1099 Forms Correction

Use this procedure to correct Forms 1099 that were submitted to the IRS electronically. One-step and two-step correction processes are described, as outlined in Section 11 of IRS Publication 1220.  Refer to IRS Publication 1220 for more details and the latest information from the IRS.

Correction process 

The process generates correction files using BK99CC. To generate a correction file, select Generate 1099 Corrections File? on BK99CC. Correction files are created based on specific selection criteria. You must select only the vendors who need corrections.

Before you run BK99CC to create the correction file, you must update BusinessPlus to reflect what should have been reported. Choose the best way for your district to correct the data.

• PEUPPE: Select a record to update, select the Vendor tab, then the 1099 tab. Edit the 1099 Flag.

• Update individual transactions for the vendor.

Associated codes

Associated codes provide additional information necessary for corrections. Associated Codes must be set up in NUUPCD Common Codes with a Code Category of PEAS and the Code Values listed.

When added to PEUPPE, these association codes must include a date with the tax year being corrected in the format 12/31/YYYY. For example, if the correction is for tax year 2023 then enter 12/31/2023 as the date.

Set up the Associated Codes in Common Codes. Use Code Category PEAS with each Code Value.

• PEAS/99CZERO: When entered in PEUPPE, it zeroes out any values reported for 1099-NEC or 1099-MISC.

• PEAS/99CTIN: When entered in PEUPPE, enter the original reported Tax ID or Social Security number (TIN or SSN) in the Associated Value. If the TIN or SSN is greater than 12 characters, enter it in the Associated Description. Do not use any punctuation or special characters. If the original TIN or SSN reported was blank, leave both the value and description blank.

• PEAS/99CNAME: When entered in PEUPPE, enter the original reported name in the Associated Description. If it is a person’s name, enter First Last with no punctuation.

• PEAS/99CTYPE: When entered in PEUPPE, enter the original reported 1099 type (NEC or MISC) in the Associated Value. If the amounts are now zero in BusinessPlus then the program creates a correction entry in the IRS file to zero out the amounts for the option selected (NEC or MISC). Otherwise, this creates a normal correction of dollar values currently in the system for that type.

Since BusinessPlus processes NEC and MISC separate from each other, the 99CTYPE option has the same effect as the 99CZERO option and results in a 1-step correction.

You then need to run BK99CC again to create an IRS file for the opposite type to complete the correction. In other words, run it once for the incorrect type reported (NEC or MISC) to create a file to zero out the amounts. Then run it again for the correct type (MISC or NEC) to create a file with the correct information to complete the second step. 

One-Step correction 

Use the one-step process to correct: 

• Dollar amounts

• Misclassification of 1099 payments within the same form

One-Step correction procedure

1. Make the necessary corrections in BusinessPlus using one of these methods:

   • On the PEUPPE Vendor 1099 tab, set the vendor 1099 flag to D - Never or N - As specified in AP.

   • Modify individual transactions as needed.

2. Zero Out Values: (if needed): On the vendor PEUPPE Associations tab, enter the 99CZERO Code to create a correction with zero values. Enter a tax year date in the Date field (format 12/31/YYYY).

3. On BK99CC, select the type of 1099s for corrections:

   • 01 - 1099-NEC

   • 02 - 1099-MISC

4. Selection: On BK99CC, select only vendors that require corrections. 

5. Execution: Select Generate 1099 Corrections File? when you execute BK99CC.

6. File Creation: If the amounts are now zero in BusinessPlus, then the program creates a correction entry in the IRS file to zero out the amounts for the option selected (NEC or MISC). Otherwise, it creates a normal correction of dollar values currently in the system for that type.

Two-step correction 

Use the two-step process to correct: 

• Tax ID number (for example: TIN, SSN, EIN, ITIN) 

• Name of the payee

• Return type (MISC or NEC)

Two-Step correction procedure

1. Make the necessary corrections in BusinessPlus using one of these methods:

   • On the PEUPPE Vendor 1099 tab, set the vendor 1099 flag to D - Never or N - As specified in AP.

   • Modify individual transactions as needed.

2. Original Values: On the vendor PEUPPE Associations tab, enter the following Codes as needed. Enter a tax year date in the Date field (format 12/31/YYYY).

   1. 99CTIN: Enter the original reported Tax ID or Social Security number (TIN or SSN) in the Associated Value. If the TIN or SSN is greater than 12 characters, enter it in the Associated Description. Do not use any punctuation or special characters. If the original TIN or SSN reported was blank, leave both the value and description blank.

   2. 99CNAME: Enter the original reported name in the Associated Description. If it is a person’s name, enter First Last with no punctuation.

   3. 99CTYPE: Enter the original reported 1099 type (NEC or MISC) in the Associated Value.

3. On BK99CC, select the type of 1099s for corrections:

   • 01 - 1099-NEC

   • 02 - 1099-MISC

4. Selection: On BK99CC, select only vendors that require corrections. 

5. Execution: Select Generate 1099 Corrections File? when you execute BK99CC. 

6. File Creation: The system generates two correction files, each addressing specific corrections. 

File naming conventions 

To prevent overwriting previously generated files, the following naming conventions are used: 

• Original Files: IRSTAXyy_1099tttt_date_time.txt 

• Correction Files: 

  • One-Step: IRSTAXyy_1099tttt_date_time_correction.txt

  • Two-Step: IRSTAXyy_1099tttt_date_time_correction1.txt for the first correction and IRSTAXyy_1099tttt_date_time_correction2.txt for the second correction

If common code CK99/FILEINFO has Ledger entered in Associated Description 2, which indicates to include the ledger code in the file name, then IRSTAXyy is replaced by IxxTAXyy, where xx = ledger code.

Upload correction files 

1. Log into the IRS FIRE System. 

2. Upload the first correction file. 

3. If you ran a two-step correction, upload the second correction file.

Ensure compliance with IRS guidelines and specifications when you upload correction files. 

For further assistance or inquiries, contact customer support. 

1099 correction examples

 1099-NEC

Reported wrong amount

1. Update the vendor in BusinessPlus to the correct amount that should have been reported. 

2. Run BK99CC for 1099-NEC. Select the vendor and select Generate 1099 Corrections File?.

3. Submit the resulting file to the IRS. 

Vendor should not have 1099-NEC

1. Update the vendor in BusinessPlus to reflect all zeros on the 1099-NEC. 

2. In PEUPPE add association code 99CZERO. Enter the date for the tax year as 12/31/YYYY where YYYY = tax year.

3. Run BK99CC for 1099-NEC. Select the vendor and select Generate 1099 Corrections File?.

4. Submit the resulting file to the IRS.

Incorrect TIN/SSN on 1099-NEC

1. Update the vendor in BusinessPlus to the correct TIN/SSN. 

2. In PEUPPE, add association code 99CTIN for the vendor. Enter the TIN/SSN that was reported incorrectly in the associated value, or enter it in the associated description if greater than 12 characters. Do not include dashes or other punctuation. If the original TIN/SSN reported was blank, leave both the value and description blank. Enter the date for the tax year as 12/31/YYYY where YYYY = tax year.

3. Run BK99CC for 1099-NEC. Select the vendor and select Generate 1099 Corrections File?.

4. Submit the resulting two files to the IRS. Submit filename_correction1.txt first, then submit filename_correction2.txt. 

Incorrect Vendor Name on 1099-NEC

1. Update the vendor in BusinessPlus to correct the vendor name. 

2. In PEUPPE, add association code 99CNAME for the vendor. Enter the name that was reported incorrectly in the associated description. Do not include dashes or other punctuation. Enter the date for the tax year as 12/31/YYYY where YYYY = tax year. 

3. Run BK99CC for 1099-NEC. Select the vendor and select Generate 1099 Corrections File?.  

4. Submit the resulting two files to the IRS. Submit filename_correction1.txt first, then submit filename_correction2.txt. 

1099-NEC filed but should have been 1099-MISC

1. Update the vendor in BusinessPlus to the type that should be reported. 

2. In PEUPPE, add association code 99CTYPE for the vendor. Enter NEC in the associated value (incorrect type initially reported). Enter the date for the tax year as 12/31/YYYY where YYYY = tax year.

3. Run BK99CC for 1099-NEC. Select the vendor and select Generate 1099 Corrections File?.

4. Submit the resulting file to the IRS. 

5. Run BK99CC for 1099-MISC. Select the same vendor.

   1. If no previous 1099-MISC was reported for the vendor, make sure Generate 1099 Corrections File? checkbox is clear (not selected).

   2. If a 1099-MISC was previously reported for the vendor and needs information such as amounts corrected, select Generate 1099 Corrections File?.

6. Submit the resulting file to the IRS. 

1099-MISC

Reported wrong amount

1. Update the vendor in BusinessPlus to the correct amount that should have been reported. 

2. Run BK99CC for 1099-MISC. Select the vendor and select Generate 1099 Corrections File?.

3. Submit the resulting file to the IRS. 

Vendor should not have 1099-MISC

1. Update the vendor in BusinessPlus to reflect all zeros on the 1099-MISC. 

2. In PEUPPE, add association code 99CZERO. Enter the date for the tax year as 12/31/YYYY where YYYY = tax year.

3. Run BK99CC for 1099-MISC. Select the vendor and select Generate 1099 Corrections File?.

4. Submit the resulting file to the IRS. 

Incorrect TIN/SSN on 1099-MISC

1. Update the vendor in BusinessPlus to the correct TIN/SSN. 

2. In PEUPPE, add association code 99CTIN for the vendor. Enter the TIN/SSN that was reported incorrectly in the associated value, or enter it in the associated description if greater than 12 characters. Do not include dashes or other punctuation. If the original TIN/SSN reported was blank, leave both the value and description blank. Enter the date for the tax year as 12/31/YYYY where YYYY = tax year. 

3. Run BK99CC for 1099-MISC. Select the vendor and select Generate 1099 Corrections File?.

4. Submit the resulting two files to the IRS. Submit filename_correction1.txt first, then submit filename_correction2.txt.

Incorrect Vendor Name on 1099-MISC

1. Update the vendor in BusinessPlus to the correct vendor name. 

2. In PEUPPE, add association code 99CNAME for the vendor. Enter the name that was reported incorrectly in the associated description. Do not include dashes or other punctuation. Enter the date for the tax year as 12/31/YYYY where YYYY = tax year.

3. Run BK99CC for 1099-MISC. Select the vendor and select Generate 1099 Corrections File?.

4. Submit the resulting two files to the IRS. Submit filename_correction1.txt first, then submit filename_correction2.txt.

1099-MISC filed but should have been 1099-NEC

1. Update the vendor in BusinessPlus to the type that should be reported. 

2. In PEUPPE, add association code 99CTYPE for the vendor. Enter MISC (incorrect type initially reported) in the associated value. Enter the date for the tax year as 12/31/YYYY where YYYY = tax year.

3. Run BK99CC for 1099-MISC. Select the vendor and select Generate 1099 Corrections File?.

4. Submit the resulting file to the IRS. 

5. Run BK99CC for 1099-NEC. Select the same vendor.

   1. If no previous 1099-NEC was reported for the vendor, make sure Generate 1099 Corrections File? checkbox is clear (not selected).

   2. If a 1099-NEC was previously reported for the vendor and needs information such as amounts corrected, then select Generate 1099 Corrections File?.

6. Submit the resulting file to the IRS.