CHAPTER 3: OTHER ADMINISTRATIVE REGULATIONS

Return to CHAPTER 3: OTHER ADMINISTRATIVE REGULATIONS

SUBSECTION 4.3.7.1
GENERAL

4.3.7.1.1
Introduction

Effective Date:

July 1, 1995

In the course of state business activities, agencies may make certain payments to others that must be reported to the Internal Revenue Service (IRS). Copies of information returns must be furnished to recipients for payments reported. These information returns include the appropriate Form 1099 (1099-G, 1099-INT, 1099-MISC, and 1099-R), Form W-2, and Form W-2G. These forms are transmitted to IRS with Form 1096 except for Form W-3 which is used to transmit Form W-2s.

4.3.7.1.2
Purpose

Effective Date:

July 1, 1995

To insure compliance by state agencies with the various reporting requirements of the Internal Revenue Service for annual U.S. Information Returns.

4.3.7.1.3
Guidelines

Effective Date:

July 1, 1995

The following guidelines are provided for general informational purposes only. To ensure federal reporting compliance, agencies are to obtain current publications and IRS advice as needed.

4.3.7.1.3.a

The annual information returns report payments for the calendar year and are generally to be mailed to recipients by January 31 and to IRS by February 28. When 250 or more information returns are prepared by an organization (agency), IRS Publication 1220 requires that they be submitted to the IRS magnetically or electronically and describes the procedure. This requirement applies separately for each type of form.

4.3.7.1.3.b

Annually, during late fall, the IRS mails Publication 393, Federal Employment Tax Forms, to each employer (state agency). Publication 393 contains sample payroll related Forms W-2, W-3, W-2c, and W-3c with completion instructions and a listing of other frequently used payroll forms. Also provided is a listing of information returns (1096, 1099 series, and W-2G) used to report various nonpayroll payments. Publication 393 includes Form 7018, Employer’s Order Blank for Forms, which agencies may use to order applicable forms for reporting purposes.

4.3.7.1.3.c

The IRS publication, Instructions for Forms 1099, 1098, 5498, and W-2G, provides specific instructions on the filing requirements of these returns. This publication contains a Guide to Information Returns. This chart is a helpful quick reference for Forms Number, Title, What To Report, Amounts to Report, and Due Date to the IRS and the Recipient.

Information returns generally applicable to state agencies are:

4.3.7.1.3.c(1)
Form 1099-G, Statement for Recipients of Certain Government Payments

Unemployment compensation payments by the Employment Security Department.

Federal taxable grants of $600 or more which are administered by the state.

Amounts of federal income tax withheld under the 31% backup withholding rules.

4.3.7.1.3.c(2)

Form 1099-MISC, Statement for Recipients of Miscellaneous Income, exclude payments to corporations except for medical or health care service related situations as described in item (e). If backup withholding has been taken, Form 1099-MISC must be filed, regardless of the payment amount.

Payments of $600 or more to estates or beneficiaries for deceased employees’ wages, whether the payment to the recipient is made in the year of death or after the year of death.

Payments of $600 or more for rents.

Prizes and awards of $600 or more that are not for services rendered. (Report taxable awards to employees on Form W-2.) This excludes payments for lottery winnings by the State Lottery Commission which are reported on Form W-2G.

Payments of $600 or more for fees, services, commissions, or other forms of compensation to persons not treated as employees for services rendered. Examples are payments for professional services pursuant to personal services contracts and payments to witnesses or experts in legal adjudication.

Payments of $600 or more to physicians or other suppliers or providers of medical or health care services in connection with medical assistance programs, or health, accident, and sickness insurance programs.

Amounts of federal income tax withheld on miscellaneous income according to the 31% backup withholding rules.

4.3.7.1.3.c(3)

Form 1099-R, Statement for Recipients of Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., is used to report pension and retirement plan payments, whether or not federal income tax is withheld. Death benefit payments made under retirement plans and Internal Revenue Code Section 457 plans (deferred compensation) paid to an estate or beneficiary are reported on Form 1099-R.

4.3.7.1.3.c(4)

Form W-2, Wage and Tax Statement, is issued to report wages and taxable fringe benefits subject to federal income tax withholding, OASI, and/or medicare employment taxes and all taxes withheld. Moving expense reimbursements excludable from wages and payroll taxes are also reported on Form W-2. Distributions to Internal Revenue Code Section 457 plan participants are reported on Form W-2s.

4.3.7.1.3.c(5)

Form W-2G, Statement for Recipients of Certain Gambling Winnings, is used by the State Lottery Commission to report payments for lottery winnings of $600 or more and the required 28% federal income tax withheld from winnings of more than $5,000.

Note: Form 1099-INT, Statement for Recipients of Interest Income, is not applicable to state governments because of the tax-exempt status for interest on obligations of a state or municipal government.

4.3.7.1.3.d

Payments to corporations are generally not required to be reported (reference is Instructions for Forms 1099, 1098, 5498, and W-2G) except for medical payments, payments in which federal income tax or foreign tax is withheld, and barter exchange transactions. Also, generally, payments made to tax-exempt organizations, such as other governmental agencies, social service agencies, and hospitals, are exempt from informational reporting requirements. However, reporting is required for most payments to individuals and partnerships. It is important to know whether the recipient of the payment is doing business as an individual, partnership, corporation, or is tax-exempt.

4.3.7.1.3.e

The Taxpayer Information Number (TIN), name, and address of the recipient are required to be entered on the forms for identification of the payee. The TIN is the social security number for an individual or the employer identification number for a business. Request the recipient’s TIN when applicable. IRS Form W-9, Request for Taxpayer Identification Number and Certification, may be used for obtaining the TIN from payees.

4.3.7.1.3.f

Beginning in 1994 (first filing is January 31, 1995), report backup withholding, withholding on gambling winnings, and withholding from pensions, annuities, and IRAs once a year on Form 945, Annual Return of Withheld Federal Income Tax. See separate deposit requirements for Form 945 in the IRS Publication 15 (Circular E).

4.3.7.1.3.g

Additional instructions and examples are available from the IRS in:

Publication 15 (Circular E), Employer’s Tax Guide;

Publication 493 (Supplement to Circular E), Alternative Tax Withholding Methods and Tables;

Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Corporations;

Publication 937, Employment Taxes;

Publication 1220, Specifications for Filing Forms 1098, 1099 series, 5498 and W2-G Magnetically or Electronically;

Instructions for Forms 1099, 1098, 5498, and W-2G;

Form SS-8, Request for Determination of Employee Work Status for Purposes of Federal Employment Taxes and Income Tax Withholding;

Publication 1141, General Rules and Specifications for Private Printing of Substitute Forms W-2 and W-3; and

Publication 1179, Specifications for Paper Document Reporting and Paper Substitutes for Forms 1096, 1098, 1099 Series, 5498, and W-2G.

4.3.7.1.3.h

Obtain SSA Publication 42-007, Magnetic Media Reporting (W-2 reporting to the SSA) from the Social Security Administration.

Return to CHAPTER 3: OTHER ADMINISTRATIVE REGULATIONS

	The following guidelines are provided for general informational purposes only. To ensure federal reporting compliance, agencies are to obtain current publications and IRS advice as needed.
4.3.7.1.3.a	The annual information returns report payments for the calendar year and are generally to be mailed to recipients by January 31 and to IRS by February 28. When 250 or more information returns are prepared by an organization (agency), IRS Publication 1220 requires that they be submitted to the IRS magnetically or electronically and describes the procedure. This requirement applies separately for each type of form.
4.3.7.1.3.b	Annually, during late fall, the IRS mails Publication 393, Federal Employment Tax Forms, to each employer (state agency). Publication 393 contains sample payroll related Forms W-2, W-3, W-2c, and W-3c with completion instructions and a listing of other frequently used payroll forms. Also provided is a listing of information returns (1096, 1099 series, and W-2G) used to report various nonpayroll payments. Publication 393 includes Form 7018, Employer’s Order Blank for Forms, which agencies may use to order applicable forms for reporting purposes.
4.3.7.1.3.c	The IRS publication, Instructions for Forms 1099, 1098, 5498, and W-2G, provides specific instructions on the filing requirements of these returns. This publication contains a Guide to Information Returns. This chart is a helpful quick reference for Forms Number, Title, What To Report, Amounts to Report, and Due Date to the IRS and the Recipient.
	Information returns generally applicable to state agencies are:
4.3.7.1.3.c(1)	Form 1099-G, Statement for Recipients of Certain Government Payments
	Unemployment compensation payments by the Employment Security Department.
	Federal taxable grants of $600 or more which are administered by the state.
	Amounts of federal income tax withheld under the 31% backup withholding rules.
4.3.7.1.3.c(2)	Form 1099-MISC, Statement for Recipients of Miscellaneous Income, exclude payments to corporations except for medical or health care service related situations as described in item (e). If backup withholding has been taken, Form 1099-MISC must be filed, regardless of the payment amount.
	Payments of $600 or more to estates or beneficiaries for deceased employees’ wages, whether the payment to the recipient is made in the year of death or after the year of death.
	Payments of $600 or more for rents.
	Prizes and awards of $600 or more that are not for services rendered. (Report taxable awards to employees on Form W-2.) This excludes payments for lottery winnings by the State Lottery Commission which are reported on Form W-2G.
	Payments of $600 or more for fees, services, commissions, or other forms of compensation to persons not treated as employees for services rendered. Examples are payments for professional services pursuant to personal services contracts and payments to witnesses or experts in legal adjudication.
	Payments of $600 or more to physicians or other suppliers or providers of medical or health care services in connection with medical assistance programs, or health, accident, and sickness insurance programs.
	Amounts of federal income tax withheld on miscellaneous income according to the 31% backup withholding rules.
4.3.7.1.3.c(3)	Form 1099-R, Statement for Recipients of Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., is used to report pension and retirement plan payments, whether or not federal income tax is withheld. Death benefit payments made under retirement plans and Internal Revenue Code Section 457 plans (deferred compensation) paid to an estate or beneficiary are reported on Form 1099-R.
4.3.7.1.3.c(4)	Form W-2, Wage and Tax Statement, is issued to report wages and taxable fringe benefits subject to federal income tax withholding, OASI, and/or medicare employment taxes and all taxes withheld. Moving expense reimbursements excludable from wages and payroll taxes are also reported on Form W-2. Distributions to Internal Revenue Code Section 457 plan participants are reported on Form W-2s.
4.3.7.1.3.c(5)	Form W-2G, Statement for Recipients of Certain Gambling Winnings, is used by the State Lottery Commission to report payments for lottery winnings of $600 or more and the required 28% federal income tax withheld from winnings of more than $5,000.
	Note: Form 1099-INT, Statement for Recipients of Interest Income, is not applicable to state governments because of the tax-exempt status for interest on obligations of a state or municipal government.
4.3.7.1.3.d	Payments to corporations are generally not required to be reported (reference is Instructions for Forms 1099, 1098, 5498, and W-2G) except for medical payments, payments in which federal income tax or foreign tax is withheld, and barter exchange transactions. Also, generally, payments made to tax-exempt organizations, such as other governmental agencies, social service agencies, and hospitals, are exempt from informational reporting requirements. However, reporting is required for most payments to individuals and partnerships. It is important to know whether the recipient of the payment is doing business as an individual, partnership, corporation, or is tax-exempt.
4.3.7.1.3.e	The Taxpayer Information Number (TIN), name, and address of the recipient are required to be entered on the forms for identification of the payee. The TIN is the social security number for an individual or the employer identification number for a business. Request the recipient’s TIN when applicable. IRS Form W-9, Request for Taxpayer Identification Number and Certification, may be used for obtaining the TIN from payees.
4.3.7.1.3.f	Beginning in 1994 (first filing is January 31, 1995), report backup withholding, withholding on gambling winnings, and withholding from pensions, annuities, and IRAs once a year on Form 945, Annual Return of Withheld Federal Income Tax. See separate deposit requirements for Form 945 in the IRS Publication 15 (Circular E).
4.3.7.1.3.g	Additional instructions and examples are available from the IRS in:
	Publication 15 (Circular E), Employer’s Tax Guide;
	Publication 493 (Supplement to Circular E), Alternative Tax Withholding Methods and Tables;
	Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Corporations;
	Publication 937, Employment Taxes;
	Publication 1220, Specifications for Filing Forms 1098, 1099 series, 5498 and W2-G Magnetically or Electronically;
	Instructions for Forms 1099, 1098, 5498, and W-2G;
	Form SS-8, Request for Determination of Employee Work Status for Purposes of Federal Employment Taxes and Income Tax Withholding;
	Publication 1141, General Rules and Specifications for Private Printing of Substitute Forms W-2 and W-3; and
	Publication 1179, Specifications for Paper Document Reporting and Paper Substitutes for Forms 1096, 1098, 1099 Series, 5498, and W-2G.
4.3.7.1.3.h	Obtain SSA Publication 42-007, Magnetic Media Reporting (W-2 reporting to the SSA) from the Social Security Administration.