Tax Reporting Overview

The Tax Reporting User Guide includes information on the following areas:

1099 Reporting: Entities that provide certain kinds of income to reportable vendors must file an information return (Form 1099) with the IRS. The information return shows how much reportable income the vendor earned during the course of the tax year.
1098 Reporting: A government or governmental entity and certain nongovernmental entities must file the 1098-F form, to report certain fines, penalties, and other amounts paid. An eligible educational institution that is a governmental unit, or an agency or instrumentality of a governmental unit, is subject to the reporting requirements of Form 1098-T.
1042-S Reporting: The IRS requires US companies to withhold a specific percentage of money paid to foreign individuals, companies, and non-resident aliens based on their country of origin and the type of income classification of the money being paid to that company or individual. Form 1042-S is the tax form used to report such income.
Backup Withholding: Under Section 3406 of the Internal Revenue Code, a payer making certain payments to payees is required to withhold and pay to the IRS a specified percentage of applicable payments if one or more predetermined conditions are met. This withholding is known as Backup Withholding.
Contract Withholding was a federal law that mandated federal, state, and local governments withhold 3% from payments for goods and services. The law was included in section 511 of the Tax Reconciliation Act of 2005. The IRS referred to it as Withholding Under Internal Revenue Code Section 3402(t). CGI Advantage refers to that withholding as Contract Withholding. Although the law was revoked, the withholding feature still exists in Advantage.

The 1099 Reporting Process includes a number of table set up, processes, and transactions. The following diagram shows the portion that is considered for the Legacy 1099 Reporting process and the portion that is considered for the Advantage Tax Reporting module. Together, the process results in IRS substitute forms that can be sent to recipients and data files that can be sent to the IRS.