​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 box type. 

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.

Transaction Codes That Post to the Vendor Payment File

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.

Transaction Codes that Do Not Post to the Vendor Payment File 

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 cost allocations.

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.

Solving Common Problems

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.

Payment is on the Vendor Payment file with a Wrong Subobject

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. 

Payment is on the Vendor Payment File With a Wrong PCA or Index

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 the table.

Payment is on the Vendor Payment File but You Want to do Cost Allocations

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 codes.

Payment is Not on the Vendor Payment File but Should Be

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. 

Payment is Not on Vendor Payment File – Should Be and has Wrong Expenditure Subobject

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 year. 

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 a Payment is 1099-MISC Reportable

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.