Redepositing/ Canceling checks issued in a prior calendar year has significant tax compliance and annual reporting implications for a payee and Harvard. If Harvard has already issued an annual tax document (i.e., 1099 or 1042S) to the payee, a redeposit to cancel a check can render that tax document incorrect and require Harvard to send the payee an amended form – which can also be problematic if the payee has already filed their annual returns.
If you paid a supplier (individual or entity), and need to redeposit/ cancel payment(s), here’s how to avoid tax hazards:
DO: Process check redeposits in the same calendar year that the original payment was issued.
DO: Monitor the HART Cash Management – Escheat Due Diligence Report for any non-payroll checks that have not been cashed within 6 months and take action.
DO: Remember each PR/ PO invoice created is a NEW payment, and not a “reissued” payment, that triggers NEW reporting and/ or tax reviews.
DO NOT: Process a check stop & redeposit for checks issued in a PRIOR CALENDAR YEAR without a prior review and approval from AP Customer Service ap_customerservice@harvard.edu for any 1099 - US individual or US entity supplier, or Nonresident Alien Compliance Manager natasha_rivera@harvard.edu for any 1042S – foreign individual or foreign entity supplier.
For more information on the process considerations regarding cancelling (and redepositing) payments made to foreign individuals and entities see, please visit the Nonresident Alien Tax Compliance website.