1099 Forms Correction Procedures
This document provides instructions for correcting Forms 1099 submitted to the IRS electronically. It includes guidelines for both one-step and two-step correction processes as outlined in Section 11 of IRS Publication 1220. See IRS Publication 1220 for more details and the latest information from the IRS.
Correction Process
The correction process involves generating correction files using the BK99CC menu option for either 1099-NEC or 1099-MISC. Users can indicate their intent to generate correction files by selecting the "Generate 1099 Corrections File?" checkbox. Correction files are created based on specified selection criteria. You must specifically select only the vendors who need correction. Before you run BK99CC to create the correction file, you must update BusinessPlus to reflect what should have been reported. Whether that’s updating the 1099 flag in PEUPPE or updating individual transactions, whatever is the best way for a district to correct their data.
One-Step Correction
The one-step correction format addresses:
Dollar Amount Corrections
Misclassification of 1099 Payment within the Same Form
Procedure for One-Step Correction
Make Corrections in BusinessPlus
Selection: Only select vendors requiring corrections.
Execution: Execute menu BK99CC and select the checkbox "Generate 1099 Corrections File?".
Zeroing Values (if needed): Utilize the 99CZERO associated code (including 12/31/20xx for the date) in PEUPPE to create a correction with zero values.
File Creation: The system generates a correction file with corrected data.
Two-Step Correction
The two-step correction format is used for correcting:
Tax ID number (TIN, SSN, EIN, ITIN, etc.),
Name of the payee, or
Return type (MISC or NEC for BusinessPlus).
Procedure for Two-Step Correction
Make corrections in BusinessPlus
Original Values: Utilize the 99CTIN, 99CNAME, and/or 99CTYPE associated codes (including 12/31/20xx for the date) in PEUPPE to record the original Tax ID, Name or Return Type.
Selection: Only select vendors requiring corrections.
Execution: Execute menu BK99CC and select the checkbox "Generate 1099 Corrections File?".
File Creation: The system generates two correction files, each addressing specific corrections.
Associated Code Information
Associated codes are used to provide additional information necessary for corrections. The following codes are utilized:
99CZERO: This indicates that we want to zero out any values reported as a 1099-NEC or 1099-MISC. Add a tax year date in the Date field (e.g., 12/31/20XX). If the amounts are now zero in BusinessPlus then the program will create a correction entry in the IRS file to zero out the amounts for the option picked (NEC or MISC) by either setting the vendor's 1099 Flag in PEUPPE to D or N (or modify individual transactions, whatever is required). Otherwise, this will simply create a normal correction of dollar values currently in the system for that type.
99CTIN: Records the original Tax ID or Social Security Number (TIN/SSN) reported, placed in the Associated Value. If the TIN/SSN is greater than 12 characters, use the Associated Description and add a tax year date in the Date field. If the original TIN/SSN reported was blank, leave both the value and description blank. There should be no punctuation in the TIN/SSN.
99CNAME: Records the original name reported, placed in the Associated Description. Add a tax year date in the Date field. Note that if an individual, it should be FIRST LAST Name order and no punctuation (if applies).
99CTYPE: Records the original type reported (NEC or MISC), placed in the Associated Value. Add a tax year date in the Date field. Please note that since BusinessPlus processes NEC and MISC separate from each other this will have the same effect as the 99CZERO option above and result in only a 1-step correction. If the amounts are now zero in BusinessPlus then the program will create a correction entry in the IRS file to zero out the amounts for the option picked (NEC or MISC). Otherwise, this will simply create a normal correction of dollar values currently in the system for that type. 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.
Reminder that all these association codes must include a date on PEUPPE within the tax year being corrected. Example if this correction is for tax year 2023 then place 12/31/2023 as the date for the corresponding association code.
File Naming Conventions
To prevent overwriting of 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 the option to include the ledger code in the file name is active, i.e. LEDGER in Associated Code 2 of common code CK99/FILEINFO, then the prefix IxxTAX (where xx = ledger code) will be used instead of IRSTAX.
Uploading Correction Files
Log into the IRS FIRE System.
Upload the first correction file.
Upload the second correction file if a two-step correction is performed.
Ensure compliance with IRS guidelines and specifications when uploading correction files.
For further assistance or inquiries, please contact customer support.
1099 Correction Scenarios
Correcting 1099-NEC
Amount is incorrect
Update vendor in BusinessPlus to the correct amount that should have been reported.
Run BK99CC for 1099-NEC selecting the vendor and checking “Generate 1099 Corrections File?”.
Submit the resulting file to the IRS.
Should never have issued a 1099-NEC
Update vendor in BusinessPlus to reflect all zeros on the 1099-NEC.
In PEUPPE add association code 99CZERO and update the date field with 12/31/20XX.
Run BK99CC for 1099-NEC selecting the vendor and checking “Generate 1099 Corrections File?”.
Submit the resulting file to the IRS.
TIN is incorrect
Update vendor in BusinessPlus to the correct TIN.
Add association code 99CTIN for that vendor in PEUPPE. Place the TIN that was reported incorrectly in the associated value (or associated description if greater than 12 characters) and update the date field with 12/31/20XX. Do not include dashes or other punctuation. If the original TIN reported was blank, leave both the value and description blank.
Run BK99CC for 1099-NEC selecting the vendor and checking “Generate 1099 Corrections File?”.
Submit the resulting two files to the IRS, submit (filename)_correction1.txt first, then submit (filename)_correction2.txt.
Name is incorrect
Update vendor in BusinessPlus to correct the vendor's name.
Add association code 99CNAME for that vendor in PEUPPE. Place the name that was reported incorrectly in the associated description and update the date field with 12/31/20XX. Do not include dashes or other punctuation.
Run BK99CC for 1099-NEC selecting the vendor and checking “Generate 1099 Corrections File?”.
Submit the resulting two files to the IRS, submit (filename)_correction1.txt first, then submit (filename)_correction2.txt.
Should have received a 1099-MISC instead of 1099-NEC
Update vendor in BusinessPlus to what should have been reported.
Add association code 99CTYPE for that vendor in PEUPPE. Place “NEC” (incorrect type initially reported) in the associated value and update the date field with 12/31/20XX.
Run BK99CC for 1099-NEC selecting the vendor and checking “Generate 1099 Corrections File?”.
Submit the resulting file to the IRS.
Run BK99CC again, this time for 1099-MISC selecting the same vendor and make sure “Generate 1099 Corrections File?” is UNCHECKED. (Note: If this vendor previously was also included on a 1099-MISC, you do want to check “Generate 1099 Corrections File?” box.)
Submit the resulting file to the IRS.
Correcting 1099-MISC
Amount is incorrect
Update vendor in BusinessPlus to the correct amount that should have been reported.
Run BK99CC for 1099-MISC selecting the vendor and checking “Generate 1099 Corrections File?”.
Submit the resulting file to the IRS.
Should never have issued a 1099-MISC
Update vendor in BusinessPlus to reflect all zeros on the 1099-MISC.
In PEUPPE add association code 99CZERO and update the date field with 12/31/20XX.
Run BK99CC for 1099-MISC selecting the vendor and checking “Generate 1099 Corrections File?”.
Submit the resulting file to the IRS.
TIN is incorrect
Update vendor in BusinessPlus to the correct TIN.
Add association code 99CTIN for that vendor in PEUPPE. Place the TIN that was reported incorrectly in the associated value (or associated description if greater than 12 characters) and update the date field with 12/31/20XX. Do not include dashes or other punctuation. If the original TIN reported was blank, leave both the value and description blank.
Run BK99CC for 1099-MISC selecting the vendor and checking “Generate 1099 Corrections File?”.
Submit the resulting two files to the IRS, submit (filename)_correction1.txt first, then submit (filename)_correction2.txt.
Name is incorrect
Update vendor in BusinessPlus to the correct vendor's name.
Add association code 99CNAME for that vendor in PEUPPE. Place the name that was reported incorrectly in the associated description and update the date field with 12/31/20XX. Do not include dashes or other punctuation.
Run BK99CC for 1099-MISC selecting the vendor and checking “Generate 1099 Corrections File?”.
Submit the resulting two files to the IRS, submit (filename)_correction1.txt first, then submit (filename)_correction2.txt.
Should have received a 1099-NEC instead of 1099-MISC
Update vendor in BusinessPlus to what should have been reported.
Add association code 99CTYPE for that vendor in PEUPPE. Place “MISC” (incorrect type initially reported) in the associated value and update the date field with 12/31/20XX.
Run BK99CC for 1099-MISC selecting the vendor and checking “Generate 1099 Corrections File?”.
Submit the resulting file to the IRS.
Run BK99CC again, this time for 1099-NEC selecting the same vendor and make sure “Generate 1099 Corrections File?” is UNCHECKED. (Note: If this vendor previously was also included on a 1099-NEC, you do want to check “Generate 1099 Corrections File?” box.)
Submit the resulting file to the IRS.