an Existing Value tab.







  1. Complete the Schedule Query page. (If you selected a previous defined run control, the page will be populated.)

    • Search for query to run by entering part of the query name in the Query Name: box and click “Search”. Select the query.

Query Search Results



Enter parameters for the selected query and click “OK”.



Completed Parameter Page:



Note: The dates in the examples are examples as well. Please use the dates from the email sent to you when running the queries.



  1. Click “Run” to run the query in the process scheduler.




  1. Click “OK” at the bottom of the Process Scheduler Request page. After clicking “OK”’ the Schedule Query page is displayed. A process instance will be listed below the Process Monitor link and Run button.



  1. Navigate to Process Monitor. You may either do this through normal navigation or by clicking the link on the Schedule Query page. The query can be found on the process monitor.




  1. To view the results of the query, click on Details link from the Process Monitor after the Distribution Status states “Posted”.




  1. To see the output from the query, click on View Log/Trace. The results of the query are in the CSV file listed.




  1. If you are using Microsoft Office 2010 please follow the instructions on page 10 on how to save the file once you reach this screen.



Contact Information

  • Email 1099 and 1042 Reports to F&A.Accounts@tn.gov

  • Send 1099 questions or any questions about the reports to Donna Nicely at 615-253-5234 or email her at Donna.Nicely@tn.gov

  • Send Settlement and Foreign Vendor questions to Robert McDonald at 615-253-6104 or email him at Robert.McDonald@tn.gov

  • Send LLC questions to Katelyn Huckaby at 615-770-1104 or email her at Katelyn.Huckaby@tn.gov

  • Don Shelton can answer any questions. His number is 615-253-4758 or email him at Donald.Shelton@tn.gov



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