October 23, 1996

MEMORANDUM NO. 970028

TO:             Chief Financial Officers
                   NCAS Agencies

FROM:        Chuck Cooper, Assistant State Controller
                  Office of the State Controller

SUBJECT:  North Carolina Accounting System (NCAS) 1996 1099 Processing

Attached is the time schedule for the 1996 1099 processing activities. Unlike last year, 1099 processing should be much simpler since agencies have been operating the entire calendar year on the NCAS. The majority of the processing should have been done throughout the 1996 year by flagging invoices with 1099 codes and reviewing the monthly 1099 reports. Now the end-of-year tasks should primarily consist of further review of reports for errors and the accuracy of data. To aid in this review process, the Office of the State Controller (OSC) will begin producing the 1099 reports on a weekly basis starting November 18. Although we will not be conducting a 1099 training course, updated procedures for 1099 processing can be found in the State Information Guide (SIG).

New Internal Revenue Service (IRS) regulations require that Form 1099 information returns must include the payers phone number that leads to direct access to individuals actually able to resolve a taxpayers questions in an expeditious manner. The phone number requirement applies to payee statements reporting (1) payments of $600 or more in the course of a trade or business, (2) payments for services of $600 or more, (3) direct sales of $5000 or more, (4) payments of unemployment compensation, (5) payments of mortgage interest, (6) payments of interest, (7) cash receipts of $10,000 or more, (8) foreclosures or abandonments of security, (9) payments of royalties. The OSC will be confirming from each agency a phone number that will be printed on the 1099 form.

As in past years, the OSC will be ordering W-2 and 1099 forms for NCAS agencies. The quantity of forms being ordered is based upon past experience; therefore, the OSC will not survey agencies for need. Should you anticipate your agencys requirements changing drastically from 1995, please call Randy Thomas at 733-0178 with an estimate of the kind and quantity of forms you will need.

The W-2 forms being ordered are carbonless four-part forms, designed to be used in conjunction with magnetic media reporting. Should you need W-2 forms and are not reporting on magnetic tape, you will need to obtain your own forms. The 1099-MISC, -G, and -INT forms are three part forms that are acceptable for paper or magnetic reporting. The 1099-MISC and INT forms are self-mailers.

The 1996 State contract for W-2 and 1099 forms, effective October 1, 1996, is with Wallace Computer Services. Macon Michaux, the contact person, can be reached at 919-876-0343 or at FAX #919-872-4876.

The following time schedule has been established to process 1996 calendar year 1099 information.

Please call the OSC NCAS Client Support at (919)875-HELP if you have any questions, concerns, or require assistance with NCAS 1099 activities. Thank you for your attention in this matter.