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FLAIR WFLAIR W--9 Edit & 9 Edit & Backup Withholding WorkshopBackup Withholding WorkshopFebruary 8, 2012

FLAIR W-9 Edit Workshop 1

AgendaAgendaW-9 Edit BasicsCommunicationsCommunicationsAgency Impacts◦ Error Messages and Resolutions◦ Common Issues◦ Prompt Payment Impacts

Review Object Code ListBackup WithholdingQuestions

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WW--9 Edit Basics9 Edit Basics

FLAIR W-9 Edit Workshop 3

Purpose of March 5Purpose of March 5thth EditEditObtain a verified Florida Substitute Form W-9 on all vendors◦ Form W-9 required by the IRS for all persons

receiving payments from a government entity◦ Improve the accuracy of 1099 reporting◦ Aid in the implementation of Backup

WithholdingWithholding◦ Aid in cleaning up the Statewide Vendor File◦ Improve Vendor Payment Reporting

(Transparency)

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Object Codes Subject to EditObject Codes Subject to Edit

1099 reportable object codesNon reportable vendor type payment Non-reportable vendor type payment object codes◦ This will be used to capture other vendor

payments not currently 1099 reportable

W-9 required for both types

FLAIR W-9 Edit Workshop 5

WW--9 Edit Exceptions9 Edit ExceptionsTransactions to foreign vendors as identified on the Statewide Vendor File (those with a “Y” in the Foreign Indicator field)Transactions to “E” vendors (those on the Employee Vendor File)Purchasing Card TransactionsPurchasing Card TransactionsTransactions to object codes not classified as subject to the edit (see object code list)

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Impact on FLAIR & MFMPImpact on FLAIR & MFMP

Edit will not allow an encumbrance, payable or disbursement transaction to payable, or disbursement transaction to be processed without a verified Florida Substitute Form W-9.◦ FLAIR – The W-9 indicator in the Statewide

Vendor File must be set to “Y”

◦ MFMP – The W-9 indicator must be set to “Y”

FLAIR W-9 Edit Workshop 7

CommunicationsCommunications

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Communication EffortsCommunication EffortsThird notice to MFMP vendors sent January 10, 2012Warrant message was added May 2011g yLetters sent on monthly basis to vendors with 1099 reportable payments and no W-9 on fileNotified top 1000 vendors of the requirement to complete Form W-9 by personal phone call Mail-out to Non-MFMP vendors who received multiple payments in the last 12 months that have not submitted payments in the last 12 months that have not submitted a W-9Various communications sent by agenciesMFMP website messages, newsletters, etc.

FLAIR W-9 Edit Workshop 9

What can agencies be doing to What can agencies be doing to prepare?prepare?

All State of Florida agencies need to register d b Fl d S b F W 9and submit a Florida Substitute Form W-9

Continue to send messages to vendors with no W-9 using the sample provided at http://www.myfloridacfo.com/aadir/FormW9EditsandBackupWithholding.htmContinue to access the FLAIR Information Warehouse to determine which vendors have or have not submitted a W-9

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Information Warehouse Information Warehouse --https://flair.dbf.state.fl.us/https://flair.dbf.state.fl.us/

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Information Warehouse Information Warehouse ––RACF LoginRACF Login

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W-9 on file, Passed IRS TIN matching

WW--9 Indicators9 Indicators

matching

W-9 on file, Pending IRS TIN matching

W 9 filW-9 not on file

W-9 on file, Failed IRS TIN matching

Current Statistics Current Statistics Total vendors who received a warrant in 2011

(F and S Vendors only)( y)

No. of encumbrances or payables with verified W-9

Total Verified W-9 Percent

57,755 24,034 41.6%

Total Encumbrances With Verified W-9 Percent

97,669 74,398 76.1%

Of the top 1000 vendors, 880 have a verified W-9

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Total Payables With Verified W-9 Percent

4,914 4,413 89.8%

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WW--9 Submission Steps9 Submission Steps

W-9 Website: https://flvendormyfloridacfo comhttps://flvendor.myfloridacfo.com2 Step Process◦ Vendors must register and receive a User ID◦ Return to the W-9 website to complete and

submit W-9

W-9 must be verified through TIN matching◦ May take 3 to 5 business days

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Agency ImpactsAgency Impacts

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Error Messages & ResolutionsError Messages & ResolutionsCode Error Message Resolutions

088K INVALID VENDOR –W9 PENDING IRS TIN

Description: The vendor has submitted a W-9 to DFS, but the verification is pending a response from h IRS MATCHING the IRS.

Resolution: Verification can take 3 to 5 business days. Check the Statewide Vendor File daily for a W-9 indicator update.

088J INVALID VENDOR –NO W9 ON FILE

Description: The vendor has not submitted a W-9 under the Vendor ID (TIN) on the transaction. Resolution: Double check vendor number. If the vendor number is correct in the SWVF, direct the vendor to the W-9 website to complete the Florida Substitute Form W-9 electronically for that TIN.

088L INVALID VENDOR –W9 FAILED IRS TIN MATCHING

Description: The vendor has submitted a W-9, but the TIN or Name provided by the vendor does not match the IRS’ records. Resolution: Contact vendor and inform vendor to correct their W-9.

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Common WCommon W--9 Submission Issues9 Submission IssuesVendor number in SWVF must match tax identification number submitted on W-9Be aware of EFT issues if an agency adds a new Vendor ID (TIN) due to W-9 issues“N” vendors are subject to the W-9 edit if the transaction is to an object code subject to the editDFS cannot accept IRS Form W-9sRefer vendors who are having trouble to the W-9 Helpdesk, not FLAIR Helpdesk◦ (850) 413-5519 or FLW9@myfloridacfo.com

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Prompt Payment Impacts Prompt Payment Impacts ––Sec. 215.422(3)(b), F.S.Sec. 215.422(3)(b), F.S.

“For purposes of this section, the nonsubmittal of the appropriate federal taxpayer identification the appropriate federal taxpayer identification documentation to the Department of Financial Services by the vendor will be deemed an error on the part of the vendor, and the vendor will be required to submit the appropriate federal taxpayer documentation in order to remedy the error.”Vendors should not receive prompt payment interest if the payment of their invoice is delayed solely due to their error in not filing their W-9.

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Review ObjectReview ObjectC d Li tC d Li tCode ListCode List

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Current Object Code ListCurrent Object Code List5th column indicates object codes “Subject to the March 5th edit”March 5 edit

All employee related object codes are excluded

Vendor type payments are subject to the edits

All Independent Contractor (13xxxx) object codes are subject to the edits

Most property object codes (5xxxxx) are subject to the edit◦ At this time land and easements are not subject to

the edit due to eminent domain acquisitions

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New Object CodesNew Object Codes

Proposed object codes for fiscal year 2012◦ To identify vendor type payments separate ◦ To identify vendor type payments separate

from beneficiary payments, some object codes may be divided

For example: 2530XX – Client Benefits and Allowances2540XX – Supplies and Commodities2550XX – Foster Care Payment

◦ New travel object codes for direct payIdentify reimbursements from vendor type payments

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Backup WithholdingBackup Withholding

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Backup WithholdingBackup Withholding

Rate of withholding is 28%Required for vendors without a verified Required for vendors without a verified TINRequired for vendors who have been notified by the IRS they are subject to backup withholdingImplementation projected early 2013

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QuestionsQuestions

Contact –◦ Vendor Management Section and W-9 Vendor Management Section and W 9

HelpDeskDepartment of Financial Services(850) 413-5519FLW9@myfloridacfo.com

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