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Processing 1099s in Oracle Fusion Payables

The 1099 processing is at the top of the priority list for the AP Managers at the beginning of every year. For
cloud customers, the IT department needs to confirm with Oracle Cloud support for the latest annual AP patches (
typically available in November/early December) to reflect 1099 tax reporting changes required by the United
States Internal Revenue Service (IRS) for that tax year. The AP managers then extract the data for the current tax
year by running certain set of oracle standard programs and file that data in defined format with IRS.
In order to comply with Internal Revenue Service (IRS) tax requirements, all state agencies must report nonemployee compensation to the IRS on a calendar-year basis. To provide correct year-end reporting information,
corrections and updates may be required to the Supplier Master Data and/or modifications may be required to AP
Invoices. In order to file accurate 1099 reports, all necessary changes must be made by December 31 of the
current tax year.
1. 1099 Preparation Steps

Set up Suppliers for 1099 reporting (Supplier > Manage Supplier, Income Tax tab)

Suppliers defined in Oracle need to have specific fields populated indicating that the Supplier requires a 1099
including:

Taxpayer ID (must be 9 digits)

Federal Reportable box must be selected

Federal Income Tax Type (to determine which box on the 1099 the amount will go)

Tax Reporting Name (alternate name to use for the supplier on the 1099 documents) OPTIONAL

Update 1099 reportable flag at the supplier site level (Supplier > Manage Supplier > Sites > General Tab)
Enable the supplier site for 1099 reporting

1099 AP Invoice Requirement (Invoices > Create Invoice)

Ensure that the appropriate AP invoice lines are flagged appropriately. Invoice distributions contain a field called
the Income Tax Type, when this field is populated; the invoice distribution is flagged for 1099 reporting.

Income Tax Type The MISC code defaults from Supplier record

Income Tax Region The State code (like FL for Florida) defaults from the Sites address

Setup Tax Reporting Entity Create tax reporting entity from Set up and Maintenance > Manage
Reporting Entities

For each reporting entity, assign one or more balancing segment values. When you submit 1099 reports for a
tax entity, Oracle Fusion Payables sums up the paid invoice distributions that have these company balancing
segment values in their accounts.

2. 1099 Reporting Considerations

The total for all 1099 reportable invoice distributions is $600 or higher (See http://www.irs.gov for more
information)

There is a MISC code on the invoice distribution in the Income Tax Type field

The Invoice is paid within the date range specified (usually the year)

3. 1099 Reporting Process Flow

4. 1099 Reporting Processing Steps


A. Review Oracle 1099 Processing Updates

The IT department reviews oracles metalink for 1099 processing and program updates ( typically
available in November/early December)

Identify any patches to reflect 1099 tax reporting changes required by the United States Internal Revenue
Service (IRS) for that tax year

Apply and test those patches

B. Review 1099 Suppliers

Run US 1099 Supplier Exception Report to identify Suppliers with inaccurate or missing information
for 1099 processing. Correct these supplier exceptions in the Suppliers window. The 1099 Supplier
Exceptions Report should be submitted for each of the tax reporting entities.

Correct supplier exceptions on the Income Tax tab on the Manage Suppliers page. You should submit the
US 1099 Supplier Exceptions Report for each of your tax reporting entities.

For each exception, Payables lists the Supplier Name, Supplier Number, Tax Identification Number, Tax
Reporting Site, State, and Exception Condition.

The report includes a brief description of each exception type condition it finds.

Payables sorts this report by exception condition and supplier name. A supplier is listed once for each
exception condition it meets.

A supplier may have the following exceptions:

1. Duplicate TIN
2. Foreign Supplier
3. No Tax Reporting Site
4. Non-Standard State
5. Non-Standard TIN
6. Null Address Element
7. Null Foreign Address
8. Null Organization Type
9. Null State
10. Null TIN

Run by navigating to Tools > Scheduled Processes > US 1099 Supplier Exception Report

Report Parameters

Business Unit Specify the name of a business unit.

Reporting Entity Specify the name of a reporting entity.

Balancing Segment Source Specify the account to use to determine the balancing segment associated
with the invoice.

Invoices: Charge account on the invoice distribution.

Payments: Bank cash account used for the invoice payment.

From Accounting DateLimit the report to suppliers who received any payments from the date you
specify. This is useful to ensure that your supplier information is accurate for a specific tax reporting year.
If no dates are entered, then the report lists all suppliers with 1099-related exceptions, even if no
payments were made to those suppliers.
3. Review 1099 Invoices
o Run US 1099 Invoice Exception Report to review paid invoice distributions with inaccurate or
missing 1099 income tax information. Before you run your 1099 reports, you should run this
report for each tax entity to identify any invoice distributions that Oracle Fusion Payables will
treat as exceptions in your 1099 reports.
o Run by navigating to Tools > Scheduled Processes > US 1099 Invoice Exception Report

Report Parameters

Business Unit Specify the name of a business unit.

Reporting Entity Specify the name of a reporting entity.

Balancing Segment Source Specify the account to use to determine the balancing segment associated
with the invoice.

Invoices: Charge account on the invoice distribution.

Payments: Bank cash account used for the invoice payment.

From Accounting Date, To Accounting DateSpecify accounting date range.


o The US 1099 Invoice Exceptions Report is divided into the following sections:
o Invoice Distribution Lines for 1099 Suppliers with No Income Tax Type
o Invoice Distribution Lines for Non-1099 Suppliers with an Income Tax Type
o Invoice Distribution Lines Missing Income Tax Type or with Invalid Income Tax Type

This section prints only if the option Use combined filing is enabled.

o 1099 Suppliers with a Negative Income Tax Type Total

This section does not apply to withholding tax distributions with an income tax type of
MISC4

o 1099 Suppliers with Withholding Exceptions

This section shows suppliers that have positive totals for income tax type MISC4

4. Update Invoices for Income Tax Information for 1099 Reporting to update or report on the Income
Tax Type and Income Tax Region fields on invoice distributions.
These fields are required for all invoice distributions of United States (US) federally reportable suppliers
for US 1099 reporting.
o Submit the process to:

Correct inaccurate or missing Income Tax Type or Income Tax Region fields on invoice
distributions for US 1099 suppliers.

Correct invoice distributions for non-US 1099 suppliers that have income tax types
assigned.

If a supplier is not a US 1099 supplier, but has invoice distributions with income tax types,
first ensure that the supplier is not federally reportable and that the Federal Income Tax
Type field is blank on the Edit Supplier page. Then submit the process to correct the
invoice distributions.

If a supplier should be a US 1099 supplier, change the supplier to federally reportable. In


this case, the invoice distributions are accurate, so you do not need to submit the process.
The invoices for the supplier will be included in the US 1099 reports.

o Run by navigating to Tools > Scheduled Processes > Update and Report Income Tax Details

Report Parameters

Business Unit

Specify the name of a business unit.

Supplier Name

Leave blank to submit the process for all US 1099 suppliers.

From Accounting Date, To Accounting Date

Inclusive accounting date range.

Income Tax Type Action

Action to perform on the Income Tax Type field of invoice distributions for the suppliers that you specify
o No action.
o Report. Prints the report.
o Update. Updates the Income Tax Type field of invoice distributions that have incorrect or missing
income tax types to the default income tax type for the supplier. Prints the report.

Income Tax Region Action

Action to perform on the Income Tax Region field of invoice distributions for the suppliers that you specify
o No action.
o Report. Prints the report.

o Update. Updates the Income Tax Region field for invoice distributions with incorrect or missing
income tax regions depending upon your selection for the Update Income Tax

Update Income Tax Region To

Value to set the Income Tax Region field to for invoice distributions that have incorrect or missing income tax
regions
5. Update Individual Invoice for Income Tax Information for 1099 Reporting
Search for the invoice to be updated and edit it to update 1099 information

Select Actions > Manage Distributions to update the tax information on invoice distribution lines to update 1099
income tax information on invoice distribution line

6. US 1099 PDF Report


Report on the total 1099-MISC payments for a particular 1099 supplier. Generate 1099 forms on preformatted
forms from the Internal Revenue Service for each tax reporting entity in your organization.

Voided checks are not included in 1099 payment totals, regardless of when the void occurred.

In accordance with the Internal Revenue Service rules, Oracle Fusion Payables does not generate a 1099
form for a supplier unless you paid the supplier at least 600 USD for the calendar year.

Before running the report:


o Submit the US 1099 Invoice Exceptions Report and the US 1099 Supplier Exceptions Report.
Review the report output and make any necessary corrections.
o Insert and align the forms in your printer.

Run by navigating to Tools > Scheduled Processes > US 1099 Report

Report Parameters

Business Unit

Specify the name of a business unit.

Reporting Entity

Specify the name of a reporting entity.

Payer Name Source

Specify the source from which Payables obtains the payer name for US 1099 payments displayed on this report.
Address: Address line 1 for the address entered on the Create Location page in Oracle Fusion Global Human
Resources.
Location: Location name entered on the Create Location page.
Tax entity: Entity name entered on the Create Reporting Entity page.

Balancing Segment Source

Specify the account to use to determine the balancing segment associated with the invoice.
o Invoices: Charge account on the invoice distribution.

o Payments: Bank cash account used for the invoice payment.

From Accounting Date, To Accounting Date

Specify accounting date range

The 1099 report will look like this:

7. US 1099 Electronic Media Report

Generate summarized US 1099 information in electronic format as required by the Internal Revenue
Service (IRS). You can create this file in a format to either send electronically or store on a diskette or
magnetic tape to send to the IRS.

The IRS requires electronic filing in one of these formats if you need to submit 250 or more records for
your US 1099 reporting.

You must report US 1099 information for each tax reporting entity you define for your organization, so
the 250 record requirements is applicable to each tax reporting entity.

Run by navigating to Tools > Scheduled Processes > US 1099 Electronic Media Report

Report Parameters

Business Unit

Specify the name of a business unit.

Reporting Entity

Specify the name of a reporting entity.

Payer Name Source

Specify the source from which Payables obtains the payer name for US 1099 payments displayed on this report.

Address: Address line 1 for the address entered on the Create Location page in Oracle Fusion Global
Human Resources.

Location: Location name entered on the Create Location page.

Tax entity: Entity name entered on the Create Reporting Entity page.

Control Name

Enter your Payer Name Control. You can obtain the four-character Payer Name Control from the mail label on
the 1099 package that is mailed to most payers on record each December. It is typically the first four characters
of your tax reporting entity name.

Control Code

Enter your five-digit Transmitter Control Code (TCC). You can file Form 4419 to receive a control code from the
Internal Revenue Service.

Test Submission

Select Yes if you are submitting a test US 1099 Electronic Media Report to the IRS.

Media Type
o Diskette: Formats your US 1099 data so that you can record it on a diskette.
o Electronic file: Formats your US 1099 data so that you can transmit an electronic file to the IRS.
o Magnetic tape: Formats your US 1099 data so that you can record it on magnetic tape.

Last Year Filing

Select Yes if due to merger, bankruptcy, and so on, this will be the last year that this tax reporting entity will be
filing.

File Indicator

Select one of the following file indicators to include in the report:

Correction

Original

Replacement

Original File

If you are submitting a replacement file, you must select one of the following options:

Electronic

Magnetic media

8.US 1099 Payment Report review payments made to United States (US) 1099 reportable suppliers. Use the
report to reconcile to your US 1099 forms, or to prepare additional reporting.
For example, you can use this report to get information needed to file US 1099 reporting with states that do not
participate in the combined filing program
5. Convert legacy 1099 balances to Oracle Fusion Payables
If you want to convert 1099 balances then below is the way to enter 1099 starting balance for a vendor or
supplier from legacy system:
1) Create an invoice for the supplier for the total amount of the adjustment with an Income Tax Type Code. For
example, you have $1000 1099 amount from Jan 2015 to July 2015 for supplier. Enter the invoice for $1000 with
Income tax Type Code.
2) Create a credit/debit memo without the Income Tax Type Code for the same amount (-$1000.00) for that
supplier.
3) Pay both these invoices together to create a zero dollar payment.
4) It should be emphasized that the payment date has to fall in the 1099 date range.
By following the above process, there will be no new payments and all of the accounting entries will net to zero
in the GL. The 1099 payments will now reflect the total amount of the invoice that was created with the income
tax type. Run the 1099 Payments Report and review the converted balances.
In order to timely report 1099 payments it is advised to do an early testing to ensure that all processes are
working and so that the you have time to update any records that need to be fixed. If this is the first time testing
for electronic media, you need to setup an account and do a test. Please refer IRS document on IRS website for
electronic report filing.
If you want to use the combined federal and state 1099 filing and produce K records and B records, set the Use
combined filing program option on the Manage Tax Reporting and Withholding Tax Options page. When you
enable this option, the electronic format of your US 1099 information includes K records for all tax regions or
states participating in combined filing that have qualifying payments. The output also includes B records for
suppliers with US 1099 payment amounts that equal or exceed the tax regions reporting limit in qualifying
states.
To summarize following setups are needed at high level:
a. Define supplier as Federal reportable in suppliers UI
b. Make a supplier site as income tax reporting site
c. Create an invoice with income tax type populated at invoice distributions. Pay the invoice
d. Create a reporting entity Set up and Maintenance > Manage Reporting Entities
e. From Schedule ESS jobs Run 1099 reports.

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