Transcript New Vendor Create in Banner Policy

Understanding Form W-9 and 1099
Requirements
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This policy primarily responds to IRS regulations,
which governs the taxation and reporting
responsibilities of U.S. based entities. On an annual
basis, the College must issue 1099 tax statements
to all eligible vendors regarding the income they
received from the College.
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The College must also electronically transmit a file
to the IRS with accurate data pertaining to those
vendors including Name, Address, Tax
Identification Number and Gross Income.
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This policy helps the College with its compliance of IRS
regulations concerning the issuance and accuracy of
annual tax statements to vendors.
 This policy will facilitate IRS reporting requirements
▪ Certain types of payments made to vendors must be reported to the IRS. Having
a signed W-9 on file allows the College to report the correct combination of Tax
Identification Number (TIN) and name, thus avoiding IRS penalties.
 Evidence of validity is documented.
▪ Having a signed W-9 on file is considered evidence that the payee is a valid
individual or business. This helps the College avoid making inappropriate
payments to fraudulent entities.
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Vendor
A vendor for this purpose is:
 Every entity, business or person that has a vendor
record in the AP Module Database.
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Vendor Maintenance
 The electronic means of storing changes in the
vendor information who supply goods and services
to the College.
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Eligible Vendor
 Vendor that is required to receive a 1099 Form due to
the type of payment received or/and their Business
Entity Form
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This policy applies to all faculty and staff that
deal with vendors while performing their
departmental duties.
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WHO SHOULD KNOW THIS POLICY
 Senior Financial or Business Officers
 Chairs of Departments, Directors of Institutes and
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Centers
Department Administrators
Program Directors
Faculty
Administrative staff with Accounts Payable
responsibility
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Vendor Maintenance
 The College of William and Mary departments
and its units will initiate the request to create or
update a vendor record using the new form
“Vendor File Maintenance Record”.
 These are vendors with whom the department
wishes to enter into a transaction and a vendor
record ----may or may not exist in Banner.
Federal regulations require that Form 1099-MISC be
sent to each person or company, other than
corporations, to whom we have paid at least $10 in
royalties or at least $600 in rents, services (including
payment for parts and materials), prizes and awards, legal
services or medical and health care payments.
 All payments processed through the Accounts
Payable Office must be reviewed for possible 1099
reporting.
 To ensure proper reporting to the IRS the College
must collect the W9 from vendors.
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1099 Vendors are flagged during the Vendor
Create Process
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1099 payments are flagged during the
payment process
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The best way to ensure the information
required is enter in the system is to get a
vendor to complete IRS Form W-9 before
writing any checks.
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New Vendor Create
 Every new vendor must complete a Request for
Taxpayer Identification Verification form (W9) before
it is created in Banner and before the College will
make any payments to the vendor.
 The W9 helps us identify the legal entity of a business
or individual.
▪ The W9 form verifies the vendor/payee’s legal name, address,
taxpayer identification number, and type of organization
(individual, partnership, corporation, etc).
▪ Any false information given by the vendor on a W9 becomes
their liability, not the College’s.

The IRS site states:
 If the tax-exempt organization does not obtain an
SSN or EIN before the organization pays the
contractor, the organization must withhold
income tax from the payment, generally referred
to as backup withholding.
 Backup withholding rules require that 28 percent
of the payment be withheld, and reported on
Form 945, Annual Return of Withheld Federal
Income Tax.
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http://www.irs.gov/charities/article/0,,id=172606,00.html
If the AP office
receives
paperwork we
will be better
prepared to
process the
payment.
It is important we
know the reason
we received a new
W9 in the office
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New Vendor
Name Change (example: doing business as)
Employees and Students receiving
payments other than reimbursements
Business Entity Change
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A W-9 form will not be required for the
following:
 Employees of the College including students
receiving expense reimbursements or refunds.
 Nonresident Aliens or Foreign Entities (a set of different
forms are required)
 Petty cash reimbursements
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Vendors who are reportable include:
Individuals
Sole proprietors (including doctors and attorneys),
Partnerships,
Limited Liability Companies (except Corporations)
Medical and Healthcare Corporations
Trusts and Estates
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Scholarship and fellowship payments are not
1099 reportable since all "working"
scholarships and fellowships are processed
through our payroll office.
Other types of scholarships are not
reportable to the IRS.
 The best way to ensure you have the information
you need is to get a payee to complete IRS Form
W9 before you write a check.
 Never assume that because a business name
includes the word “Company” or “Co.” that it is a
corporation.
 Businesses that are Limited Liability Companies or
LLCs, can be treated as sole proprietors,
partnerships or corporations, so don’t assume that
LLC in the business name means you don’t have to
file a Form 1099-MISC.
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If someone refuses to complete Form W-9 or
to give the College the information needed to
determine if a Form 1099-MISC must be filed,
there are two options.
 Option 1: A payment can be processed, but the
payment will have Federal income tax withholdings
at the backup withholding rate (currently 28%), and
the vendor will receive a net check.
 Option 2: You can choose to refuse the business.
 If you have any questions please
don’t hesitate to contact the
Accounts Payable Office