Enter Supplier Income Tax Information

Explanation

Use this activity to designate a supplier as subject to tax reporting and/or withholding. In the United States, this is known as Form 1099 income tax reporting and withholding. You can also define valid supplier income types, which identify the categories of income each registered invoice line from the supplier represents. 

If necessary (i.e. check box Supplement Report Codes to Tax Withholding Lines in Company/Invoice is cleared), you must also specify the states where tax withholding at state level applies for the supplier.

Prerequisites

This activity requires that:

• A supplier exist.
• The association number be specified in the header portion of the Supplier window, or the tax ID number be specified on the Supplier/Invoice/General tab.
• General supplier information be entered on the Supplier/General tab.
• Supplier address information be entered on the Supplier/Address tab. Address, city, state, zip code and phone number must be entered. It is also required that check boxes for Address Defaults and Method Default are marked when saving the phone number as communication method.
• The supplier group be defined in the Supplier Groups window.
• The currency be defined in ISO Code Usage/Currency.
• Payment terms be defined in the Payment Terms window.
• One or more supplier income types be defined in the Income Types window.

For state income tax reporting and withholding, the Supplement Report Codes to Tax Withholding Lines check box must be selected on the Company/Invoice tab. Also, tax report codes with the State Tax Withhold tax function must have been defined in the Report Codes for Tax Lines, Withholding window.

System Effects

As a result of this activity, supplier income types can be registered for invoice lines, which enables income taxes to be reported and/or withheld as required by law.

Window

Tax Withholding/Reporting

Related Window Descriptions

Tax Withholding/Reporting

Procedure

To perform this activity, follow these steps:

1. In the Tax Withholding/Reporting List, specify whether the supplier is subject to tax reporting only or to tax withholding and reporting.
2. If the supplier is exempt from tax withholding, select the Tax Exempt check box. Also, enter the beginning and ending dates of the period during which the exemption is valid.
3. If the IRS has sent a second notice during the past three calendar years indicating that the taxpayer's taxpayer identification number (TIN) is missing or incorrect, select the 2nd TIN Notification check box.
4. Click the Supplier Income Type tab.
5. Create a new record.
6. In the Supplier Income Type ID field, select a supplier income type from the List of Values. Values appear automatically in the Description and Threshold Amount in Acc Curr fields.
7. If you want to specify a threshold amount specifically for this supplier, enter a numeric value in the Supplier Threshold Amount in Acc Curr field. This value overrides the global threshold amount defined in the Income Types window.
8. If you want this supplier income type to appear by default when an invoice line is entered, select the Income Type ID as Default check box.
9. If the supplier is subject to income tax withholding at the state level, click the Supplier State Tax Info tab. This tab is visible only if the Supplement Report Codes to Tax Withholding Lines check box is selected on the Company/Invoice tab. In the Report Code field, select a supplier state report code from the List of Values. Values appear automatically in the Description and Country Code fields. Select the state for which you want to report and/or withholding taxes using this report code. You can specify up to two states using report codes 16A and 16B.
10. Save your changes.