Payments

Policy

FIACCT 05-17_01 Payments – Request new/change

Effective: July 1, 1994
Revised: December 1, 2019
Reviewed: December 1, 2019

Purpose

This policy defines the process for requesting a new vendor set-up or for changing or invalidating an existing vendor.


Definitions

Sole proprietor

An unincorporated business owned by one individual.

Taxpayer Identification No.
(Federal Identification No.)

This could be either a Social Security number (SSN) or an Employer
Identification Number (EIN). A TIN is always 9-digits; a TIN with more or fewer than nine numbers is incorrect.

Legal Business Name
Or Individual Name

The name shown on the vendor’s required federal tax filings associated with the Taxpayer Identification Number (TIN). A vendor may have multiple business or “doing business as” names. However, when the vendor files required federal tax filings, the vendor uniquely identifies itself by the Taxpayer Name and Taxpayer Identification Number.

DBA/Alias

The DBA/Alias name may or may not be the same name.

Policy

A. For new vendor requests, agencies must create and submit a VCC (Vendor Customer Creation) document which will be reviewed and approved by the Division of Finance.
1. Agencies must obtain the vendor’s name and tax identification number (TIN) by receiving either a W-9 or an IRS EIN verification letter (LTR 147C).
2. Agencies must work with the vendor to complete the Form FI-51 Vendor Information Form.
3. Both the TIN verification document and the Form FI-51 Vendor Information Form must be attached to the VCC.
4. The Division of Finance will review the documentation against the VCC and match Name and TIN to the IRS database. If the name and TIN do not match the IRS records the VCC will be rejected with instructions in the comment section.

B. To change or invalidate an existing vendor, agencies must either attach a copy of the invoice or letterhead or similar verification from the vendor to the Vendor Customer Modification (VCM) document or email the documentation to [email protected] before such change or invalidation will be processed. Finance will only process the change or invalidation only after receiving the copy of the verification.

C. Various and unique circumstances may exist where the payments made to individuals or vendors would best be handled by using a unique Miscellaneous Vendor code (i.e., juror payments, fines, refunds). Agencies should contact the Division of Finance to determine if their payments would fit these circumstances.

D. Agencies must obtain a new Vendor number for a former employee of the State who previously had an
employee Vendor number. Agencies must not use the employee’s old Vendor number.

E. If the contractor is a retiree of any URS participating entity, the agency must complete a URS
reemployment notification form.

F. Agencies must determine whether a current employee of the State is eligible as a contractor for additional work or is subject to dual-employment requirements. The agency’s DHRM contact can assist with that determination.
1. If eligible as a contractor, the agency must obtain a new Vendor number for a current employee of the State who also provides work for the State as an independent contractor. Agencies must not use the
employee’s Vendor number set up through the Payroll System.
2. If subject to dual employment requirements the agency must coordinate with any other employing
agency and the employee to complete a Form FI-7.

G. If a new vendor refuses to provide a Taxpayer Identification Number, agencies should contact State Finance.
H. State Finance will invalidate an existing Vendor code when any of the following events occur:
 Notification of a change in vendor Taxpayer Identification Number (TIN). Vendor codes used on active agency or state contracts are handled as exceptions and coordinated with State Purchasing.
 Notification from the US Postal Service that mail is Undeliverable.
 A duplicate Vendor number is identified to an already existing vendor.


Procedures

Responsibility

Action

Establishing a New Vendor Number

Department

  1. Determine if a Vendor number already exists in the FINET system using the lookup feature in the VCC document, VCUST table or in Data Warehouse.
  2. If a Vendor number does not exist, obtain documentation required in paragraph A, create and submit a VCC document with the supporting documentation electronically attached.

    The VCC must contain the following information:
     Legal Business Name or Individual Name
     Payment Address and Ordering Address
     Zip Code
    • Whenever possible, obtain the complete 9-digit Zip code (Zip code plus 4). The US Postal service maintains a Zip plus 4 lookup on its website at www.usps.gov.
    • Phone Number
    • Email Address
    Taxpayer ID Number (Federal ID Number)
    • List the vendor’s Taxpayer Identification Number (TIN). Indicate
    whether the number is a Social Security Number (SSN) or an
    Employer Identification Number (EIN). If you are not sure, ask the vendor.

    1099 Reporting
    • Indicate whether the vendor is subject to IRS 1099 Miscellaneous Income reporting using the following guidelines:
    • All payments to a corporation of attorney(s) or to a corporation of medical, physical, or mental health care provider(s) are 1099 reportable. Payments made to all other corporations are not required to be reported on a 1099.A vendor with the term “Company” or “Co.” or “LLC” or “LC” or “.COM” in its name cannot be assumed to be a corporation. If you are not sure, ask the vendor.
    • Payments to tax-exempt entities (US government; states; political subdivisions; associations; foundations; clubs; and religious, charitable and educational organizations) are not required to be reported on a 1099.
    • Non-taxable payments to the recipients from federal or state aid or from a support, assistance, or training program (e.g., difficulty-of- care payments) are not required to be reported on a 1099.
    • All other individuals, entities, and organizations are generally subject to 1099 reporting.

    Vendor Entity Indicator
    Indicate the vendor entity as one of the following, as indicated on the W-9 or IRS EIN verification letter (LTR 147C):
    • Corporation
    • Sole Proprietor
    • Individual
    • Partnership
    • State Government
    • Other Government
    • If vendor is an LLC, use partnership unless the vendor specifies that they should be classified as a corporation.
    • Other (Rarely appropriate)

    Certification
    • Vendor Active Status should be “Active”
    • Vendor Approval status should be “Complete”

    3. Provide documentation as an attachment to VCC. Examples of
    documentation include: invoices, contracts, utility bills, and phone directory entries. AnyW9, IRS Letter 147C or department application must be received directly from the vendor.

Finance

 Review the VCC.
 Process the information.
 Validate TIN information against the IRS TIN matching database.
 Approve or reject the VCC/VCM document.
 Notify Department if the document is rejected.

Department

Use the new Vendor code on all payment documents processed through FINET.

Changing or Invalidating an Existing Vendor Number

Department

Send to State Finance, a copy of the invoice or letterhead or similar verification from the vendor with the change information or request to close an existing account.

Finance

Review the verification from the vendor. Process the change or invalidate the Vendor code.

When a vendor code is invalidated for any reason, update the DBA to read DO NOT USE!!! If a new vendor is set up to replace an invalidated vendor, cross reference the new Vendor number under the DBA section.

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