CMP 421-03: Tax Reporting IRS Form 1099

To code disbursements for professional fees, independent contractor services, royalties, copyright payments, and other payments requiring tax reporting

Internal Revenue Service

University policy

All payments for services, rentals, royalty, and copyright payments made to payees other than corporations, governmental agencies, colleges, and universities, excluding employee expense reimbursements and payments to nonresident aliens. Exceptions to the corporation exemption are: medical corporations and attorneys.

All professional fees, and certain other payments that require reporting on IRS Form 1099 as listed in the table below are to be charged to the indicated object/sub-object code(s). NAU, along with other state agencies, provides Form 1099-related information to the State of Arizona Department of Administration for preparation of consolidated Form 1099s. Since tax reporting is required for professional fees, etc. for individuals or organizations other than corporations, government agencies, and colleges/universities, it is important that departments obtain accurate social security/taxpayer ID numbers, names  and addresses for applicable payments/orders to new vendors.

Type of Service and Code for Payments Requiring IRS Form 1099

 

Type of Service	Where Reported	Object/Sub-object Code
All rentals	1099 box 1	All object/sub-object codes beginning with 7360
All royalty fee/copyright payments	1099 box 2	Object/Sub-Object code 7520 10
Awards/Prizes (not for service performed)	1099 box 3	Object/Sub-object code 7535 10 (Scholarship payments should be coded to the correct 77xx object code) Awards or prizes paid to employees should be processed through the Payroll Office.
Medical Services	1099 box 6	Object Sub/Object codes beginning with 7530
Maintenance and Repair services	1099 box 7	Object/Sub-Object codes beginning with 7331
Printing and copy services	1099 box 7	Object/Sub-Object codes beginning with 7351
Audio/Video Services	1099 box 7	Object/Sub-Object codes beginning with 7380
Advertising Services	1099 box 7	Object/Sub-Object codes beginning with 7392
Professional, Independent Contractor, Outside Services, Speakers, Honoraiums.	1099 box 7	Object/Sub-Object codes beginning with 7510. Documented expense reimbursements, such as travel, are not reportable and should be coded to object 7540.
Cooperative Teacher Certificates/Waivers	1099 box 7	Object/Sub-Object code 7750 10. This code is not for use with the following Advantage documents: PV's, PD's, RX's, PC's, II's and IX's. This code is used for information interfaced from the Peoplesoft Student Information System (PS).
Land improvements, building improvements/remodeling, new construction costs, planning/design/management costs, and building fixtures	1099 box 7	Object/Sub-Object codes beginning with 7810 through 7829. Excluding 7810 10, land acquisition. These codes are used primarily by the Facility Services Department. The Object/Sub-Object code most often used by other departments is 7822 30, Bldg. Fixtures, Drapes, Carpet, etc.

For information on employee expense reimbursements, see CMP 420-01, "Faculty and Staff Reimbursements".

For information on tax reporting for nonresident aliens, see CMP 425-01, "Payments to Non-Resident Aliens"

For information on tax reporting for independent contractors, see CMP 421-01, "Independent Contractors"

For additional assistance with 1099 tax reporting, accounting concerns and coding, please contact John Rabe in the Comptroller's Office.