Information Return Reporting for Federal Agencies
Federal agencies are generally subject to the same information reporting requirements and must file information returns for each calendar year with respect to applicable payments made during the year in the course of its trade or business.
The payer must file Form 1099-MISC, Miscellaneous Income, for each person it paid at least $600 for rents, services (including parts and materials), prizes and awards, or other income If payment for services includes amounts paid for labor and parts, include both amounts on the Form 1099-MISC. For more information, see the Instructions for 1099-MISC.
Payments Under Contract - Section 6050M Reporting
Section 6050M provides that the head of every executive agency that enters into any contract shall make a return for each person with whom the agency entered into a contract during the calendar year. A Federal executive agency of the United States, as defined by 6050M(b), is any executive agency other the General Accounting Office, any military department and the United States Postal Service and Postal Rate Commission of the United States.
Section 1.6050M-1(b)(2) of the Income Tax Regulations defines a contract as an obligation of a Federal executive agency to make payment of money (or other property) to a person in return for the sale of property, the rendering of services, or other consideration. The regulations limits the reporting requirement by providing that any contract or contract action for which the amount obligated is $25,000 or less does not have to be reported.
This information is required to be filed either through the Filing Information Returns Electronically (FIRE) system or on Form 8596, Information Return for Federal Contracts. See Form 8596 and Revenue Procedure 2008-49 for more information.
Special Information Reporting Rules
- Payments to Attorneys: Attorney fees of $600 or more paid the course of the business must be reported on Form 1099-MISC, box 7. This includes legal fees paid to corporations. This does not include gross proceeds paid to attorneys in connection with legal services in box 14.
- Vendor Services: Payments made by a federal executive agency for any type of vendor services must be reported on Form 1099-MISC, box 7.
- Payments Reportable to Corporations: Payments by federal agencies to corporations are not exempt from the filing requirements. Internal Revenue Code section 6041A(d)(3) provides that payments made for services performed by a corporation are subject to information reporting requirements when the remuneration has been paid to the corporation by a Federal executive agency.
- Student Loan Interest Statements: If student loan interest of $600 or more from an individual is received during the year, report this amount on Form 1098-E, Student Loan Interest Statement.
- 1099-R: Use Form 1099-R to report distributions from certain pensions, annuities, retirement or profit-sharing plans in excess of $10 or more. For more information, see the Instructions for Form 1099-R.
Interest Income (1099-INT)
In general, a government entity must issue Form 1099-INT, Interest Income, to each person to whom it paid, during the calendar year:
$10 or more of interest on:
- Accounts in banks, credit unions, or similar organizations
- Tax credit bonds
- Bonds, including tax-exempt state or local government bonds
- U.S. savings bonds
$600 of interest on:
- Damage awards
- Income tax refunds
- Other payments made in the course of governmental operations
Interest of less than $600 on a tax refund may be reported with the refund on Form 1099-G. See the Instructions for Form 1099-G.
For more information on interest reporting, see the Instructions for Form 1099-INT and Form 1099-OID.
Certain Governmental Payments (1099-G)
A Federal agency must issue Form 1099-G, Certain Governmental Payments, to each person it made payments, during the calendar year, of:
- Alternative Trade Adjustment Assistance for Older Workers payments
- Agricultural payments
- Market gain associated with the repayment of a Commodity Credit Corporation (CCC) loan
Federal agencies are subject to requirements to withhold income tax of 28% from certain payments if the payee is not exempt from backup withholding and fails to furnish a correct taxpayer identification number (TIN), or a notice is received from the IRS indicating that backup withholding should begin on a payee.
Note: Backup withholding does not apply to wages or pension payments.
All entities are required to comply with the backup withholding rules. However, some recipients are exempt from having backup withholding imposed on them. Do not apply backup withholding to any of the following entities:
- A state, the District of Columbia, a possession of the United States, or any of their political subdivisions or instrumentalities.
- The United States or any of its agencies or instrumentalities.
- An organization exempt from tax under section 501(a), any IRA, or a custodial account under section 403(b)(7) if the account satisfies the requirements of section 401(f)(2).
- A foreign government or any of its political subdivisions, agencies, or instrumentalities.
- An international organization or any of its agencies or instrumentalities.
For more information on information return filing requirements, refer to the General Instructions for Forms 1099, 1098, 5498, and W-2G.