DoD Financial Management Regulation Volume 13, Chapter 7
* February 2011
7-9
0705 REPORTING TO THE INTERNAL REVENUE SERVICE (IRS)
070501. General. All records relating to payments to individuals and firms are
retained for at least four years and available for IRS review. Continental United States (CONUS)
offices consult their local IRS office when forms, publications, or assistance are needed. Overseas
offices contact the IRS, Assistant Commissioner (International), by going to www.irs.gov, to get
the address and telephone number of the nearest IRS representative. IRS representatives, in
CONUS and overseas, are available to provide instructions concerning IRS procedures for return
preparation and filing, and depositing employment tax payments.
070502. Contract Payments (Nonpersonal Services). Cumulative payments made by
NAFIs under service contracts of $600 or more to anyone, during a calendar year, are reported to
the IRS along with the total amounts paid to include the name, address, and Social Security
number of the individual. For businesses, report the amount paid, the business name, business
address, and business tax identification number. NAFI contracts with entertainers are considered
service contracts. If a single payment to an individual is less than $600 but total payments made
during the calendar year to the same individual reach $600, then a report must be filed. The report
is provided to the individual or firm and to the IRS using IRS Form 1099-MISC, “Miscellaneous
Income.” The individual or firm receives a copy of the IRS Form 1099-MISC by January 31 of the
following calendar year of payment. This requirement also applies to individuals who, in addition
to being NAFI employees, have contracts with NAFI for nonpersonal services. A separate IRS
Form 1099-MISC is prepared for each individual or firm to whom total payments of $600 or more
are made. IRS Form 1096, “Annual Summary and Transmittal of U.S. Information Returns,” is
used to transmit the IRS copy of 1099s to the IRS. These forms are forwarded to the IRS by
February 28 of the following year. Refer to www.irs.gov for preparation instructions and filing
requirements.
070503. Gambling and Bingo Winnings. IRS reporting requirements for gambling
and bingo winnings are tied to individual games. Unlike contract payments, winnings are not
accumulated from game to game; each game stands alone for IRS reporting requirements.
Whenever cash, merchandise, or a combination thereof with a total value of $1,200 or more is
awarded to a person for winning a single bingo game or other gambling activity, an
IRS Form W-2G, “Certain Gambling Winnings,” is prepared. Individuals receive their copies of
the IRS Form W-2G either at the time payment is made or not later than January 31 of the
following year. IRS Form 1096 is used to transmit the IRS copy of the IRS Form W-2Gs to the
IRS. Additionally, IRS Form 1042S, “Foreign Person’s U.S. Source Income Subject to
Withholding,” is prepared for reporting foreign nationals gaming winnings and withholdings.
These forms must be forwarded to the IRS by February 28 of the following year. Refer to
www.irs.gov for preparation instructions and filing requirements.
0706 INTERNATIONAL BALANCE OF PAYMENTS (IBOP) PROGRAM. IBOP is an
accounting of a country’s international transactions for a particular time period. NAFIs are subject
to the IBOP reporting requirements prescribed in DODI 7060.03, “International Balance of
Payments Program – Nonappropriated Fund Activities,” and Volume 6A, Chapter 13.