1099-MISC: Make Adjustments and Solve Common Problems
When you make adjusting entries from one expenditure
subobject to another and either subobject is 1099-MISC reportable, you should
use the transaction codes listed below.
Any time you adjust between expenditure subobject codes, you may be
changing the total amount for the 1099-MISC or changing a total in a specific
If an adjustment transaction code does not post to the
vendor payment file, the 1099-MISC amount will not be updated to reflect the
change, and manual adjustments to the 1099 System may be required. Adjustments
that impact the 1099-MISC reporting should be done in the same calendar year as
the original expenditure.
The following adjustment transaction codes should be used
when adjusting an expenditure from one subobject code to another – especially
if either of the codes are 1099-MISC reportable. These subobject codes post to
the vendor payment file.
EXPENDITURE ADJ TO VENDOR PAYMENT FILE – REDUCTION
Dr 1003 Cash
EXPENDITURE ADJ TO VENDOR PAYMENT FILE – CHARGE
Cr 1003 Cash
ENCUMBRANCE EXPENDITURE ADJ TO VENDOR PMT FILE – CHARGE
Dr 3001 Reserve for
Cr 4300 Encumbrances
The following adjustment transaction codes do not post to the Vendor Payment File
and you should only use these for adjustments within the same subobject such as
If you use these transaction codes for adjustments between
subobjects, determine if the 1099-MISC reporting requirement is different for
the subobjects. If they are, you should
use the 27A/27B/27C codes, or you must manually report the information by
vendor and calendar year to the SCO for manual entry into the 1099 System.
Cr 4200 Expenditures
Cr 1003 Cash
Dr 3001 Reserve
Cr 4300 Encumbrances
Below are a few examples of why you would need to correct
information on the Vendor Payment File for 1099-MISC reporting. You should make
these types of adjustments on a batch type 4 or 5.
If either the wrong subobject or the correct subobject are
1099-MISC reportable, you should use the TCs 27A, 27B, or 27C to post both
sides of the adjustment to the Vendor Payment File.
Since neither the PCA nor the Index are part of the criteria
for the 1099 extract, you do not have to worry about the adjustment posting to
the Vendor Payment Table. However, you
may still want to use the TCs 27A, 27B, or 27C so the adjustment will show on
If the subobject is remaining the same or if the 1099-MISC
reporting is remaining the same, you may use the 270/271/273 adjustment transaction
Since the payment must be on the Vendor Payment File for the
1099 extract, you will need to submit the information to the State Controller’s
Office, Division of Statewide Accounting when requested at the end of the year.
In order to eliminate this manual process, use transaction codes that post to
the Vendor Payment File whenever possible.
If you paid with a transaction code 282 and an expenditure
subobject that is not 1099 reportable, but you should have paid with a 1099
reportable expenditure subobject, the procedure to report correctly depends if
the expenditure posted in the current fiscal year or the previous fiscal
If the expenditure posted in the previous fiscal year, you
will need to submit the information to the SCO, Division of Statewide
Accounting when requested at the end of the year. If the expenditure posted in
the current fiscal year, use a transaction code 270 with all the original
coding, and then enter a transaction code 27B with the correct expenditure
subobject, TIN, and any other coding to record the payment correctly.
If you do not know if an expenditure is 1099-MISC
reportable, contact the SCO. If necessary, SCO may direct you to the State Tax
Commission or the IRS for assistance.