Kansas Department of Administration

05-a-016 - Business Procurement Card (BPC) 1099 Reporting (February 16, 2005)

INFORMATIONAL CIRCULAR NO. 05-A-016
DATE: February 16, 2005
SUBJECT: Business Procurement Card (BPC) 1099 Reporting
EFFECTIVE DATE: Immediately
A & R CONTACT: BPC Questions:
Tim Hund (785) 368-6347 (tim.hund@da.state.ks.us)
1099 Questions:
Ken Hasenbank (785) 296-5304 (ken.hasenbank@da.state.ks.us)
Don Beck (785) 296-7291 (don.beck@da.state.ks.us)
APPROVAL: Approved by Dale Brunton
SUMMARY: Effective with calendar year 2005, agencies are required to record all BPC purchases made under 1099 reportable subobject codes (as noted in Policy and Procedure Manual Filing 7002) in STARS for 1099 reporting purposes.


The Internal Revenue Service (IRS) issued guidelines in August 2004 related to information reporting of eligible purchases made by payment cards. These guidelines apply to purchases made on Business Procurement Cards (BPCs), and require that these purchases be included on Form 1099 Information Returns issued to vendors after the close of each calendar year.

The IRS, in Revenue Bulletin 2004-31, outlines a methodology for 1099 reporting for payment cards based on Merchant Category Codes (MCCs). We have determined that this method of reporting will not be used for state agencies. The State of Kansas will continue to identify BPC purchases subject to 1099 reporting based on a review of the detailed items purchased and the STARS Expenditure Subobject Code used for the payment. Agencies are expected to process journal vouchers (JVs) for all BPC purchases made using 1099 reportable expenditure subobject codes as identified in Policy and Procedure Manual Filing 7002. JV transactions will not be required for corporations (other than legal and medical corporations for which 1099 reporting is always required).

Agencies will prepare journal vouchers (JVs) to report the payment for the entity from which the purchase was made rather than UMB to whom the payment was made. This is done by using a transaction code of 780 with a reversal code "R" with the UMB Bank vendor number on the BPC payment on the first line and using transaction code 780 with the entity's vendor number from whom the purchase was actually made on the second line. The vendor number for the payee to be charged must be established in STARS prior to processing the journal voucher. In the comments section of the journal voucher, please type "for BPC 1099 purposes". Use JV type "Correct Payment/Receipt Prefix V & S" for these SOKI entries.

Following is a sample of the two JV lines required for each correction:

Sample of the Two JV lines
Line#
1236
Sfx
01
Origin OrigDoc#
V0000001
T/C
780
Ref.Doc Sfx M Agy
000
Fund
0000
BFY
YYYY
Index
0000

PCA
00000

Sobj
2690
R
R
  Description Vendor Number
UMB VENDOR NUM
Sfx
BR
Agency Use Amount
100.00
Line#
1237
Sfx
02
Origin OrigDoc#
V0000001
T/C
780
Ref.Doc Sfx M Agy
000
Fund
0000
BFY
YYYY
Index
0000
PCA
00000
Sobj
2690
R
  Description Vendor Number
123456789
Sfx
00
Agency Use Amount
100.00

The reporting date for these JVs will be based on the BPC payment due date, i.e., transactions are to be reported in STARS for 1099 purposes based on the date the payment is due to UMB. For example, the billing cycle that ends in December will have a due date in mid-January. Therefore, these JVs for 1099 reporting purposes should be processed as January STARS transactions. Any JVs for 1099 reportable payments must be processed in the same calendar year as the associated BPC payment due date.

Agencies may choose to process these 1099 JVs summarized by vendor, provided the funding line is also the same, rather than processing a separate set of transactions for each individual BPC transaction.

Agencies may choose to submit JVs as frequently as each billing cycle or as infrequently as twice per calendar year. The first deadline to record these transactions is prior to the close of the fiscal year, making sure that transactions are entered in SOKI so that they can be included in the old fiscal year business according to the year-end processing schedule published each year. The second deadline for recording these transactions would be prior to the end of the calendar year. Agencies should ensure that transactions are entered in SOKI in sufficient time that they can be reviewed and approved by 3:00 p.m. on the last working day of December each year.

DB:JR

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