How To Convert Legacy 1099 Balances to Oracle Payables

In the United States, you must report to the Internal Revenue Service certain types of payments you make to 1099 reportable suppliers. In Oracle Payables, you can designate suppliers as federally reportable, classify their invoice distributions by 1099 MISC Type, then at the end of the year when you submit your 1099 reports, Payables lists paymentsof reportable distributions made to 1099 suppliers.
Suppliers Subject to Income Tax Reporting Requirements
Define a supplier as federally reportable by enabling the Federal option and entering a value for Income Tax Type (1099 MISC Type) in the Suppliers window. Payables assigns the income tax type to each invoice you enter for that supplier. Also, to set up a federally reportable supplier, select a site to be the income tax reporting site by enabling the Reporting Site option in the Tax Reporting region of the Supplier Sites window.
Entering Invoices for Suppliers Subject to Income Tax Reporting Requirements
Once you set up a supplier as federally reportable and assign a default income tax type, Payables defaults the Income Tax Type (1099 MISC Type) to each invoice distribution you enter for that supplier.
How To Convert Legacy 1099 Balances from 3rd Party Systems to Oracle
Step 1 (AP): Create an invoice with an Income Tax Type Code for every 1099 vendor for the total amount of his total YTD payments in the legacy system.
Step 2 (AP): Create a credit memo without the Income Tax Type Code for the same amount.
Step 3 (AP): Create zero dollar payments for the legacy 1099 invoices.
No new payments will be paid out 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.
Refer to Metalink Knowledge Base > Accounts Payable > 1099 [Metalink Login required] or Accounts Payable User Guide [Oracle OTN login required] for more information on 1099 processing.

How To Prepare for 1099 Year End Processing in Accounts Payable

It’s almost that time again. In December, the IT departments typically download the latest ESU’s for 1099 processing.  And in January, AP managers struggle to remember what they did last year to generate those 1099′s.  Oracle provides plenty of documentation on the 1099 process, but Myoraclesupports.com website has published a quick overview article summarizing the setups and generation steps involved.  You can find it here.
The 1099 preparation steps are summarized below:

1. Verify Company and Supplier setup
2. Run A/P Annual Close (Optional)
3. Verify Mailing Address Format
4. Verify Legal and contact names
5. Verify Tax ID and Person/Corporation Code
6. Check For Duplicate Tax Ids
7. Choose Method of Reporting
* GL Method – report by F0911 Object Account, or
* AP Method – report by Category code 07 in F0411
8. If using GL Method –
* Verify PX AAI Set Up (Must use stable Chart of Accounts)
* Run Update Payment Information Receipts and Update Payment Information. This updates the GLCN and GLDKJ fields in the F0911.
* Print Payment Exception report, Enter Payment adjustments and Print GL Register, clear AP worktable (F045143)
9. If using AP Method –
* Verify UDC tables
* Clear AP worktable (F045143).
10. Build and Adjust Worktables – If using GL Method after entering payment adjustments Build the 1099 GL worktable F045141, Preview 1099 Media (run Combined GL AP Register), or If using AP Method Build AP worktable F045143, Enter AP adjustments, Preview 1099 Media (either Combined GL AP Register or AP Register).
11. Run Preview Media Reports (if needed)
12. Generate 1099 Returns. Using GL, AP or combination of both methods Run Write Media P04515 program to create 1099 Merged worktable F04514.
13. Write 1099 forms and Magnetic Media
14. Verify 1099 forms and Electronic File text file

Create a 1099 Supplier ............

Responsibility: Purchasing, Vision Operations (USA)
Navigation: Supply Base > Suppliers > Entry > Create Supplier

Type : Standard Supplier
Organization Name : Computer Consulting Services
Taxpayer ID : 555-22-1560

[APPLY]

Navigate to Organization

Type : Supplier

[SAVE]

Navigate to Tax Details

Reportable : Federal [CHECK]

[SAVE]

Navigate to Invoice Management

Invoice Currency : US dollar
Hold from Payment : All Invoices [CHECK]
Payment Hold Reason : Enter any valid Hold Reason [1099 Supplier]
Payment Currency : US dollar
Terms : 30 Net
Terms Date Basis : Invoice
Pay Group : ABC PAY (Which you created on earlier session)

Create a Supplier Site (for Income Tax Reporting)

Navigate to Address Book

[CREATE]

Address Line 1 : 1st Main Road
City : Half Moon Bay
County : San Mateo
State : CA
Postal Code : 94019
Address Name : Half Moon Bay
Phone Area Code : 650
Phone Number : 555-1234
Address Purpose : Payment [CHECK]

[CONTINUE]

Created Supplier site successfully.

Navigate to Tax and Reporting

Main Information

Allow Tax Applicability [CHECK]

Income Tax Reporting Site [CHECK]

[SAVE]

Remove the Payment Hold for 1099 Supplier

Remove the Payment Hold for 1099 supplier while the 1099 supplier has returned a complete 1099 tax verification letter.

Responsibility: Payables, Vision Operations (USA)
Navigation: Suppliers > Entry > Search: Supplier Name = Computer Consulting Services

Navigate to Invoice Management

Hold from Payment, All Invoices [UNCHECK]