Tax Reporting Guidelines

Tax Reporting for City Agencies

The following information provides assistance with Forms 1099-Misc or 1099-INT for City agencies.

 

Agency Training

In preparation for calendar year activities, the New York City Comptroller’s Office will be conducting the Tax Reporting class at FISA. Please contact your agency’s FMS Training Coordinator to enroll in the course.

Directive #29

Comptroller’s Directive #29: Vendor/Customer Maintenance and Tax Reporting Requirements, which specifically addresses tax reporting for the City, was revised and reissued on January 21, 2016 and is available on the Comptroller’s Directives page. Agency staff responsible for 1099 activities must be adequately trained and must maintain 1099 training materials for reference.

Backup Withholding

The Internal Revenue Service requires payers (such as the City of New York) to withhold 28% in tax, called Backup Withholding, when payees do not submit their correct Name/TIN combination. The IRS notifies the City of Name/TIN annually of mismatches which prompts the generation of B-Notices from the Comptroller’s Office to payees.

B-Notices

1st B-Notice and Required Documentation

1st B-Notices are sent to payees who appear on the IRS Backup Withholding Notification for the 1st time. A Backup Withholding Substitute Form W-9 is attached to the 1st B-Notice. Completion of this form is required from these payees along with a copy of their social security card (if applicable).

2nd B-Notice and Required Documentation

2nd B-Notices are sent to payees who appear on the IRS Backup Withholding Notification for the 2nd or 3rd time in a consecutive year. IRS Letter 147C or Social Security Administration Certification is required from these payees along with a 2nd B-Notice Attachment.

If the required documentation is not returned within 30 business days, then 28% withholding will begin on the 31st day for 1099 reportable payments. 1099 reportable payments are deemed eligible for Backup Withholding according to IRS regulations.

If the required documentation is returned within 30 business days, then the City’s payee database will be updated to reflect corrected information and the 28% Backup Withholding will be removed from the payee’s record.

Backup Withholding Hotline

If you are a B-Notice recipient, or a City Agency with a Backup Withholding related question or problem, you may leave a message on our Backup Withholding hotline at (212) 669-8233. A Comptroller’s staff member will attempt to respond to your inquiry within 1 business day.