1099 Tax Season Processing

This document outlines the 1099 tax season processing capabilities within Dynamics 365 Business Central, starting with version 2024. A key enhancement in this version is the ability to electronically transmit 1099 forms to the IRS using IRIS and send copies to vendors annually by the January deadline. This document assumes that you are familiar with the process of posting 1099-liable purchase documents within Business Central.

Summary of Steps:

1. Enable the new Functionality
2. Update 1099 Form Boxes
3. Create a new 1099 Reporting Period
4. Edit the 1099 email body if necessary.
5. Make any corrections in the Vendor Ledger Entries
6. Transmit the Vendor 1099 Magnetic Media
7. Print/Email 1099s

Enable the New Functionality

From version 24.0, you can start using this new 1099 functionality for better transparency, integration, and automation. To do this, you must enable this new feature using the Feature Management page.

1. Search and open Feature Management
2. Locate “Feature Update: Enable using 1099 forms to transmit the tax data to the IRS in the United States” and select the “All users” option under “Enabled for” if it already had “All users,” this feature was previously enabled in your system.

This feature integrates with the IRS and doesn’t print 1099 Tax Forms on preprinted original IRS 1099 Tax Forms. Instead, Business Central submits 1099 Tax Forms through integration with IRS and sends Copy B to vendors as Copy Substitutions printed on plain paper.

Update 1099 Form Boxes

Navigate to 1099 Form Boxes and click “Update Form Boxes” to ensure you have the updated form boxes. The process runs in the background without any feedback.

Creating a new IRS Reporting Period

1. Search and open “IRS Reporting Period.”
2. Add the year you will be processing, specifying “Starting Date,” “Ending Date,” and the period’s “Description.”
   
3. Create the next year so that it can be used for the new transactions.
4. Use “Copy Setup From…” to copy the setup from a previous period; enter or select a previous period and click on OK.

Edit the 1099 Email Body if Necessary

1. Search “IRS Forms Setup”
2. Select whether you want to protect the TIN or show it.
   
3. Click on “Email Content Setup” to edit the email Subject and Body, make any changes, and click OK to continue.
   
4. Close “IRS Forms Setup.”

Make any corrections in the Vendor Ledger Entries – 1099 Fields

If any corrections are necessary, you can correct the information on the Vendor Ledger Entries page.

1. Search and open “Vendor Ledger Entries.”
2. Click on Edit List
3. Find the records that might need corrections and scroll to the right to locate the 1099 fields.
4. Edit the IRS 1099 Form No, the IRS 1099 Form Box No, and the IRS Reporting Amount, as necessary.

Process the 1099 Vendor 1099 Magnetic Media

This step is to transmit the 1099 information to the IRS after corrections and adjustments have been made and requires that you have an IRIS Transmitter Control Code, a unique 5-digit numeric code (for more information: IRIS application for TCC)

1. Seach and open “1099 Form Boxes”
2. Select “Vendor 1099 Magnetic Media”
3. Type in the reporting calendar year and your Transmitter Control Code.
4. Enter the required Transmitter Information; ensure you enter accurate information in case the IRS needs to contact you.
   
5. Enable the “Test File” toggle to create a file you can review. Disable the toggle when you are ready to transmit the file.
6. Enter the required information under Vendor Information; for this example, we used Microsoft and the software vendor.
   
7. Click OK to transmit the file or to produce the test file.

Print/Email 1099s – PDF Copy Substitutions

The IRS will accept copy substitutions, which are reports that are easy to modify and do not need to be adjusted to print on a preprinted form.

To send forms to your vendors, they must consent to receive 1099 emails, which is set up on the Vendor Card page. The consent option acknowledges that your vendor provided signed consent to receive their 1099 form electronically using email.

1. Search and open “IRS Reporting Periods.”
2. Select the proper period.
3. Select Documents to open the “IRS 1099 Form Documents” page.
4. Select Create Forms and specify the reporting period in Period, enable Replace if you need to recreate the forms, and click OK.
5. Select all vendors, then select Send Emails, select the Report Type, Copy B or Copy 2, and click OK.
6. The checkboxes for Copy B Sent or Copy 2 Sent are checked to see if the email was successfully sent.

• The Status must be Submitted, which is set when you transmit the Vendor Magnetic Media. If the file was not transmitted because it was not necessary for your situation, you can open each vendor and change the Status to Submitted before you can print documents.

If the email failed, you would find the successful and failed emails in the “Activity Log” page, which you can open from the “IRS 1099 Form Documents” page under Actions.

• If a vendor does not consent to receive emails, the report should be printed instead. To do so, select the Vendor, then select Print > Print to print Copy B, Copy 2, or Copy C (which stays with the employer).

As for version 24.x, multiple reports cannot be printed at the same time.

For more information about the 1099 process please reach out to us at Support@BondConsultingServices.com. 

We hope you have a great year end closing process and a fantastic New Year!