ANNUAL INFORMATION RETURNS – REPORTABLE PAYMENTS - 8422.19

(Revised: 11/2020)

The requirement to file Annual Information Returns for reportable payments made during the calendar year is mandated by the Internal Revenue Code (IRC) and associated regulations.  Pursuant to IRC section 6041 and California Revenue and Taxation Code (RTC) 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.  In addition, IRC section 6045(f) requires the state to report any payment to an attorney (including legal corporations) made in connection with legal services whether or not 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).

State policy requires that reportable payments be identified and reported through a combination of accounting processes, the state Uniform Codes Manual (UCM), and information provided in the Payee Data Record (STD. 204). The Financial Information System for California (FI$Cal) and State Controller’s Office (SCO) Vendor Management Group (FI$Cal/SCO VMG) have developed and implemented the State Reportable Payment Program (SRPP) to process, file, and mail the Form 1099 for FI$Cal agencies/departments and agencies/departments deferred/ exempt from using FI$Cal.  These deferred or exempt agencies /departments may choose to integrate their reportable payment data into FI$Cal for reporting or develop and implement similar reportable payment identification systems to report their own reportable payment data.

The agency/department head or designee is responsible for ensuring compliance with federal and state tax laws.  Each agency/department that makes payments from the State Treasury trust and/or agency funds will comply with the Internal Revenue Service (IRS)and the Franchise Tax Board (FTB) annual information reporting and income tax withholding requirements.  Although FI$Cal/SCO VMG may prepare and file 1099s on behalf of an agency/department using the SRPP, the ultimate responsibility for ensuring completeness of the data rests with each agency/department.

Agencies/Departments deferred/exempt from using FI$Cal have the option to file independently or through the FI$Cal /SCO VMG.  For the purposes of complying with the reporting requirement, each agency/department (except for agencies/departments that use FI$Cal) shall report under its own unique Federal Employer Identification Number (FEIN).  Agencies/departments that use FI$Cal shall report under a statewide FEIN.

For those agencies/departments that need to file separate reports for certain programs, they should 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.

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