PURPOSE

The purpose of this bulletin is to update the list of Budget Object Classification Code Form 1099 Flag Settings (attached) to include the following codes and flag settings:

Additionally, the flag setting for Code 3320, Loans, is changed to N.  The exception is for Farm Service Agency only, which retains the Y setting.

This bulletin also reiterates guidance to increase agency awareness of the Internal Revenue Service (IRS) Form1099 (1099) impact when selecting Budget Object Classification (BOC) codes for processing transactions in the Foundation Financial Information System (FFIS).  The 1099 flag setting on the Budget Object Class Table (BOCT) is one of three indicators used to determine if a particular FFIS transaction is selected in the weekly FFIS Miscellaneous Income Reporting System (MINC) interface for 1099 reporting.

BACKGROUND

MINC is a Department-wide system that produces the appropriate 1099s that are provided to taxpayers (i.e., businesses and individuals) each year for particular services and/or income as identified by the BOC.  FFIS transactions originate from a variety of financial and administrative systems or are directly entered into FFIS.  The FFIS-MINC interface creates a file of 1099 reportable transactions that MINC then consolidates by TIN [Taxpayer Identification Number] and produces the appropriate 1099 and tax reporting data to the taxpayer and IRS at the end of the calendar year.

The 1099s are issued if the aggregated income amount is more than $600 for partnerships, corporations, and individuals.  There are three types of 1099s issued as described below:

• The 1099-MISC (Miscellaneous Income) is used to report income for rent, medical and health care, non-employee compensation, royalties, other income, and gross proceeds paid to an attorney.
• The 1099-INT (Interest) is used to report any income from interest payments, which may include interest paid through the Payroll/Personnel System to an employee.
• The 1099-G (Certain Government Payments) is used to report income from taxable grants.

Each type of 1099 can have a variety of income categories.  BOCs are used by MINC to determine the income category and the type of 1099 to be issued.

The FFIS Daily General Journal (GENJ) file is the source of input for the FFIS-MINC Interface.  The weekly FFIS-MINC Interface selects 1099-related records for both feeder interfaced and integrated transactions.  The interface program reads each record in the GENJ file and looks up:  (1) the 1099 VEND flag for the Vendor ID in the Vendor Table (VEND), (2) the 1099 Indicator flag for the BOC on BOCT, and (3) the Cash Account Indicator flag in the General Ledger Account Reference Table (GLAC).  All three flags must be set to "Y" (yes) for the interface to select a record that updates MINC.

RESPONSIBILITIES

Agencies are responsible for assuring the quality and integrity of the financial data in FFIS by selecting the appropriate BOC from BOCT and proper vendor code from VEND when processing FFIS transactions.  The Associate Chief Financial Officer for Financial Operations (ACFO-FO), Accounting Policy and Consolidated Reporting Division (APCRD), coordinates the review and setting of the appropriate BOC 1099 flag settings on BOCT.  Update of BOCT is limited to the Controller Operations Division, Accounting Processing Branch, Table Maintenance Section.  ACFO-FO is responsible for processing 1099s at the end of the calendar year in accordance with IRS regulations.  All parties are responsible for processing documents accurately and timely.

PROCEDURES

Specific BOCs have been established in FFIS by the Department to process certain business activities as 1099 reportable income.  Attached is a list of BOCs and the designated 1099 flag settings that agencies must consider when assigning BOCs to FFIS transactions.  Agencies wishing to change BOCT elements other than the 1099 Indicator flag shall request action via a FFIS Communications Table (COMT) request.

INQUIRIES 

Questions related to the processing intent of a BOC and/or the 1099 BOC flag settings may be directed to APCRD at 202-720-0990. 

EFFECTIVE DATE