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					                                                                            Business Services
                                                                      The University of Montana
                                                                 Missoula, Montana 59812-1254

                                                                         Procedure: 160026
                                                                      Revision Date: 1/18/05
                                                                        Revision Number: 0

PROCEDURE: 1099 Processing


The University of Montana is required to report certain payments to the IRS on form
1099MISC. These payments include non-employee compensation, prizes and awards,
medical service payments, rents, and royalties. Most of these require reporting on
amounts greater than $600.00. The 1099MISC is generally not required on payments
made to corporations, payments for merchandise, payments of rent to real estate
agents, and wages paid to employees.

To meet this requirement, Business Services uses Banner Finance to collect and
extract the 1099 reportable vendors and their associated transactions. After careful
review, the 1099MISC forms are printed and mailed to vendors by the required
deadline. Then a data file is created and transmitted electronically to the IRS.


      The Business Services Accounts Payable Manager manages the 1099 reporting

      Deadlines for IRS 1099 filing:

          o Recipient Copy: January 31
          o IRS Electronic Copy: March 31
          o Electronic test files can be submitted: November 1 – February 15

      Yearly IRS regulatory SCT enhancement releases are applied each autumn to
       ensure the Banner Software is compliant with current 1099 tax law. Refer to for current applicable 1099 tax law.


      Appendix A – 1099 Information & Banner Income Type Codes
      Appendix B – 1099 Process Flowchart
      Appendix C -- CIS Technical Specifications for programmatic logic
      Appendix D -- IRS FIRE system filing instructions

    Responsible      Procedure Step:
    Systems          1099 income types can be associated with account codes on
    (under the       FTMACCT.
    direction of
    Accounts         Select the appropriate income type code from the list to associate
    Payable)         it with an account code.

                     (Not used by UM – does not facilitate 1099 reporting on invoices.
                     1099 reportable payments are only made when specifically
                     indicated at the invoice level. The account/income type
                     association may be useful for reporting.)
    Vendor           1099 Income types can be associated with vendors on
    maintenance      FTMVEND
                   Refer to Establishing a New Vendor policy/procedure document:
                   blishing a New Vendor.doc)
                   The 1099 Tax ID and 1099 indicator check box in the invoice
                   header block of JAAINVE will default in from the vendor table. All
                   payments made to this vendor will be 1099 reportable; UNLESS
                   these two fields are cleared when making a payment.
    Campus         Designate a vendor payment 1099 reportable at invoice level
    users/Accounts <insert A/P procedure here>
    Payable        The default A/P address designated on the vendor table will
                   appear on the 1099 forms. Only the first two lines of the street
                   address will display on the 1099 form.

                                                                              Page 2 of 14
Accounts         Review new year IRS guidelines and determine procedure form
Payable          changes. Notify Systems of changes.
Systems          Review SCT release notes and determine UM program changes.

Accounts         Order IRS 1099 forms/envelopes
Accounts         Send out memo to users RE: last day to make 1099 reportable
Payable          payments.
Systems          When requested by Accounts Payable staff -- Run 1099 edit
                 scripts (J1099EDT) via setup.
                 Parameters: (Select reports to be run as instructed by A/P)
                      RUN NO ITYP REPORT? (Y/N):
                      RUN 1099 VENDORS REPORT? (Y/N):
                      RUN NOT FLAGGED FOR 1099? (Y/N):
                      RUN NO DEFAULT ADDRESS REPORT? (Y/N):
                      RUN FLAGGED 1099 UNDER BAD/ACCT? (Y/N):
                      PLEASE ENTER THE TAX YEAR (YY):
                      PLEASE ENTER START DATE RANGE (DD-MON-
                      PLEASE ENTER END DATE RANGE (DD-MON-

                 They are used by Accounts Payable staff to cleanup 1099 data.
                 Reports generated:
                     Invoices with 1099 flag checked but no income type
                     1099 vendors with default A/P addresses NULL
                     Invoices not flagged for 1099 when expense accounts
                       621%, 625%, 62841, 62857, 64106 were used
                     Invoices flagged for 1099 but when expense accounts
                       621%, 625%, 62841, 62857, 64106 were NOT used
                     Listing of all 1099 vendors

                 Run the 1099 vendors 3rd address line query from the
                 J:\\systems\Access reports\ADMN Reports.mdb
                 Give to Accounts Payable manager.

                 Check for multiple reporting ids for same pidm. Run the 1099 dup
                 pidm names query from the J:\\systems\Access reports\ADMN
                 Reports.mdb. Give to Accounts Payable manager.

Accounts         Review results from queries/move 1099 info from bad reporting
Payable          ids to the good ones– notify systems which reporting id/pidm
                 combinations are bad

                                                                         Page 3 of 14
Systems       Have programming staff remove bad reporting id/pidm
              combinations. Create audit report of records removed.
Systems       Run 1099 Report/Withhold Audit (FARWHLY) via online job
              submission for A/P.
                  Reporting Year (YY)
                  As of Date: (DD-MMM-YYYY)

              It will show all 1099 vendors and their totals.

Accounts      Review reports- <insert procedures from Kay> Clean up data –
Payable       Using the 1099 Reporting Form (FAA1099) to make adjustments
              to 1099 data.
              This form provides an online display of 1099 information for a
              vendor for a specific reporting year. Adjustments can be made to
              the income type or reported amounts. Records can also be
                   Select ‘Update Reporting ID’ to update the 1099 Reporting
                     ID of the record where the cursor resides to match the
                     1099 Reporting ID in the key block.
                   Select ‘Mass Update Reporting ID’s’ to update the 1099
                     Reporting ID of each record in the detail block. (More info
                     in Chapter 15/(Accounts Payable Processing) of the
                     Banner Finance User Manual)

CIS – DBA’s   Download SCT 1099 regulatory release from BPOST
CIS –         Apply latest SCT BPOST IRS regulatory enhancements to UM
Development   mods of 1099 Forms Report (JAB1099), 1099 Electronic File
              Build (JAM1099) (Tax year 2003: Please note that there is not a
              release guide for 5x clients, since the only change was to modify
              the IRS file layout (very minor) in FAM1099. For 6x, there is a
              release guide since there was also the enhancement to FOA1099

                                                                        Page 4 of 14
               (added an institution window), which resulted in the deletion of
               parameters for FAM1099 and FAB1099.)
Systems/Acco   Test 1099 Forms Report (FAB1099) and 1099 Electronic File
unts Payable   Build (JAM1099). Confirm results with Banner 1099 vendor data.
Systems        After receiving the okay from Accounts Payable -- Run 1099
               Forms Report (FAB1099) via job submission–
                   Printer type – (2) for Laser
                   Reporting Year (YYYY)
                   Correction as of date (use only on correction runs)
                   Combine or separate amounts – (C)
                   Primary contact telephone number – 406-243-4935
                      (A/P manager)

               This creates the data file to print on 1099 forms
               Coordinate with CIS Operations staff to print on pre-printed
               forms. Confirm correct data alignment on forms.
Systems        Run 1099 report that will match all 1099 forms produced from
               ADMN FAB1099 run. <insert run instructions – RSM to be
               submitted to Jan>
CIS –          Print JAB1099.lis on pre-printed forms
Accounts       Stuff and mail out 1099 notices
Systems        Prep for IRS electronic filing -- Review current year IRS
               publication 1220 for the federal/state combined filing program.
               Any new participating state codes will need to be entered in
               FTMSDAT in BANNER.

               Entity/Usage Code: JAM1099
               Attribute Code: STATE_CODES
               Optional Code #1: (two character state abbreviation ie. MT)
               Optional Code #2: (the associated IRS assigned state code from
               IRS Pub 1220)
Systems        When instructed by Accounts Payable -- Run 1099 Electronic File
               Build (JAM1099) – This creates the electronic file to send to the
                    Tax Year (YYYY)
                    (T)est, (C)orrection, (R)eplacement or ENTER for
                      Original <CR>
Systems        Log on to laptop and use IRS Fire System to transmit a TEST file
               to IRS (Refer to Appendix D)
Systems        Confirm file was received by IRS and acceptable. Confirm with
               Accounts Payable Manager.
Systems        Log on to laptop and use IRS Fire System to transmit an

                                                                         Page 5 of 14
           ORIGINAL file to IRS (Refer to Appendix D)
Accounts   Correction notices <insert A/P instructions>
Systems    Run FAB1099 in Correction mode via job submission (GJAPCTL)
           output file: job$sub:fab1099xxx (Print to Business Services –
           Systems laser printer—queue =BSRV$PRINT1)

               Printer type – (2) for Laser
               Reporting Year (YYYY)
               Correction as of date (use only on correction runs)
                Enter the earliest date that corrections were made.
                The correction date ensures that the system does not
                use vendors who do not have corrections.
               Combine or separate amounts – (C)
               Primary contact telephone number – 406-243-4935
                (A/P manager)

           Corrections printing works off of activity date. When the
           activity date of a 1099 transaction on FAA1099 changes,
           then a corrected 1099 will be processed. To no longer
           include a transaction amount as 1099 income on
           FAA1099, zero out the dollars associated with the
           transaction FAA1099, then rerun FAB1099 with the
           correction date processed. To modify how corrected
           1099 amounts should be captured (i.e., based on
           something other than activity date) requires a change to
           how 1099 processing currently works.

Systems    Review and transmit Worker’s Comp file

           The University of Montana has contracted with Intermountain
           Claims Inc. to process our self-funded Worker’s Compensation
           Program claims. At the end of the calendar year, they will send
           via email the electronic file to be transmitted to the IRS. Systems
           production staff will review the file for data requirements per IRS
           regulations, and transfer the file via the IRS FIRE system. (Refer
           to Appendix D)

           Contact information for file originator:

           David Ward
           Intermountain Claims Inc

                                                                      Page 6 of 14
Fax 208-375-8905

                              Page 7 of 14
                                  Appendix A
                 1099 Information & Banner Income Type Codes

Form Type:       Form Title:            What to Report:          Amounts to     Banner Income
                                                                  Report:        Type Code:
1099-MISC    Miscellaneous Income       Rent or royalty         $600 or more,     Rent = RE
                                     payments; prizes and       except $10 or
                                    awards that are not for       more for        Other Income
                                       services such as           royalties     (Prizes & Awards)
                                    winnings on TV or radio                            = PR
                                                                                 Royalties = RY
                                    Payments to a physician,    $600 or more    Medical & Health
                                     physicians’ corporation,                   Care Payments
                                        or other supplier of                         = MD
                                        health and medical
                                     services. Issued mainly
                                      by medical assistance
                                     programs or health and
                                    accident insurance plans.
                                       Payment for services     $600 or more     Nonemployee
                                     performed for a trade or                    Compensation
                                     business by people not                         = NC
                                    treated as its employees.
                                        Examples: fees to
                                          subcontractor or
                                       directors, and golden
                                       parachute payments
                                     Gross proceeds paid to      All amounts    Gross Proceeds
                                             attorneys                          Paid to Attorney
                                                                                      = AT

                                                                                            Page 8 of 14
                          Appendix B – 1099 Process Flowchart

                FINANCE 1099 PROCESS

                                Start the


                               J1099EDT                    DEFAULT_ADDR

   1099-                                                     BAD_ACCTS

                                                 No         P1




                                to Print    No        P2


   IRSTAX.DAT                  JAM1099

    TO IRS

                     Yes        Process



                                                                           Page 9 of 14
                      Appendix C – UM CIS Technical Specifications


      This is an overview of what Business Services will be doing from October thru February
      to complete the 1099 process. There are 3 major steps they do. The first step is to run
      a series scripts in the process J1099EDT that will print reports so the user can clean up
      the Banner Finance data. The second step is to run the process called FAB1099 (that
      runs a UofM modification JAB1099) that will create a print file to create the 1099 forms.
      The last step is to run the process JAM1099 that will create the electronic file to be sent
      to the IRS.


      See documentation of specific process runs for details


      See documentation of specific process runs for details


      4.1    1099 EDIT PROCESS


      4.2    FAB1099 PROCESS (Runs UofM Modified JAB1099.PC)


      4.2    JAM1099 PROCESS



      See documentation of specific process runs for details


             See documentation of specific process runs for details

                                   JAB1099 Specifications


                                                                                     Page 10 of 14
      This is a slightly modified version of FAB1099. The program has been modified to print two
      1099Misc Forms for each Vendor selected to receive a 1099Misc Form.

2.0      SOFTWARE


      The baseline program was modified so that two 1099Misc forms are printed for each
      selected vendor. For the 2001 Federal Reporting Year, the 1099Misc form was enlarged so
      that 2 forms are printed on each 8 ½ x 11 page. The UofM mod prints one page (2 forms)
      for each individual, as UofM has their 1099Misc forms printed so that the two copies go to
      each vendor (Copy B and Copy 2).

                                       FAM1099 Specifications

         This process will creates a file containing form 1099 information. The file will be
         electronically transferred to the IRS.

2.0      SOFTWARE

         PRO- C


         FAB1099             1099 Tax Detail Table
         FATTAXB             Magnetic 1099 Record B
         FATTAXT             Temporary 1099 Magnetic Tape DATA
         FTVVEND             Vendor Validation Table
         SPRIDEN             Person Identification/Name Repeating Table
         SPRADDR             Address Repeating Table
         GUBINST             Institutional Description Table


         FIN$DATA: IRS1099.DAT


         1.   GEN$SETUP:                TAX_YEAR.PROMPT
         2.   Prior Year Filing Y/N:    Hard coded to “N”
         3.   GEN$SETUP:                1099_RPT_MODE.PROMPT
         4.   Transmitter Control Code: Hard coded to "57607"
         5.   Payer Name Control:       Hard coded to “ “
         6.   Test/Correction/Replacement Indicator: (T/C/R)
         7.   GEN$SETUP:                1099_RPT_MODE.PROMPT
         8.   Combined or Separate Amounts C or S: Hard coded “C”

                                                                                          Page 11 of 14
      9. Contact Email Address Number(30 Max) : Hard coded
      10. File Type: LS = Magnetic or Blank = Asynchronous: Hard coded “ “
      11. Number of printed lines per page [55]:

6.0   LOGIC

      6.1     JAM1099.PC

              This process can be run in (T)est , (C)orrection , (R)eplacement or (RETURN) for
              Original mode. These modes will tell the IRS what type of file we are sending
              them. Most years we send a test file to make sure that the data is good and any
              new release changes are still ok. After that we send the original file. The
              correction and replacement modes are only used if the original file has been
              rejected by the IRS.

      6.2     DUMP_FATTAX.SQL (No longer used)

              Release 5.4.01 incorporated the functionality of this script into the SCT
              JAM1099.PC program. The script was removed from the job.

                                                                                    Page 12 of 14
               Appendix D -- IRS FIRE system filing instructions

Dial-Up Network connections
Use black laptop. This is already set-up with the IRS dial-up icon.

1. Double click on icon.

2. The “Connect To” dialogue box will appear with the following information:
   User name: (blank)
   Password: (blank)
   Phone number: 8 1 304 2622400
   Dialing from: New Location

   Click ‘Connect’

3. If prompted for user name and password, complete according to local UM network login
   procedures, otherwise, click ‘OK’.

4. When you receive ‘Connection Complete’, click ‘OK’.

5. Click on your Internet Explorer (remember, you are not connecting via the Internet)

6. In the URL Address enter and press enter

First time connection to the Electronic Filing System (If you have logged on previously, skip this

               Click ‘Create New Account’
               Fill out the registration form and click ‘Create Account’
               Enter your logon name (most users logon with their first and last name).
               Enter your password (the password is user assigned and is case sensitive).
               Click ‘Create Account’
               If you receive the message ‘account created’, click ‘OK’.

Subsequent connections to the Electronic Filing System

Click ‘Log On !!!’
User ID: Scott Klanecky
Password (the password is user assigned and is case sensitive)
Click ‘Log On’

At the Main Menu
Click ‘Start the Fire Application’

At the Menu Options
Click ‘Information Returns’
        Enter your TCC: 57607
        Enter your EIN: 816001713
        Click ‘Submit’

                                                                                        Page 13 of 14
The system will then display the company name, address, city, state, zip-code, phone number
and contact. This information will be used to contact or send any correspondence regarding this
transmission. Update as appropriate and/or Click ‘Accept’.

Click one of the following:
       Original File
       Correction File
       Test File
       Replacement File (if you select this option, select one of the following:)
               File submitted on this system (file was originally transmitted on this system).
               Click file to be replaced
               Magnetic media replacement file
                        Enter the Alpha character from the media tracking slip that was
               returned with your magnetic media shipment                .
               IRP-BBS replacement file
                        If you are replacing a file that was originally submitted on the IRP-
               BBS, enter the original filename assigned by that system.

Click ‘Submit’

Enter the drive/path/filename of the file you want to upload or click ‘Browse’ to locate the file.

Click ‘Upload’
When the upload is complete, the screen will display the total bytes received and tell you the
name of the file you just uploaded.
If you have more files to upload,
        click ‘File Another’, otherwise,
        click ‘Back to Main Menu’.

In 1-2 business days, you can check the acceptability of your file.
At the Main Menu
        Click ‘File Status’
        Enter your TCC: 57607
        Enter your EIN: 816001713
If ‘Results’ indicate:
‘File Good’ and you agree with the ‘Count of Payees’ you are finished with this file.
‘File Bad’ - correct the errors and resubmit the file as a ‘replacement’.
‘Not Yet Processed’ - File has been received, but we do not have results available yet.
Please check back in a few days.

Click on the desired file for a detailed report of your transmission.

When you are finished, click ‘Log off’.
Close your Web Browser.

Go back into your Dial-Up Network and click ‘disconnect’, otherwise you may stay
connected and incur unnecessary phone charges.

                                                                                      Page 14 of 14