1099 processing in rel.12
DESCRIPTION
1099 Processing in Oracle R12TRANSCRIPT
1099 Processing 1099 Processing
in Oracle R12in Oracle R12Nicole Wilson
March 09
Nicole Wilson
TUSC
February 27, 2009
1099 Overview Agenda1099 Overview Agenda
� 1099 Description and Programs
� AP Prerequisite
� Vendor Maintenance/Setups
� Major 1099 Processing Step steps
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1099 Description1099 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
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(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 Diagram1099 Process Diagram
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1099 Programs1099 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
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� 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 Requirements1099 Invoice Requirements
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AP PrerequisiteAP Prerequisite
� Ensure tax reporting entity is defined
Setup > Tax > Reporting Entities� Name
� Tax ID
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Vendor SetupsVendor 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)
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go)
� Reporting Name (alternate name to use for the supplier on the 1099 documents) - OPTIONAL
Vendor Setups (cont’d)Vendor Setups (cont’d)
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Vendor Setups (cont’d)Vendor Setups (cont’d)
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Major 1099 Processing StepsMajor 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 UpdatesOracle System/Program Review and Updates
� Review Oracle’s 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”
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� Identify any patches required for the current tax year
� Apply and test applicable patches
Vendor Review and Updates 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
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� No Tax Reporting Site
� Non-Standard State
� Non-Standard TIN
� Null Address Element
� Null Foreign Address
� Null Organization Type
� Null State
� Null TIN
Invoice Review and UpdatesInvoice 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
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� 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 non–1099 suppliers with an Income Tax Type
� Invoice Distribution Lines with a negative Income Tax Type total
� Invoice Distribution Lines with Withholding Exceptions
Payments ReportPayments 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
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� Correct the invoice line distributions to display only one amount on the 1099
1099 File Generation 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
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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)
1099 Document Generation1099 Document Generation
� Generate the 1099 forms using the 1099 Forms PDF Formatprogram
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1096 Form1096 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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� Generate a 1096 form for each tax reporting entity
Update Income Tax Details Utility 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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� Run for all suppliers Report mode initially
Adjusting 1099 InvoiceAdjusting 1099 Invoice
� Generally, the process to adjust an 1099 amount for a vendor is to:
1. Create an adjusting invoice
2. Create an adjusting credit memo equal to the invoice amount
3. Create a payment batch using a zero dollar bank
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3. 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
QuestionsQuestions
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