ANNUAL INFORMATION RETURNS – REPORTABLE PAYMENTS - 8422.19

The Internal Revenue Code (IRC) and associated regulations require filing Annual Information Returns for reportable payments made during the calendar year. Pursuant to IRC section 6041A and California Revenue and Taxation Code section 18631, the state is required to report certain payments made to individuals, medical and legal corporations, estates, trusts, and partnerships when such payments total at least $600 of miscellaneous income and $10 of interest income. IRC section 6045(f) requires the state to report any payment to an attorney (including legal corporations) made in connection with legal services, regardless if such services were performed for the payer. These payments include gross proceeds (e.g., lump-sum payments to attorneys that consist of legal fees and amounts awarded to the client).

Each agency/department that makes payments from the State Treasury trust and/or agency funds shall comply with the annual information reporting and income tax withholding requirements of the Internal Revenue Service (IRS) and the Franchise Tax Board. The agency/department head or designee is responsible for ensuring compliance with federal and state tax laws. State policy requires agencies/departments to identify and report payments through a combination of accounting processes, the state Uniform Codes Manual, and information provided in the Payee Data Record form, STD 204.

The FI$Cal and State Controller’s Office Supplier Management and Reporting Team (FI$Cal/SCO SMaRT) processes, files, and mails Form 1099s through the State Reportable Payment Program (SRPP). Although the FI$Cal/SCO SMaRT may prepare and file 1099s on behalf of an agency/department using the SRPP, agencies/departments are responsible for ensuring the completeness of the data.

Agencies/Departments deferred/exempt from using FI$Cal may choose to integrate their reportable payment data into FI$Cal for reporting or develop and implement similar identification systems to report their own data. Agencies/Departments using FI$Cal to report shall report under a statewide FEIN. Agencies/Departments reporting their own data shall report under their own unique Federal Employer Identification Number (FEIN).

Agencies/Departments needing to file separate reports for certain programs shall apply for separate FEIN(s) for the appropriate program(s). An Application for Employer Identification Number, form SS-4, is available at the IRS website at https://www.irs.gov/forms-pubs/about-form-ss-4. Return the completed form to the IRS.