The 1099 System for 1099 Miscellaneous Tax Reporting
To access the 1099 System, log on to STARS, then at the STARS menu, enter M in the Function field and press ENTER.
The 1099 System extracts information from the STARS based on
Control Table SAO EIN INDICATOR is YES.
2: Exclude transactions
in “*” batches.
Code must post to the Vendor Payment File.
used by agencies when paying a vendor.
Indicator on the Vendor Edit Table.
the $600 threshold.
7: Vendor Record
has a Y in the 1099 NAME/ADDR field.
A combination of this information, plus an accumulation of $600 or more
paid statewide to a vendor, determines if a 1099-MISC tax form will be generated
for a vendor.
System uses the SAO EIN IND
indicator on the Organizational Control Table to determine whether the agency
or the State Controller’s Office (SCO) will report 1099-MISC information.
Table 25 –
Organization Control Table
STARS--ORGANIZATION CONTROL TABLE MAINTENANCE/INQUIRY S025
FUNCTION: R (A=ADD,
C=CHANGE, D=DELETE, N=NEXT, R=RECALL)
AGENCY: 230 TRANS YEAR: 01 SAO EIN IND: Y FAS IND: Y
means SCO will do the 1099-MISC tax reporting to the IRS on behalf of the
agency. “N” means the agency will do
their tax reporting directly to the IRS.
The majority of
Idaho state agencies use the SCO’s 1099 System to report to the IRS and State
Tax Commission. The SCO staff updates this indicator each year based on the
1099 Survey sent out in October or November.
As of 2011, the bank that issues P-Cards will report 1099Misc
reportable payments. Therefore, the 1099 system will exclude all
payments and adjustments made in the P-card ‘*’ batch type (aka “splat batch”).
The 1099 System extracts information from transactions that
are on Vendor Payment Files. The system extracts transactions with effective
dates from January 1 through December 31 of each calendar year by using both
the Prior Year Vendor Payment File (January 1 – June 30) and the Vendor Payment
File (July 1 – December 31).
If a payment is 1099-MISC reportable, you must use a
transaction code that posts to the vendor payment file. The Transaction Code
Decision Table has an indicator (Y or N) to show if the transaction code will
post to the vendor payment file:
VERSION 3.1 STARS--TRANSACTION CODE
DECISION TABLE MAINTENANCE/INQUIRY
FUNCTION: R (A=ADD, C=CHANGE, D=DELETE,
TRAN-CODE: 230 TITLE: RECORD A
EXPENDITURE VOUCHER NOT PREVIOUSLY ENCUMBERED
GENERAL-LEDGER- DR-1: 4200 CR-1: 1003 DR-2: CR-2:
POSTING DR-3: 1003 CR-3: 2101
MODI N RVRS INDX R PCA R BUDU R FUND R FDTL ESUB I
RSUB N RDTL N SUBS N MULT
GLA N VNUM I VNAM VADD
PCN N PROJ GRNT
CDOC I RDOC INVC DOCD
DUDT N WARR N SECA N
POSTING-SEQ: 5 REGISTER-NO: 4
WAR-WRITING: 1 CLEAR-FUND: Y VEND-PAYMENT: Y
If a transaction code that you want to use on a transaction does
not post to the Vendor Payment File, you would have to report a 1099-reportable
payment to the SCO 1099 system manually. To avoid this, add the vendor you need
to pay to the Vendor Edit Table. Then you can use the TC 230 transaction code
to pay that vendor.
find out if a transaction code posts to the Vendor Payment File, recall the
transaction code on Transaction Code Decision Table Maintenance/Inquiry Screen
28 and look at the VEND-PAYMENT indicator. You could also view the indicator
(VENDOR-PAYMENT-IND) for the transaction code on the DAFR8640 Transaction Code Decision Table Report.
Every transaction that posts to the Vendor Payment File requires
an expenditure subobject. Any expenditure subobject that is set up for
1099-MISC reporting could be extracted by the STARS 1099 system.
A Vendor Payment File Inquiry in STARS will show subobjects
(SOBJ) used on vendor transactions.
VERSION 3.1 STARS--VENDOR PAYMENT FILE RECORD
AGCY: 230 VENDOR NO: 827864826 00 PRIOR FISCAL YEAR:
VENDOR NAME: PAPER THERMOMETER COMPANY
CURR DOC TRANS ID TC R M REFERENCE DOC AMOUNT
D0110489 01 230 09212000 4 146
00006 236 F E0110359 01 709.00
14051 5695 113579952 164450
D0310262 01 230 08042000 4 255
00010 230 59.00
34051 5630 113477172 164086
D0610078 01 230 08242000 4 491
00006 230 E0600874 01 113.00
64051 5695 113579952 162867
The two types of
1099 Indicators are:
VERSION 3.1 STARS--VENDOR
EDIT TABLE MAINTENANCE/INQUIRY
FUNCTION: N (A=ADD,
C=CHANGE, D=DELETE, N=NEXT, R=RECALL)
VENDOR NUMBER: 123456789 00 DMI: VENDOR AGY: 000 AUTHENTICATION IND:
VEND TYPE: I VEND STATUS: 0 CHG AGY: W-9 AGY: 340 1099 NAME/ADDR: Y
SORT SEQUENCE: CEDDONPLUM
SS EIN NUMBER: 123456789 00 1099 INDICATOR: Y
VENDOR NAME..: BRIAN L
VENDOR NAME 2:
VENDOR ADDRESS: 1 MAXTON RD
MCCALL STATE: ID
ZIP CODE: 83638
NO: FINANCIAL INSTITUTION:
FINANCIAL INSTITUTION ACCT NO: ACCT TYPE:
PRENOTE IND: PRENOTE DATE:
“N” is used with
the following vendor types (“Y” is used on all other vendor types:
The $600 threshold is based on the total of statewide
payments to a vendor. Your agency may have only paid $50 in 1099-MISC
reportable transactions, but another agency might have paid $2,000 to the same
vendor. The total for the two agencies exceeds the $600 threshold. Therefore, when you submit any manual
information to the SCO for input into the 1099 System, you must include all
amounts, even those under $600. The 1099 System will total all payments and
report only on those totaling over $600 statewide.
The 1099 System uses the address of the vendor record that
has a “Y” (yes) in the 1099 NAME/ADDR field as seen on the Vendor Edit Table
Maintenance/Inquiry Screen 021.
If there is no “Y” on any of the suffixes for the vendor
number, the 1099 System will use the first record on the Vendor Edit Table for
that vendor number.
The SCO submits the 1099-MISC information to the IRS. The
IRS compares the information to a file containing all social security numbers
issued by Social Security Administration, and all employer identification
numbers (EINs) issued by the Internal Revenue Service. The IRS allows words or
titles (e.g., Mr., Mrs., Dr., etc.), but they may drop this information during
If the 1099-MISC matches the name/TIN combination in the
file, the 1099-MISC is accepted. If the name/TIN combination does not match,
the 1099-MISC is considered a “non-match”.
After the IRS runs the information through the matching
process, they notify the State Controller’s Office of the non-matching name/TIN
Each year, the IRS compiles the non-matched information and
sends it to the State Controller’s Office, along with a letter outlining the
IRS’s proposed penalties. The SCO accounts for all match problems to show why
the IRS should waive the proposed penalties. The IRS sends a list of
non-matches in the spring, and a follow up list in the again in fall.
After receiving the list in the spring, the SCO checks it
against the current Vendor Edit Table to see if the IRS information agrees with
the Vendor Edit Table.
After receiving the list in the fall, the SCO repeats the
process. The SCO determines whether this is the first or second time within
three calendar years that the IRS has notified SCO that the name/TIN is
Any vendors that are still inactive from the spring are sent
the appropriate IRS “B” Notice. The
first “B” Notice is sent to vendors in the first year of non-match status and
requires the vendor to complete and sign a new IRS Form W-9. The second “B” Notice is sent to vendors in
the second of three years of non-match status, and requires a certification
from either the SSA or the IRS that the name/TIN combination is correct.
THE 2/3 RULE
If the IRS determines that the vendor
has been reported as a non-match name/TIN combination two out of three years,
the State could be fined $50 per return.
The SCO will pass this fine on to the state agency (usually the W-9 AGY)
that set up the incorrect vendor information. If it can be determined that
another agency has changed the vendor with incorrect information, the CHG AGY
will incur the fine.
FAILURE TO FURNISH CORRECT PAYEE STATEMENTS (1099s TO
“Payee statement” has the same meaning as “statement to
recipient”. If the vendor is provided
with incorrect information on the 1099-MISC, the State could be subjected to a
penalty. Therefore, the agencies should
review the 1099 reports and make sure that they notify the SCO of all changes by
any stated deadlines.
The SCO inactivates IRS non-match vendors until we receive a
signed W-9 from the vendor certifying their TIN. IRS requires a signed
Form W-9 that certifies that the TIN is correct. In addition, SCO will verify
the new W-9 using the IRS TIN matching application.
When the IRS notifies the SCO of an incorrect match, they
are required to send a B-Notice to the vendor and request a W-9 certifying the
vendor’s TIN. The vendor will remain inactive until the SCO receives a new
signed W-9, and SCO verifies the information. If the non-match is the second
non-match in a three-year period, the vendor is required to contact the SSA
(for social security numbers) or the IRS (for employer identification numbers)
for a certification showing the name/TIN combination in their records.
The State of Idaho
has chosen not to do backup withholding. Instead, the State withholds payment
until the vendor provides either a signed W-9, or the certification described
Before SCO can re-activate a non-matched vendor,
the SCO requires a signed W-9 form (or SSA/IRS certification letter) from the
vendor. When the SCO receives it, they verify the information using the IRS TIN
matching. If the name/number combination is correct, SCO updates the vendor
information accordingly, and the vendor number will be available for future
payments in SCO applications. If the name/number combination does not match, SCO
contacts the vendor for a corrected signed W-9.