1099 Reporting Deadlines and Responsibilities in State Accounting Bureau
1099 Reporting:
Live Training/Discussion
Daily Operations Section
State Accounting Bureau
DAILY OPERATIONS SECTION | STATE ACCOUNTING BUREAU (SAB)
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CY2022 corrections found after this date require the submission of a
1099 Duplicate/Correction request (Form 222) in ServiceNow.
Visit our Calendar: https://sfsd.mt.gov/SAB/Resources
DAILY OPERATIONS SECTION | STATE ACCOUNTING BUREAU (SAB)
1099 Reporting:
Deadlines (Continued)
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Visit our Calendar: https://sfsd.mt.gov/SAB/Resources
DAILY OPERATIONS SECTION | STATE ACCOUNTING BUREAU (SAB)
CP2100
Purpose: To notify
payers that they have filed incorrect information returns
(50 or more) with errors
•
An annual, sometimes bi-annual, notice sent by the IRS
•
The notice is generated based on the previous calendar year’s 1099 IRS submission
•
The notice comes with a list of payees and their taxpayer identification number
(TIN) that does not match IRS records
•
SAB directly works with the supplier to obtain valid W-9 via First B-Notice
o
B-Notices are to be sent within 15 days of the receipt of the CP2100
o
Suppliers have 15 days to respond
•
Backup withholding is required on any payment to a payee who didn’t supply
their TIN or supplied an obviously incorrect TIN. The backup withholding is sent
to the IRS.
•
SAB inactivates
supplier inactivation
Watch Part 6 of our 1099 Training for more information
DAILY OPERATIONS SECTION | STATE ACCOUNTING BUREAU (SAB)
Bulk TIN Match
Purpose: To identify suppliers with name TIN combinations that do not match
IRS records and rectify these errors so that we maintain compliance with IRS
requirements. This reduces the risk of fines, fees, and the number of suppliers
on the CP2100
•
Quarterly process
•
Completed through the IRS system
•
Suppliers with a TIN match result of ‘2’ (TIN not currently issued) are sent to the
agency and the agency works with their supplier to obtain a new W-9
SAB also runs a TIN match on every W-9 attached in a Supplier Add/Update form in
SABHRS Financials
Watch Part 6 of our 1099 Training for more information
DAILY OPERATIONS SECTION | STATE ACCOUNTING BUREAU (SAB)
DIFFERENCES
:
C-Corporation
Double taxation
•
C-Corporation is taxed when
profits are earned and then
shareholders are taxed on the
dividends they receive
Easy to form
Unlimited number of shareholders
S-Corporation
x
No double taxation
Can only form if already a C-Corp
No more than 100 Shareholders
allowed
SIMILARITIES
:
Generally, payments are tax exempt
o
No exemption for legal or medical service
payments on 1099-MISC or 1099-NEC
•
Medical Payments: MISC box 6
•
Gross proceeds paid to an attorney:
MISC box 10
Limited Liability
Separate entities
DAILY OPERATIONS SECTION | STATE ACCOUNTING BUREAU (SAB)
LLC
•
Simple management structure
•
No double taxation
•
Distributes ownership freely (members)
•
Created by state statute
•
IRS will treat LLC either as a corporation,
partnership, or as part of the owner’s tax
return
o
Unless the LLC files Form 8832 and elect
to be treated as a corporation
,
•
An LLC with one member is treated
as an entity disregarded as
separate from its owner
•
An LLC with at least two members
is classified as a partnership
Corporation
•
Formal management structure
•
C-Corp: double taxation
•
Ownership represented by stock
(stockholders)
If you see a Gov class is incorrect or suspect
it is incorrect, please let SAB know. We want
to try to clean up our supplier record.
DAILY OPERATIONS SECTION | STATE ACCOUNTING BUREAU (SAB)
Common errors
•
Selecting ‘1099’ as the Withholding Type. This
is no longer a valid type.
o
Please select 1099G, 1099M, or 1099N
•
Marking a foreign vendor payment for
withholding
o
Foreign vendor payments are generally not
1099 reportable
o
If you think one of your foreign vendor
payments is 1099 reportable, please
contact SAB and we will help you
determine if it is
DAILY OPERATIONS SECTION | STATE ACCOUNTING BUREAU (SAB)
Question:
How do I determine if licenses for software are 1099 reportable?
Answer:
The facts of each situation need to be analyzed to determine whether a payment is a:
a)
Service (1099-NEC reportable)
b)
Rental payment (1099-MISC box 1 reportable)
c)
In the category of a merchandise payment (not reportable)
d)
Royalty payment (few specialized instances) (1099-MISC box 2 reportable)
In all these reportable situations, however, C-Corp and S-Corp recipients are “exempt
recipients”. No 1099 is filed.
Visit our 1099 Reporting documents on our resource page to find a
that explains the
characteristics which determine service, rental, royalty, and merchandise categorization.
DAILY OPERATIONS SECTION | STATE ACCOUNTING BUREAU (SAB)
Question:
How do I know if my payments for software licenses are reportable?
Answer:
If there is a time limitation on the use of, or access to, the program, such as with a
requirement to renew the “license” each year, the transaction is not a goods purchase,
and the payment is treated as rental income.
Most software “license” purchases will likely fall into this category. The payment is
reportable on 1099-MISC box 1.
Agency invoice example
DAILY OPERATIONS SECTION | STATE ACCOUNTING BUREAU (SAB)
Question:
For
non-employee travel reimbursements, is there a difference in how we report a
contractor versus members of a board, commission, or council? We currently tax the
entire travel claim including any Honorarium paid for all non-employees.
Answer:
Whether it’s an employee or a non-employee all travel is reported the same. The only thing
to watch is if the travel is in Montana or if it’s out of the state. There are certain exceptions
if travel is in Montana vs out of the state. See
MOM-POL-Employee Travel.
Honorariums
and non-employee reimbursements are reported in
1099-NEC box 1
Per
MCA 2-18-501
, “All elected state officials, appointed members of boards, commissions,
or councils, department directors, and all other state employees must be reimbursed for
meals and lodging”.
DAILY OPERATIONS SECTION | STATE ACCOUNTING BUREAU (SAB)
Question:
How do I determine what is reportable when making a payment for a combination of
goods and services?
Answer:
You first need to analyze if the parts or materials were incidental to providing the service.
In other words, would the service have been possible without the parts or materials?
If the parts or materials were incidental to the service, the full amount of an invoice,
containing both goods and service charges, is reportable.
Agency invoice examples
DAILY OPERATIONS SECTION | STATE ACCOUNTING BUREAU (SAB)
What questions do you have?
DAILY OPERATIONS SECTION | STATE ACCOUNTING BUREAU (SAB)
Thank you!
If you have additional questions after this session, please
open a
Case – SAB
in ServiceNow or call 406-444-3092
This detailed document outlines the deadlines and responsibilities related to 1099 reporting in the State Accounting Bureau (SAB). It covers important dates for filing and adjustments, interactions with agencies, and SAB's responsibilities in handling CP2100 notices and Bulk TIN Match processes. The document also provides key information on supplier communications, compliance with IRS requirements, and actions required to maintain accurate tax records.
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Daily Operations Section State Accounting Bureau 1099 Reporting: Live Training/Discussion
1099 Reporting: Deadlines December 15 - Adjustments related to January-October 2022 January 2 10 - Interfacing agencies can submit their 1099 file January 9 - Last day for payment cancelations/reissues/ACH returns January 9 - 1099 Adjustments November-December 2022 January 10 - Agencies will be locked out of the Adjust Withholding page CY2022 corrections found after this date require the submission of a 1099 Duplicate/Correction request (Form 222) in ServiceNow. o Visit our Calendar: https://sfsd.mt.gov/SAB/Resources DAILY OPERATIONS SECTION | STATE ACCOUNTING BUREAU (SAB)
1099 Reporting: Deadlines (Continued) January 25 - 1099-MISC/1099-NEC/1099-G file to be sent to the IRS January 26 - 1099-MISC/NEC/1099-G forms to be mailed to suppliers February 1 - Cancelations/reissues/ACH returns will resume March 1 - The Adjust Withholding page will be re-opened for the calendar year 2023 transactions Visit our Calendar: https://sfsd.mt.gov/SAB/Resources DAILY OPERATIONS SECTION | STATE ACCOUNTING BUREAU (SAB)
1099 Reporting: SAB Responsibility CP2100 Purpose: To notify payers that they have filed incorrect information returns (50 or more) with errors An annual, sometimes bi-annual, notice sent by the IRS The notice is generated based on the previous calendar year s 1099 IRS submission The notice comes with a list of payees and their taxpayer identification number (TIN) that does not match IRS records SAB directly works with the supplier to obtain valid W-9 via First B-Notice o B-Notices are to be sent within 15 days of the receipt of the CP2100 o Suppliers have 15 days to respond Backup withholding is required on any payment to a payee who didn t supply their TIN or supplied an obviously incorrect TIN. The backup withholding is sent to the IRS. SAB inactivates supplier inactivation Watch Part 6 of our 1099 Training for more information DAILY OPERATIONS SECTION | STATE ACCOUNTING BUREAU (SAB)
1099 Reporting: SAB Responsibility (Continued) Bulk TIN Match Purpose: To identify suppliers with name TIN combinations that do not match IRS records and rectify these errors so that we maintain compliance with IRS requirements. This reduces the risk of fines, fees, and the number of suppliers on the CP2100 Quarterly process Completed through the IRS system Suppliers with a TIN match result of 2 (TIN not currently issued) are sent to the agency and the agency works with their supplier to obtain a new W-9 SAB also runs a TIN match on every W-9 attached in a Supplier Add/Update form in SABHRS Financials Watch Part 6 of our 1099 Training for more information DAILY OPERATIONS SECTION | STATE ACCOUNTING BUREAU (SAB)
1099 Reporting: C-Corp vs. S-Corp DIFFERENCES: C-Corporation Double taxation C-Corporation is taxed when profits are earned and then shareholders are taxed on the dividends they receive Easy to form Unlimited number of shareholders SIMILARITIES: Generally, payments are tax exempt o No exemption for legal or medical service payments on 1099-MISC or 1099-NEC Medical Payments: MISC box 6 Gross proceeds paid to an attorney: MISC box 10 Limited Liability Separate entities S-Corporation x No double taxation Can only form if already a C-Corp No more than 100 Shareholders allowed DAILY OPERATIONS SECTION | STATE ACCOUNTING BUREAU (SAB)
1099 Reporting: Limited Liability Company (LLC) vs. Corporation Corporation Formal management structure C-Corp: double taxation Ownership represented by stock (stockholders) LLC Simple management structure No double taxation Distributes ownership freely (members) Created by state statute IRS will treat LLC either as a corporation, partnership, or as part of the owner s tax return o Unless the LLC files Form 8832 and elect to be treated as a corporation, An LLC with one member is treated as an entity disregarded as separate from its owner An LLC with at least two members is classified as a partnership If you see a Gov class is incorrect or suspect it is incorrect, please let SAB know. We want to try to clean up our supplier record. DAILY OPERATIONS SECTION | STATE ACCOUNTING BUREAU (SAB)
1099 Reporting: Adjust Withholding Screen Common errors Selecting 1099 as the Withholding Type. This is no longer a valid type. o Please select 1099G, 1099M, or 1099N Marking a foreign vendor payment for withholding o Foreign vendor payments are generally not 1099 reportable o If you think one of your foreign vendor payments is 1099 reportable, please contact SAB and we will help you determine if it is DAILY OPERATIONS SECTION | STATE ACCOUNTING BUREAU (SAB)
1099 Reporting: Software, Services, and Cloud Transactions Question: How do I determine if licenses for software are 1099 reportable? Answer: The facts of each situation need to be analyzed to determine whether a payment is a: a) Service (1099-NEC reportable) b) Rental payment (1099-MISC box 1 reportable) c) In the category of a merchandise payment (not reportable) d) Royalty payment (few specialized instances) (1099-MISC box 2 reportable) In all these reportable situations, however, C-Corp and S-Corp recipients are exempt recipients . No 1099 is filed. Visit our 1099 Reporting documents on our resource page to find a PDF that explains the characteristics which determine service, rental, royalty, and merchandise categorization. DAILY OPERATIONS SECTION | STATE ACCOUNTING BUREAU (SAB)
1099 Reporting: Cloud Transactions Question: How do I know if my payments for software licenses are reportable? Answer: If there is a time limitation on the use of, or access to, the program, such as with a requirement to renew the license each year, the transaction is not a goods purchase, and the payment is treated as rental income. Most software license purchases will likely fall into this category. The payment is reportable on 1099-MISC box 1. Agency invoice example DAILY OPERATIONS SECTION | STATE ACCOUNTING BUREAU (SAB)
1099 Reporting: Non-employee Travel Question: For non-employee travel reimbursements, is there a difference in how we report a contractor versus members of a board, commission, or council? We currently tax the entire travel claim including any Honorarium paid for all non-employees. Answer: Whether it s an employee or a non-employee all travel is reported the same. The only thing to watch is if the travel is in Montana or if it s out of the state. There are certain exceptions if travel is in Montana vs out of the state. See MOM-POL-Employee Travel. Honorariums and non-employee reimbursements are reported in 1099-NEC box 1 Per MCA 2-18-501, All elected state officials, appointed members of boards, commissions, or councils, department directors, and all other state employees must be reimbursed for meals and lodging . DAILY OPERATIONS SECTION | STATE ACCOUNTING BUREAU (SAB)
1099 Reporting: Transactions with goods & services Question: How do I determine what is reportable when making a payment for a combination of goods and services? Answer: You first need to analyze if the parts or materials were incidental to providing the service. In other words, would the service have been possible without the parts or materials? If the parts or materials were incidental to the service, the full amount of an invoice, containing both goods and service charges, is reportable. Agency invoice examples DAILY OPERATIONS SECTION | STATE ACCOUNTING BUREAU (SAB)
1099 Reporting: Discussion Time What questions do you have? DAILY OPERATIONS SECTION | STATE ACCOUNTING BUREAU (SAB)
THANK YOU! Thank you! If you have additional questions after this session, please open a Case SAB in ServiceNow or call 406-444-3092 DAILY OPERATIONS SECTION | STATE ACCOUNTING BUREAU (SAB)
