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How To Convert Legacy 1099 Balances to Oracle Payables

September 10, 2006 on 10:29 pm | by Marian Crkon | In How To Guides | |  Print |  Email

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.