Accounts Payable Advisory No. 71

Accounts Payable Advisory
Office of Operations
Bureau of State Expenditures
Advisory Name
Processing Payments Subject to Federal Reporting
Date Issued
02/09/2021
Date Last Updated
10/13/2021

Subject:

New Form 1099-NEC and Updated Form 1099-MISC

Reference:

Guide to Financial Operation, Section XII.5.K.2 – Processing Payments Subject to Federal Reporting

Guidance:

The Internal Revenue Service (IRS) revised Form 1099-MISC effective for the 2020 tax year to accommodate the creation of Form 1099-NEC. Payors now report non-employee compensation on Form 1099-NEC rather than Form 1099-MISC. Payors also report certain income in different box numbers on the redesigned 1099-MISC.  OSC populated 1099-MISC and 1099-NEC forms for tax year 2020 using the withholding data provided by agencies in the Statewide Financial System (SFS).

On October 25, 2021, New York State will implement updates to the SFS to accommodate the creation of Form 1099-NEC and changes to Form 1099-MISC. Upon implementation, online agencies will be able to start using the new withholding codes. After implementation, the SFS will contact Bulkload agencies to discuss a plan for transitioning their systems to send SFS the new withholding codes.

Prior to implementation, OSC will release information on how these changes will impact agency business processes and guidance on recommendations for change management. Additionally, to support agencies after implementation, OSC and SFS will provide a class on this topic at the Fall Conference on October 26, 2021. Please refer to the Guide to Financial Operation, Section XII.5.K.2 – Processing Payments Subject to Federal Reporting for more information. (Updates to this section are currently in progress.)

Agency personnel should email [email protected] with questions regarding this advisory. Vendors with questions regarding their 1099 should contact the SFS Help Desk at [email protected] or 855-233-8363.