Tax Reporting Entities

Tax Reporting Entities

In the United States we must report to the Internal Revenue Service certain type of payments we make to 1099 reportable suppliers. During the supplier setup We can make supplier as federally reportable. When we enter invoices for that supplier, we classify invoice distributions by 1099 misc type using the Income Tax type field. At the year end, we can then report, in standard formats of accumulated 1099 payment information to the Internal Revenue Service, other tax agencies and to our suppliers.
For each reporting entity, we assign one or more balancing segment values, when we submit 1099 reports for a tax entity, Payable sums up the paid invoice distributions that have these balancing segment values in their accounts (Eg- Company, Fund balancing segments)to create and report on 1099 supplier payments.


If we want to use combined federal and state 1099 filing, and want to produce K-Records and B-Records, we have to enable the combined filing program in payables option.
If we use combined federal and state filing, then we have define tax regions.
Define tax reporting entities.

Resolve 1099 exceptions if any:
Submit for each reporting entity the 1099 Invoice exception report to identify the following exceptions :
A )1099 Invoice distribution with no income tax type.
B) 1099 Invoice distributions with invalid or missing income tax region.

Submit the 1099 supplier exception report to identify and resolve the exceptions:

A) Suppliers with Null or Invalid State abbreviations.
B) Suppliers that will be flagged as foreign in the 1099.

Resolve any exceptions in the Suppliers window.
A)Optionally withhold tax from suppliers if they have a missing or invalid Tax Identification Number (TIN) and if you have not met the legal requirements of requesting a valid TIN from them.
Generate 1099 Reports.
A)1099 Forms. Submit to the Internal Revenue Service for each 1099 supplier, and send a copy to the supplier.
B)1096 Form. Submit to the Internal Revenue Service for each 1099 MISC type paid during the calendar year.
C)1099 Electronic Media. If you submit 250 or more 1099 forms, the Internal Revenue Service requires you to file your 1099 payment information on magnetic media or electronically .
D)Form 941. Send this form to the Internal Revenue Service to report total supplier withholding for a quarter. Your Accounts Payable department should create a manual payment for the total amount withheld, and you should remit this amount and the 1096 Form to the Internal Revenue Service.
E)1099 Payments Report. Run this report for your reference to review 1099 payments by supplier or MISC type

1099 Overview

Form 1099 is a form promulgated by the Internal Revenue Service and is used in the United States Income Tax System to prepare and file information return to report various type of income other than wages, salaries and tips (for which form W2 is used instead).
Each payer must complete a 1099 for each covered transaction. Three copies are made one for he payer , one for the payee and one for the IRS.
US Tax law requires business to submit a Form 1099 for every contractor paid at least $600 for service during a year. This requirement usually does not apply to corporations receiving payments.
Many business and organizations must file thousands of 1099s per year. Thus payers who file 250 or more Form 1099 reports must file all of them electronically or magnetically with the IRS. The 250 or more requirement applies separately for each type of return and separately for each type of corrected return. Even though filers may submit 249 information returns on paer, the IRS encourages files to transmit returns electronically.
If the less than 250 or more requirement is met, and paper copies are filed, the IRS also requires the payer to submit a copy of form 1096. The 1096 is a summary of information forms being sent to the IRS. You need one 1096 for each type of information form you have issued.
Payees use the information provided on the 1099 forms to help them complete their own tax returns. In order to save paper, payers can give payees one single Combined Form 1099 that lists all of their 1099 transactions for the entire year. Taxpayers are usually not required to attach Form 1099s to their own Federal income tax returns unless the Form 1099 includes a report for Federal income tax withheld by the payer from the related payments.
several versions of Form 1099 are used, depending on the nature of the income transaction:
1099-A: acquisition or Abandonment of Secured Property
1099-B: Proceeds from Broker and Barter Exchange Transactions
1099-C: Cancellation of Debt
1099-CAP: Changes in Corporate Control and Capital Structure
1099-DIV: Dividends and Distributions
1099-G: Government Payments
1099-H: Health Insurance Advance Payments
1099-INT: Interest Income
1099-LTC: Long Term Care Benefits
1099-MISC: Miscellaneous Income
1099-OID: Original Issue Discount
1099-PATR: Taxable Distributions Received From Cooperatives
1099-Q: Payment from Qualified Education Programs
1099-R: Distributions from Pensions, Annuities, Retirement Plans, IRAs, or Insurance Contracts
1099-S: Proceeds from Real Estate Transactions
1099-SA: Distributions From an HSA, Archer MSA, or Medicare Advantage MSA
1042-S: Foreign Person's U.S. Source Income
SSA-1099: Social Security Benefit Statement
SSA-1042S: Social Security Benefit Statement to Nonresident Aliens
RRB-1099: Payments by the Railroad Retirement Board
RRB-1099R: Pension and Annuity Income by the Railroad Retirement Board
RRB-1042S: Payments by the Railroad Retirement Board to Nonresident Aliens
W-2G: Certain Gambling Winnings