Defense Finance & Accounting Service DFAS Tax Office August 2010 1099 Tax Reporting Program Welcome screen. We hope that by the end of our presentation, you will have a better understanding of why you report payments made via government convenience check in the 1099 Tax Reporting Program, and the affect on the 1099 recipients (the individuals and merchants who receive the payments) if you report incorrect information. Defense Finance & Accounting Service DFAS Tax Office August 2010

General – Program Description What is the 1099 Tax Reporting Program (1099TRP) Application created to collect & report to the IRS payments made by DoD for “services”. The 1099TRP is a secure government web based tool for collecting payment data.

General – Convenience Checks IRS form 1099-Miscellaneous SANDY ’ S BAR & GRILL 222 SANDWICH BLVD SOMEWHERE WV 24946 Partial picture of an IRS form 1099-Misc.

General – Convenience Checks Transactions for services are payments made for work performed rather than purchase of goods.

General – Convenience Checks Examples of reportables Dry cleaning of uniforms Booth rentals for job fairs/recruiting Maintenance fees Instructor and speaker fees Examples of non-reportables Goods/products Payments to any government agency Payments to Federal tax-exempt business By government agency we mean Federal, State, Local, City. Example the Post Office. There are some businesses that are State tax-exempt, but not Federal. If you are in doubt, request a copy of the IRS Determination Letter. If they do not have one and they were paid for services, report the data.

System Access User roles & permissions Agency Program Coordinator (APC) Convenience Check Transaction Screen Review Add Modify Delete Convenience Check Report View Print

System Access User roles & permissions Approving Official/Billing Official (AO) Convenience Check Transaction Screen Review Convenience Check Report View Print Note: It is a conflict of interest to be able to approve payments & have the ability to manipulate payment data.

System Access User roles & permissions Checkwriter (Account Holder) Convenience Check Transaction Screen Review Add Modify Delete Convenience Check Report View Print

System Access Obtaining user id & password Each person requesting access must complete DD form 2875 DD form 2869

System Access DD form 2875 (versions 2009) APC, AO, or Checkwriter completes Type of Request, Date, System Name Part I, all blocks Part II, blocks 13 thru 20b Your Security Manager completes Page 2, Part III, all blocks Tax Office completes Location Part II, blocks 21 thru 25 The current version is 2009. Some agencies have created a 2010 version, however, we do not accept it. Only the owner of the form, DISA is authorized to change the form. You must have a positive background investigation. It is unnecessary to have a security clearance.

System Access – DD form 2875 We accept forms that are digitally signed, faxed, or mailed.

System Access DD form 2869 (version 2007) APC, AO, or Checkwriter completes Section I, all blocks APC completes Section II, all blocks Tax Office completes Section III, all blocks The APC must have access; otherwise, the checkwriter’s access will not work. The checkwriter’s access is linked to the APC’s access. Will discuss this further on in the presentation. The Program allows roles for a Primary APC, one Alternate APC, one Primary AO, and one Alternate AO per checkwriter.

System Access – DD form 2869 If you are an APC or AO, do not forget to list all of your checkwriters and their account numbers. Also make sure you contact us if a checkwriter leaves or with new account numbers.

Initial System Access Sun Java Plug-in Must be loaded on PC Allows user to view application Message will appear if not loaded Contact your LAN/Technical Office to load

Initial System Access Public Key Enabled (PKE) Registration w/Common Access Card (CAC) Receive initial userid & password Access the 1099TRP website Required to register user id & password

Initial System Access Registering for PKE Open web browser Input 1099TRP web address .mil agencies: https://dfas4dod.dfas.mil/systems/1099 .edu agencies: https://dfas1099trp.csd.disa.mil .mil receives 1099TRP Homepage; .edu does not Click link, “Enter the 1099TRP here” On PKE Screen enter userid & password Click Register Button Receive message, “Successful Registration” .edu users will not see the 1099TRP Homepage. We can send you are copy of the Convenience Check User’s manual. Screen shows the two links for accessing the Program. If you receive an error message and cannot PKE your machine, please email us at cco.checks@dfas.mil. Describe what happens and any message you receive. We may have to have your password unlocked and reset.

Initial System Access - PKE Screen Picture of the PKE registration screen where the user id and password are input.

After PKE Registration Initial System Access After PKE Registration Use CAC & CAC pin No more user id & password Must access Program at least once every 90 days to avoid being locked out You can add a reminder to your calendar to log into the program every 90 days.

Initial System Access Steps to Sign into 1099TRP Open web browser Enter 1099TRP web address Receive 1099TRP Homepage Click link, “Enter the 1099TRP here” Select digital certificate, click OK Enter CAC pin, click OK Program loads Receive Warning screen, click OK

1099TRP Homepage Link to access the 1099TRP Convenience Check User’s Manual Informational messages DD Forms 2875 & 2869 GSA SmartPay Presentation What is & is not reportable IRS Charity Site Public/Private Colleges & Universities Cannot stress enough using the Convenience Check User’s Manual. It has step-by-step instructions for accessing the Program, inputting, modifying and deleting data. It talks about each screen and what goes in it. Informational messages like the Program is up, down, expected to be down, etc. A list of what is and is not reportable. It contains examples to help.

1099TRP Homepage We cannot stress enough the importance of using the Convenience Check User’s Manual. It contains step-by-step directions for navigating the program.

System Overview Welcome screen First screen of Program Provides current status of the 1099TRP Convenience Check Data entry point Tool bar

System Overview - Welcome Screen

System Overview Convenience Check Entry Transaction Screen All users are permitted access to this screen Convenience check data entered here Divided into 3 tabs Transaction Screen Merchant Screen Sole Proprietor Screen

System Overview – Transaction Screen

System Overview – Transaction Screen Category Non-Employee Compensation Pay merchant/individual for services, not employee Most often used Rents Pay to use a space or equipment Medical & Heath Care Pay doctor, dentist, or hospital Gross proceeds paid to an attorney Pay attorney for legal services

System Overview – Merchant Screen

System Overview – Merchant Screen Tax Identification Number (TIN) Social Security Number (SSN) Individual or Sole Proprietor XXX-XX-XXXX Always 9-digits, no letters Employer Identification Number (EIN) Merchant/Business XX-XXXXXXX Always 9-digits, no letters Must match name registered on IRS records Important: Protect the TINs

System Overview – Sole Proprietor

System Overview – Sole Proprietor Sole business owner Owner and business names different William R Smith Bill’s Lawn Mowing Service Not partnership or corporation Usually small business Has SSN; rarely has an EIN Sole Proprietor is someone who owns an unincorporated business by himself or herself. However, if you are the sole member of a domestic limited liability company (LLC), you are not a sole proprietor if you elect to treat the LLC as a corporation.

Check Report Convenience Check Report Request Screen is accessed from Reports menu All users have access to their authorized accounts Screen of where the Reports menu resides.

Check Report Convenience Check Report Request Can be sorted by Check date TIN Merchant Name Month Year Click Select box Click Run button Screen where Reports requirements are selected.

Check Report Convenience Check Report Request ACCOUNT CONFUSED, DAZED A 444455566610000 (Active) CHECK # DATE AMOUNT TIN MERCHANT 1099 ISSUED? CATEGORY 234 06/25/10 94.00 XXXXXXXXX VICKY’S GOWNS OF GLORY NO NONEMPLOYEE COMPENSATION 2468 DRESS AVE, BOWLING LANE, OH 43352 Example of what data is shown contained on a Convenience Check Report. The 1099 Issued? will appear as NO until the forms are issued in January. If the merchant’s payments total $600 and above, a tax form is issued. The column will read YES. If no form is issued, the column will remain NO.

General – Purchase Card Do not input any purchase card data DFAS receives & reports it electronically DFAS receives the purchase card data electronically from the main banks, i.e. VISA & MasterCard. It is important for the checkwriter not to report the purchase card data, since this will result in duplicate reporting of the transaction.

Updates PKE - no more passwords after initial registration Changes to reporting requirements Section 6041, Internal Revenue Code 2011 Banks issue tax forms for purchase card payments Decision pending on banks issuing tax forms for convenience checks 2012 Reporting requirements apply to goods & services

Web Addresses .mil or .gov web address .edu web address https://dfas4dod.dfas.mil/systems/1099 .edu web address https://dfas1099trp.csd.disa.mil .edu – You are unable to view the website homepage. Sorry. We will email you information such as what is and is not reportable with your password.

E-mail Address cco.checks@dfas.mil Access issues Access requests General reporting questions General Program questions Hey, email us

Half-Way Point Are we done yet? Nooo not yet.

Good To Know Enter, Save, Add. Enter, Save, Add… Clear commands – Clear & Cancel Remove unwanted record - Delete, Save Find a record - Query Move backward or forward - Previous or Next Idle time 30 minutes – Oh, I’m knocked out & must log back in The function keys allow duplicate check entries so be careful if you use them. The “Clear” and “Cancel” buttons remove commands that are interfering with you reporting the data. If you do not click the “Add” button after inputting data, you are typing over what you have reported. You will end up with one check reported. If you are looking for a specific check or merchant, use the Query button. To navigate through your check data, use the Previous button to go backward and the Next button to go forward. If you take a break and are away from the program for 30 minutes, it will knock you out of the program. That is a security feature. Just log back in when you are ready.

Good To Know The tax year is Calendar Year, not Fiscal Year December 31 is the absolute, last day for inputting check data!! Or was it December 32? Encourage your checkwriters to input the check data before December Are you planning on taking leave in December? You really need to have your input up-to-date by December 1. Something always happens in December - We take leave, you take leave, the merchant takes a vacation, system issues.

You are Responsibilities Whose responsible for inputting & ensuring the convenience check data is reported correctly? You are

Responsibilities – All Privacy Act Information TINs Names & Addresses Account Numbers Pssssst….secure it We cannot stress enough the importance of Keeping this information secure.

Responsibilities - Checkwriter Obtain merchant info for tax reporting Legal name & address Tax Identification Number (TIN) Obtain check data Check number Date check was written Check amount Brief description of what was purchased Input merchant & check data at least monthly Review input for accuracy Use something to capture the merchant’s legal information. We recommend the IRS form titled “Request for Taxpayer Identification Number and Certification (form W-9)” found on our homepage or at www.irs.gov. The data needs reported at least monthly. Data can be reported the same day the check is issued if you would prefer.

Responsibilities - APC Ensure Checkwriter obtains merchant & check data Ensure check data is input at least monthly Review input for accuracy Input data in the absence of Checkwriter Checkwriters need informed of anything that will affect their reporting. If you, the APC, are leaving, the checkwriters need to know who is replacing you.

Ensure Checkwriter obtains merchant & Responsibilities - AO Ensure Checkwriter obtains merchant & check data Ensure check data is input at least monthly Review input for accuracy

Data Review Merchant data free of misteaks? Merchant data consistent? Merchant data free of misteaks? Sole Proprietor correctly identified? Check number correct? No duplicates? Dollar amount correct? No extra zeros? Only reportable data input Reportable data input for any $ amount ($600 threshold applies to the Tax Office) There is a $600.00 threshold for reporting payments, exception $10.00 for Royalties. Our office is the final reporting entity; therefore, the threshold applies to our office, not yours. Input all reportable check data regardless of the $ amount.

Data Review What happens when the data is input incorrectly?

Data input incorrectly in 1099TRP APC, AO, & Checkwriter do not review data DFAS issues tax forms & reports data to IRS IRS forms are issued to “real” people. What you report affects their income and their reporting to the IRS. No one wants to be audited by the IRS. Angry merchant contacts DFAS IRS audits merchant

What happens when an angry merchant contacts us? You could be taken on a three-hour tour

Audits What happens when you are audited and you did not report your check data? You’ll be sorry And you will be audited at one time or another.

So what do I need for an Audit?

Audits APC & AO List of Checkwriters AO & Checkwriter Checkwriter Account numbers 1099TRP Convenience Check Report AO & Checkwriter Receipts/invoices for transactions Checkwriter Logbook, checkwriter, & Internal records

Tax Office

Tax Office End-of-Year 2009 In November and December, we received approximately 343 System Access Request forms, 1,523 password reset requests, 772 access issue inquiries, and 2,369 general and informational inquiries. We are still adding new account number due to the SmartPay II. We added 957 new account numbers. It really is in your best interest to have everything up-to-date, all accesses approved, and all earlier check data reported before the November/December timeframe. The best way to contact us at the end of the year is to email us.

Tax Office - Contacts Vicky Waldron – Primary Sandy Major – Alternate Gayla Vincent – Program Manager cco.checks@dfas.mil https://dfas4dod.dfas.mil/systems/1099 https://dfas1099trp.csd.disa.mil fax number: 614 693-5452 DSN 869-5452 Contact me? Dy-no-mite! Contact our office with your inquiries and technical problems. Do not contact the DFAS Web PMO; they can not assist you.

The End Mother elephant and baby elephant walking away signifies the end of the presentation. .