1099 Misc Tax Form 2006 by hdc31226

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									Tax Reconciliation Bill H.R. 4297
Signed into Federal law on May 17, 2006



         3% Federal Mandatory
              Withholding
   State Controller’s Division - SFMS
       Presented by: Trudy Vidal
          Bill Requirements
 Withhold 3% tax on certain vendor
  payments made by government entities
  after December 31, 2011
 Remit these taxes to the IRS using current
  tax deposit rules
 Report the withholding to the vendors/IRS
  on form 1099-MISC
    Withhold on Vendor Payments
 All government entities are required to withhold
 Payments made to any person providing any
  property or services
 Includes any payment made in connection with
  voucher or certificate program
 Includes payments to provide health care/other
  services NOT based on need or income (we will
  be discussing exceptions)
 Withhold on Vendor Payments – cont

 Exceptions    to Withholding:
     Payments for interest
     Payments for real property
     Payments to tax-exempt entities and foreign
      governments
     Payments to intra-governmental entities
     Payments for classified or confidential
      contracts
 Withhold on Vendor Payments – cont

 Exceptions    to Withholding:
     Payments made by a political subdivision
      which pays less than $100m annually of this
      type payments
     Payments in connection with public
      assistance/welfare eligibility determined by
      income
     Payments to government employees
     Proposed regulations have dollar threshold of
      $10,000 per payment
         Federal Reporting
          Requirements
 1099-MISC   required to report payments
  and withholding
 Reporting includes Corporations
 Currently – 7,500 1099-MISC forms issued
 Estimate – 20,000 1099-MISC forms will
  be issued
         Description of Project
         SFMS Responsibility
 Make  modifications to SFMA (Statewide
  Financial Management Application) to
  calculate and appropriately withhold/report
 Add central staff to manage new
  withholding
 Develop new procedures to ensure
  accurate withholding, remitting and
  reporting
              Technology – SFMA
              SFMS Responsibility
   Modifications to SFMA will be extensive
    including but not limited to:
       System Management Profile – 97 screen for 3%
        withholding amount
       Systemwide Vendor Profile – 52 screen indicator
       Comptroller Object Profile – D10 screen withholding
        will be independent of 1099-MISC indicator
Technology – SFMA continued
    SFMS Responsibility
   Withholding program currently only withholds
    for backup withholding and foreign vendor
    withholding
   ACH payments currently do not allow any
    withholding
   1099-MISC reporting program
   TIN Bulk Matching program currently only
    runs once a year
   Add Electronic remittance to IRS
           Staffing Requirements
           SFMS Responsibility
 Add   central staff for ongoing management:
     Daily deposits reconciled and remitted to IRS
     Modifications to vendor process
     Daily TIN Match with IRS to manage accurate
      information on over 100,000 vendors
     Provide notification/training/support to vendor
      community regarding withholding
     All current vendors will need modifications
                       Project Schedule
                      SFMS Responsiblity
    Implementation Date = January 1, 2012



                      Phase 1
                                            Phase 2
                                                                 Phase 3



          July 2010             July 2011             Jan 2012


     Phase 1 – System Modifications
     Phase 2 – Transition System Profiles-Additional staffing resource
     Phase 3 – Ongoing Management
                 Current Status
SCD Policy Option Package submitted for 09-11
Biennium
    One time funding system modifications
SCD Policy Option Package submitted for 11-13
Biennium
 Ongoing funding 1 FTE
 Informational mailings and 1099s for about 100,000

  vendors
SFMS to train agencies and provide
implementation guidance for SFMA vendors
What Does This Mean To Agencies
   If all agency payments are made through
    SFMA warrants or ACH, we will handle
    this requirement centrally
   If agencies make payments with checks
    through subsystems:
       Each agency will need to review type of
        payments made
       Each agency may need to make system
        modifications, remit taxes to IRS and file
        1099-MISC Forms reporting withholding
Questions?

								
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