You wish to issue the 1099-Misc forms in the system, however no invoices are being processed by the run.
Reproducing the Issue
- Go to Tax Management work center.
- Go to Withholding Tax Return Runs view.
- Create the tax run with the 1099 related tax arrangement.
The tax run did not process any invoices, hence the tax return is not created.
You missed a master data set up for this tax scenario, hence withholding tax was not processed within the invoices.
In order for the system to properly generate a tax return for 1099 reporting, there are settings in your master data that need to be made.
The below master data objects carry attributes that are specific to Withholding tax:
- Company Tax Arrangement: The company should be marked to withhold tax. Refer to the Withholding Tax Required checkbox in your Tax Authority master data.
- Supplier: The Supplier is subject to withholding. Note that if for the US, for example, you do not withhold amounts but report payments with 1099-Misc, select No backup withholding. If you have to withhold a certain percentage, select Liable to withholding. This is maintained in the supplier master data -> Financial Data -> Tax Data -> Withholding Tax Classifications.
- Product: The product is relevant to withholding. Go to the Material or Service master data, choose View All, then go to Taxes tab. Maintain the required data in the Withholding Tax Classification section.
If the supplier invoice does not have a product ID assigned to it, the Withholding tax code is not populated automatically. You can, however, maintain a Withholding Tax Code in the Supplier's master data, in the Withholding tax Classifications section, field Withholding Tax Income Type. The information maintained here is then defaulted to the supplier invoice when no product ID is selected.
After posting and paying the invoice, you can go to the Tax Management work center and open the Withholding Tax Item report. The report display all payments relevant for withholding tax for a specific period. The display includes the underlying invoices, the withholding tax amounts, and the tax base amounts relating to each payment.
Note that this setup is valid from the date that you do the changes. In case you have not classified your supplier as being relevant to withhold taxes, the tax amount would not be accounted with the invoices. The amount, however, can be entered manually as a Manual Tax Entry. Please, refer to the SAP Business ByDesign Help Document Withholding Tax Base Amount Entries Quick Guide.
Help Document Withholding Tax Base Amount Entries Quick Guide
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