This bulletin provides guidance on Federal IRS Form 1099 reporting and filing requirements to those agencies that make payments outside of the State’s Central Accounting System (CAS).  IRS filing requirements must be followed to avoid penalties.

The IRS requires the annual reporting of certain payments made to vendors and others.  Generally, payments to the same payee totaling over $600 in a single calendar year must be reported to the payee via a Form 1099 (information return), and a copy must be filed with the IRS.  A list of payments subject to IRS reporting may be found at:
http://osc.state.ny.us/agencies/gbull/g-132.htm.

For agencies that use the CAS to process payments, these filing requirements are automatically completed by the Office of the State Comptroller (OSC).  However, when an agency makes its own payments outside the CAS from sole custody accounts, the agency is required to ensure compliance with the IRS filing requirements to avoid IRS penalties.

Complying with IRS Filing Requirements for Agencies that Make Payments Outside of the Central Accounting System:

An agency may comply with the IRS filing requirements using one of two methods:

1. An agency may report to OSC the payments it made.  OSC will distribute Form 1099 to payees and electronically file the information returns with the IRS.  An agency is responsible for providing the following information to OSC for each payee: payee name, address, taxpayer identification number (TIN); applicable IRS payment type code; and the total reportable amount of payments made to that payee during the calendar year.  This information should be encrypted and submitted to OSC in an Excel file as soon as possible after the last payment made during each calendar year, but no later than the first business day of January of each year to fedrep@osc.state.ny.us; (Agencies unable to email an encrypted file should contact the Federal Reporting Unit – either by email or phone (518-486-4602) – for alternate instructions).
   
   
2. An agency may itself prepare and distribute the required Form 1099 information return to the payee and file with the IRS directly.  If an agency chooses to prepare all forms and file directly:

• The agency should consult the IRS instructions for Form 1099 and the OSC website noted above to determine whether a payment is subject to the reporting requirements.  (For example, only certain types of payments to corporations are reportable).  The IRS instructions may be accessed at www.irs.gov
  
  
• All reporting and filing must be completed timely.  The Form 1099 must be provided to payees by January 31st.  This information must also be separately reported to the IRS.  Generally, the due date for reporting to the IRS is March 31st.
  
  
• All filing with the IRS must be done electronically. The IRS requires any payer filing 250 or more information returns to file electronically.  Since the State far exceeds this limit, any agency filing information returns using the State’s EIN must do so electronically.  While an agency may use the State’s EIN, it must use its own Transmitter Control Code (TCC) to distinguish its returns from those filed by OSC.  Agencies may obtain their own TCC by completing an application at http://www.irs.gov/pub/irs-pdf/f4419.pdf.  Under no circumstances may an agency or its designee file paper information returns with the IRS when using the State’s EIN.

Agencies must adhere to all IRS filing requirements, regardless of the method of filing.  Specifically, agencies must:

• Provide the payee’s correct TIN and name.  The IRS requires that the payee’s TIN and name match the IRS’ records.  An agency should obtain IRS Form W-9 from payees to obtain their name and TIN.  Agencies may also wish to use the IRS’ TIN matching program to verify the information.  Information about the TIN matching program can be found at: https://la2.www4.irs.gov/PeopleBooks/CRMPROD/Training/3pdev/3papp/3papp_tin/tinapp.htm
  
  

Agencies not complying with IRS guidelines will be responsible for paying IRS penalties.  These penalties may be as much as $100 for each unfiled or incorrectly filed information return, up to a maximum penalty of $1.5 million.

Questions:

If you have any questions regarding this bulletin, please contact OSC’s Bureau of State Expenditures’ Federal Reporting line: 518-486-4602.