Overview
This section outlines the legal requirement for Federal agencies to report payments made to specific contractors to the Internal Revenue Service (IRS) using Form 1099. it also establishes the contractor's obligation to provide a Taxpayer Identification Number (TIN) to facilitate this reporting.
Key Rules
- Reporting Requirement: Under 26 U.S.C. 6041 and 6041A, Government agencies must report payments made to certain contractors to the IRS via Form 1099.
- TIN Mandatory: Per 26 U.S.C. 6109, contractors are legally required to furnish their TIN to the agency if the payment is subject to Form 1099 reporting.
- Administrative Responsibility: The agency's designated payment office, rather than the contracting officer, is responsible for the actual submission of these reports to the IRS.
Practical Implications
- Contractors must ensure their TIN is accurately registered in the System for Award Management (SAM) and matches IRS records to avoid payment delays or potential backup withholding.
- While the payment office handles the reporting, contracting officers must ensure the necessary tax documentation and TIN information are collected during the solicitation and award process.