1099 Processing in Rel.12

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1099 Processing in Oracle R12

Nicole Wilson TUSC February 27, 2009

March 09

1099 Overview Agenda


1099 Description and Programs AP Prerequisite Vendor Maintenance/Setups Major 1099 Processing Step steps

1099 Description
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 U.S. tax law requires businesses to submit a Form 1099 for every contractor paid at least $600 for services during a year (this requirement usually does not apply to corporations receiving payments) Accurate reporting of 1099 information is dependent upon decisions made by your agency throughout the year Payers who file 250 or more 1099 form reports must file all of them electronically or magnetically with the IRS

1099 Process Diagram

1099 Programs
1099 programs include invoice information that is flagged for 1099 reporting Invoice distributions contain a field called the Income Tax Type, when this field is populated, the invoice distribution is flagged for 1099 reporting Income Tax Type field on the invoice distribution is populated in one of three ways:
Default from Supplier Update from the utility program Manual update

1099 Invoice Requirements

AP Prerequisite
Ensure tax reporting entity is defined Setup > Tax > Reporting Entities
Name Tax ID

Vendor Setups
Suppliers defined in Oracle need to have specific fields populated indicating that the Supplier requires a 1099 including:
Taxpayer ID (must be 9 digits) Reportable box must be selected Income Tax Type (to determine which box on the 1099 the amount will go) Reporting Name (alternate name to use for the supplier on the 1099 documents) - OPTIONAL

Vendor Setups (contd)

Vendor Setups (contd)

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Major 1099 Processing Steps


Oracle System/Program Review and Updates Vendor and Invoice Review and Updates 1099 File and Document Generation

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Oracle System/Program Review and Updates Review Oracles Metalink for 1099 processing and program updates
Typically available in November/early December

Search for Accounts Payable 1099


Results should be similar to Accounts Payable 1099 Knowledge Browser Product Page

Identify any patches required for the current tax year Apply and test applicable patches

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Vendor Review and Updates


Run the 1099 Supplier Exception Report
Will identify Suppliers with inaccurate or missing information for 1099 processing

Exceptions listed on the report that require correction are:


Duplicate TIN Foreign Supplier No Tax Reporting Site Non-Standard State Non-Standard TIN Null Address Element Null Foreign Address Null Organization Type Null State Null TIN

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Invoice Review and Updates


Run the 1099 Invoice Exception Report
The report will display invoices by error type Review paid invoice distributions with inaccurate or missing 1099 income tax information A common error is that changed the supplier type but not the distribution lines on an invoice

The 1099 Invoice Exceptions Report is divided into the following sections:
Invoice Distribution Lines for 1099 suppliers with no Income Tax Type Invoice Distribution Lines for non1099 suppliers with an Income Tax Type Invoice Distribution Lines with a negative Income Tax Type total Invoice Distribution Lines with Withholding Exceptions

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Payments Report
Run the 1099 Payments Report
Listing of payments made to 1099 suppliers Run in detail to include invoice numbers, invoice amounts, and payment dates Review this report to identify instances where one supplier has two different tax types (MISC1 and MISC7) Correct the invoice line distributions to display only one amount on the 1099

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1099 File Generation


Generate the file to be sent to the IRS using the 1099 Electronic Media program
Generate summarized 1099 information in electronic format as required by the IRS Transfer to the IRS via the IRS website IRS requires electronic filing in one of these formats if 250 or more records need to be submitted for the 1099 reporting (applicable to each tax reporting entity) Process will error if certain exceptions exist (such as an invalid supplier TIN)

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1099 Document Generation


Generate the 1099 forms using the 1099 Forms PDF Format program

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1096 Form
IRS requires 1096 form sent as a summary of each 1099 form type you transmit on paper When the 1099 Forms report is run, Payables summarizes all payments of 1099 MISC reportable invoice distributions and populates a table for 1096 information Generate a 1096 form for each tax reporting entity

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Update Income Tax Details Utility


Used to update the Income Tax Type and/or Income Tax Region fields on invoice distributions Used to update multiple invoices after changes have been made to the Federal Reporting status or Income Tax Type of a Supplier Run for all suppliers Report mode initially

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Adjusting 1099 Invoice Generally, the process to adjust an 1099 amount for a vendor is to:
1. 2. 3.

Create an adjusting invoice Create an adjusting credit memo equal to the invoice amount Create a payment batch using a zero dollar bank account to pay the above invoice and credit memo

Key: the adjusting invoice has a tax code on it the credit memo does not

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Questions

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Presenter Information Nicole Wilson TUSC wilsonn@tusc.com

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