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Issue Forms 1099-MISC

Policy: 

Independent contractors that are used in the participant-directed program must be issued Forms 1099-MISC when they meet certain criteria.  The F/EA issues Forms 1099-MISC to contractors and submits copies of the Forms 1099 and Form 1096 (or electronic equivalent) to the IRS.  Copies of Forms 1099 and Form 1096 (or electronic equivalent) are submitted to the state Department of Revenue (or equivelent) depending on state rules.

Forms 1099-MISC should be filed per instructions and rules for the form, which can change from year to year.

Not withstanding other Form 1099-MISC instructions, Forms 1099-MISC will generally be issued to independent contractors by the F/EA under the following circumstances:

  • the participant uses the services of a self-employed individual and the individual is paid $600 or more per year by the participant (or consumers) for those services.
  • the participant uses the services of a nonprofit or government organization and that entity is paid $600 or more per year by the participant (or consumers) for those services.
  • the participant purchases health or medical services from any organization, including a corporation.  Qualifying health and medical services include services provided by physical & occupational therapists and nurses.

Forms 1099-MISC generally must be submitted to payees by January 31 of the year following the tax year reported on Form 1099-MISC.

The F/EA submits to the IRS copies of all Forms 1099-MISC and a completed Form 1096 by February 28 of the year following the tax year reported on Form 1099-MISC.  If the F/EA issues 250 or more Forms 1099-MISC, Forms 1099 must be filed electronically by the IRS.  In this case, a Form 1096 is not required.  Electronic Forms 1099-MISC are due to the IRS by March 31

Procedure: 
  1. <<Insert procedure to determine which payments/contractors qualify to receive a Form 1099-MISC and how that is tracked.>>
  2. <<Insert procedure to produce paper Forms 1099-MISC>>
  3. <Insert procedure to mail Forms 1099-MISC to payees>>
  4. <<Insert procedure to either create the electronic form 1099 for the IRS, or to create the 1096 MISC.>>
  5. <<Insert procedure to submit Forms 1099 and Form 1096 (or electronic equivalent) to the IRS.>>
  6. <<Insert procedure to create Form 1099 info per state requirements and to submit to the state.>>
Internal Controls: 
  1. <<Insert internal controls to track which payees get Forms 1099.>>
  2. <<Insert internal controls to ensure that data on Forms 1099 is correct.>>
  3. <<Insert internal controls to ensure that Forms 1099 are submitted to payees by January 31 and to the IRS and State by applicable due dates.>>