USAS Procedures for 1099 Reporting for Calendar Year 2023

Overview

Applicable to

State agencies and institutions of higher education

Summary

Agencies and institutions often pay individuals who are not their employees for services rendered, and sometimes pay interest to individuals. If your agency or institution has paid a non-corporate payee a total of $600 or more for services or interest during a calendar year, you must report the payment(s) to the Internal Revenue Service (IRS) on a Form 1099-Miscellaneous (MISC), Form 1099-Nonemployee Compensation (NEC), or Form 1099-Interest Income (INT) and send Form 1099 Copy B to the payee. Generally, payments to corporations are not reportable.

Exception: Legal and medical services are reportable to the IRS for corporations. USAS will force 1099 Indicator A (Attorney Fees) or 6 (Medical Services) when a payment is made to a payee with ownership type C (Corporation), O (Out of State Corporation) or T (Texas Corporation) AND the comptroller object code used to make the payment has a default 1099 indicator A or 6 on the USAS D10 Profile (comptroller object profile). See Instructions for Form 1099-MISC and 1099-NEC PDF regarding payments to corporations for legal and medical services.

For reportable interest payments see Instructions for Form 1099-INT PDF

Payments made with a credit card or payment card and certain other types of payments, including third-party network transactions, must be reported on Form 1099-K by the payment settlement entity (Citibank N.A.) under U.S. Code, Title 26, Section 6050W and are not subject to reporting on Form 1099-MISC; see exceptions on the instructions for Form 1099-MISC.

State of Texas agencies and institutions of higher education are not required to issue Form 1099-MISC for payments made with a credit card. It is Citibank N.A.’s responsibility to report credit card payments via Form 1099-K.

To assist agencies and institutions with filing 1099s, the Uniform Statewide Accounting System (USAS) captures 1099-related data and by request generates the following reports:

• DAFR7940
  • 1099 verification reports to help agencies analyze 1099 data prior to requesting the DAFR7950.
• DAFR7950 – agencies choose from one of the following filing formats:
  • 1099 data file – agencies must print hard copies to send to vendor.
  • Hard copy forms with the IRS Reportable Data File (IRSRDF).

Filing Deadlines:

Important for CY 2023 1099 Reporting:

• On January 23, 2023, the IRS opened the new Information Returns Intake System (IRIS) Taxpayer Portal. IRIS is a free online system that allows users to electronically file information returns and automatic extensions of time to file. Agencies using IRIS for the first time, must request a unique Transmitter Control Code (TCC) for that system. Any TCC obtained to use the FIRE system cannot be used for IRIS. Please keep in mind, the FIRE system will also be available for filing. Do not file copies of the forms in the FIRE system and in IRIS. This will result in duplicate filing. For more information, please visit the E-file Forms 1099 with IRIS webpage.
• On February 21, 2023, the Department of the Treasury and the IRS published final regulations reducing the threshold for filing returns and other documents electronically. These regulations require filers of 10 or more information returns in a calendar year beginning in 2024, tax year 2023, to file those information returns electronically. Corrected information returns MUST be filed electronically if the original return was required to be submitted electronically. For more information about the regulations and the reduced threshold to electronically file, refer to the IRS and Treasury’s final regulations on e-file and the Filing Information Returns Electronically (FIRE) webpages.
• DAFR7950s can be requested any business day beginning Jan. 2-30, 2023.
• USAS-generated 1099 forms are addressed to the payee’s mail code based on the last 1099-eligible payment made to that payee by the paying agency.

Note: Agencies can look up the mail code used to generate a 1099 form in the Texas Identification Number System (TINS). For instructions, see 1099 MC Lookup in the Payee Mail Code Information (PYADDR) section of TexPayment Resource.

Legend

This icon indicates information applicable to the Centralized Accounting and Payroll/Personnel System (CAPPS).