Requirements for Furnishing Form 1099-G Electronically
Government entities that make certain payments, including unemployment compensation and income tax refunds, are required to report these payments on Form 1099-G, Certain Government Payments. Because these payments may be taxable to recipients, government entities that make these payments are required to report unemployment compensation of $10 or more in box 1 of Form 1099-G. Income tax refunds of $10 or more issued by states and other government entities must be reported on Form 1099-G, box 2.
In general, the reporting requirement is met by providing a paper copy of Form 1099-G to the recipient by January 31 of the year following the year of payment. However, a government entity may elect to establish a system for furnishing the form electronically. In order to do this, the payer is required to obtain written consent from each recipient to whom a statement will be furnished electronically. In addition, the payer is required to make certain notifications to each consenting individual.
The requirements for furnishing Form 1099-G (and other information returns) are specified in Revenue Procedure 2011-60, also available as Publication 1179, General Rules and Specifications for Substitute Forms 1096, 1098, 1099, 5498, and Certain Other Information Returns, specifically in section 4.6 “Electronic Delivery of Recipient Statements.”
A government entity may furnish the statement electronically instead of on paper if the recipient has affirmatively consented to receive it electronically, and has not withdrawn the consent before the statement is furnished. The consent by the recipient must be made electronically in a way that shows that he or she can access the statement in the electronic format in which it will be furnished.
If the government entity makes any hardware or software changes that create a risk that the recipient will not be able to access the statement, a notice must be provided to the recipient before changing the hardware or software. The notice must inform the recipient that a new consent to receive the form in the revised electronic format must be provided. After implementing the revised hardware and software, the furnisher must obtain from the recipient a new consent or confirmation of consent to receive the form electronically.
The government entity must place electronically posted statements on the applicable website by the January 31 due date, and the statements must remain available until October 15 of that year. When statements are posted, the issuing entity must notify the recipients, either electronically or by mail.
Prior to furnishing the statement electronically, the government entity must provide the recipient a statement with all the following prominently displayed:
- If the recipient does not consent, a paper copy will be provided.
- The scope and duration of the consent.
- How to obtain a paper copy after giving consent.
- How to withdraw the consent.
- Conditions under which an electronic statement will no longer be furnished.
- Procedures to update recipient information (for example, termination of employment).
- A description of hardware and software required to access, print and retain a statement, and when it will no longer be available.
All electronic statements must be in a format that conforms to the requirements stated in Publication 1179. For general information reporting requirements for Form 1099-G, see the Instructions for Form 1099-G.