Submitting 1099 Reportable Non-Payroll Payment Information

The University of Minnesota makes non-payroll payments to individuals and businesses in the course of the University’s trade or business. Federal and State tax regulations require that the University report certain types of non-payroll payments (excluding payments processed through the University’s Purchasing Card (PCard) program) to the Internal Revenue Service (IRS), state taxing authorities, and recipients for payments made in each calendar year. The payments are reported to recipients on IRS Form 1099. 

1099-MISC, Miscellaneous Income Reporting Requirements

The reportable threshold for all non-payroll payments (except royalty payments) is an aggregated amount of $600 or greater during a calendar year. Royalty payments have a threshold of $10 or greater during a calendar year.

All non-payroll payment recipients require an entity type and must be a US citizen or entity for tax purposes. Payments to non-US taxpayers may be reported on IRS Form 1042-S: Foreign Person’s U.S. Source Income Subject to Withholding.

The reportable entity types include: 

• individuals,
• sole proprietorships,
• partnerships,
• estates,
• trusts, and
• corporations (medical and legal services only)

Government and tax-exempt organizations are excluded from reportable entity types.

Units must report all non-payroll payments issued outside of the Enterprise Financial System (EFS) to the reportable entity types listed above, including but not limited to the following: 

• rents,
• royalties,
• medical / healthcare services,
• legal settlements,
• attorney’s fees,
• human participants payments,
• honoraria,
• certain deceased employee wages or benefits,
• taxable fringe benefits received by retired employees or non-employees,
• gifts or prizes, and
• payments for services provided by non-employees

Note: unsubstantiated and/or undocumented employee expense reimbursements may be reported as compensation on IRS Form W-2.

Payments and Tax Reporting for Human Participants

IRS regulation requires the University to report payments to human participants totaling $600 or more during a calendar year. University departments and/or Principal Investigators must obtain a W-9, including the human participant’s name, address and social security number when the cumulative payments over a calendar year equals or exceeds $600 (that are not set up as a supplier in EFS ). This includes payments made via the Prepaid Debit Card, Single Payment Supplier (SPV), Zero Balance Accounts, Contingent Accounts and through Cash Advances.

This requirement does not conflict with HIPAA regulations. University faculty and staff must not include health or detailed information regarding the study in the payment documentation.

1099-K, Merchant Card and Third Party Network Payments Reporting Requirements

Payments processed through the University’s UCard program requires the University to report on IRS form 1099-K.

IRS Deadline Requirements

Purchasing Services is responsible for ensuring that all 1099 forms are sent to recipients by January 31st of the following calendar year. If the due date for filing IRS Form 1099 falls on a Saturday, Sunday or legal holiday, the form is due on the next business day.

Departmental Procedure

To comply with the Internal Revenue Service (IRS) reporting rules related to non-payroll payments made by the University, University units are responsible for providing recipient and payment information to Purchasing Services. Requirements and deadlines vary depending on the amount of the non-payroll payment and if the payment occurs within EFS. 

Payments that must be reported to Purchasing Services include:

• One-time, aggregated, cash or non-cash payments to a recipient that meets or exceeds $600 during a calendar year, and
• Payments that are processed outside of EFS, or
• Payments where the recipient’s name, address and tax ID for 1099 reporting are not readily available in EFS.

The table below shows payment types and the University unit responsible for providing the information to Purchasing Services. 

Payments processed in the Enterprise Financial System (EFS) require an existing supplier record.  If the supplier does not exist in EFS, units must complete form UM 1679 – Supplier Authorization/Change Form to have the supplier created in EFS prior to payment being issued.

Documentation Requirements

If the non-payroll payment occurs outside of EFS, units must complete form Supplier W-9 -Request for Taxpayer Identification Number and Certification and submit to Purchasing Services.

• If the payment is $600 or greater (cash or non-cash) or $10 or greater for royalty payments – the form must be submitted at the time of payment.
• For payments that aggregate to $600 or greater during the calendar year - All final information must be submitted to Purchasing Services by the 3^rd business day in January following the calendar year the payments were made.

If units provide incorrect recipient information or if any information is missing, future payments to the supplier may be put on hold until all issues are resolved and/or all documentation is received.

Required information and instructions for submitting data to Purchasing Services

Required information

Recipient’s name, which is used on the individual’s or organization’s tax return, Social Security Number or Employer Identification Number (EIN), current address, and the total payment amount. 

For all non-payroll payments, excluding UCard, the required information must be submitted to Purchasing Services on form 1099-Misc Reporting Template.xlsx. The submitted form must be in Excel format.

For UCard reporting, the required information must be submitted to Purchasing Services on form 1099-K Reporting Template.xlsx. The submitted form must be in Excel format.

How to submit recipient information for payments that occur outside of EFS

Social Security and Employer Identification (EIN) Numbers are classified as private, highly restricted data according to Administrative Policy Data Security Classification. 

The data must be transmitted to Purchasing Services via Box Secure Storage. The responsible staff member should set up an account with Box Secure Storage and contact Purchasing Services at [email protected].  Purchasing Services will create and share the folder with the requester.

Documentation deadlines

• If the payment is $600 or greater (cash or non-cash) or $10 or greater for royalty payments, the form must be submitted at the time of payment.
• For payments that aggregate to $600 or greater during the calendar year, all final information must be submitted to Purchasing Services by the 3^rd business day in January following the calendar year the payments were made.