MEMORANDUM SA 99-12
|All State Agencies|
|FROM:||F. Howard Karlton CPA, Director|
|SUBJECT:||1099 Reporting Changes for Calendar Year 1998|
The Internal Revenue Service has recently released the Instructions for Forms 1099, 1098, 5498, and W-2G... which details the changes in reporting requirements for the calendar year ending 1998. Agencies should obtain a copy of these instructions from the Internal Revenue Service by either calling 1-(800) 829-3676 or through the Internet at "www.irs.ustreas.gov" as there have been changes affecting reporting for 1998.
There are two new 1098 forms that must be completed for 1998. The 1098-E, Student Loan Interest Statement has been developed for lenders to report student loan interest received of $600.00 or more on eligible student loans for a covered period ending during or after 1998. The 1098-T, Tuition Payments Statement has been developed for eligible educational institutions to report tuition and related expenses. You should obtain the instructions for these forms for correct filing procedures and instructions.
The exemption from reporting payments to corporations for legal services no longer applies. All vendor codes used by agencies to pay for legal services need to have the 1099 Indicator changed to ‘Y', if the indicator is currently ‘N'. Additionally, the Master Vendor Indicator must be changed to ‘Y' and the Primary vendor Indicator must be changed to ‘N' for the main office vendor code of the FEIN/SSN. Agencies should submit a Payee Vendor Update form directly to OSRAP to affect the change. The completed form may be faxed to either (504)342-1053 or mailed to the address below. These forms may be obtained from Forms Management, if needed.
The IRS has stipulated that "...if you make a payment in the course of your trade or business to an attorney in connection with legal services and the attorney's fee cannot be determined, the total amount paid to the attorney (gross proceeds) must be reported in box 13 with a new code of A."
Two new object codes have been added to ISIS to properly report gross proceed payments to attorneys on the 1099 forms generated at year end. Those objects are 3435 - Legal - Gross Proceeds and 3745 - Contract Atty-Gross Proceeds. Agencies should journal voucher their expenditures for attorney gross proceed payments to these accounts as appropriate. Please remember to code the vendor code on both lines of the J6. An InfoMaker report is attached for those ISIS agencies that coded transactions to object codes 3430 and 3742 with transaction dates during the period of 1/1/98 to 9/23/98. You should verify that no other payments are affected by running your own InfoMaker reports and reviewing the 4G01 and 4G02 1099 reports. Agencies should take this into consideration when manually correcting any 1099s generated for calendar year 1998 at the close of this year.
The 1099 process, which is run during the December monthly close, looks at the vendor's 1099 status and the object code used on the payment voucher at the time the process is run to determine if a payment will be reported. Therefore, even though the vendor's 1099 indicator was ‘N' when payments were issued, as long as the change is made before the 1099 process is run, all payments for that vendor record issued using 1099 reportable objects will be reported.
If you have any questions, please contact the OSRAP Help Desk at (225)342-1097. Remember, all OSRAP SA memorandums and forms may be accessed through our home page at http:\\www.doa.state.la.us\osrap\osrap.htm.
|POST OFFICE BOX 94095||STATE CAPITOL ANNEX||BATON ROUGE, LA 70804-9095|
|(504) 342-0708||FAX (504) 342-1053|
|AN EQUAL OPPORTUNITY EMPLOYER|