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Big 1099 Hassles Ahead for Businesses
A provision buried in the 2,400+ page health reform law is threatening to hammer U.S. businesses with a flood of new tax paperwork. Section 9006 of the health care bill mandates that beginning in 2012 all companies will have to issue 1099 tax forms to any individual or corporation from which they purchase more than $600 in goods or services within a tax year. The scope of expanded 1099 coverage would include previously routine business transactions such as a computer purchase, office supplies vendor, local restaurant or catering service.
This change will dramatically alter the purpose and quantity of 1099s and will require businesses to issue millions of new tax documents each year. The mandate is intended to help fund the new healthcare law and enables the Internal Revenue Service to find an estimated $15 + billion in tax revenue that businesses may not be paying now.
In the past, businesses have issued 1099 forms to independent contractors, but not to corporations that provide products and services. The healthcare law expands that requirement starting in 2012. A survey by the National Association for the Self Employed found that the mandate will increase small-business paperwork from two (2) 1099 forms a year to twenty-seven (27).
The Small Business & Entrepreneurship Council has started a petition drive to repeal the 1099 reporting mandate. The SBE Council has launched the Stop1099 web site for its petition drive and provides information on the issue. The group’s goal is 500,000 signatures by the time Congress returns from its August recess. To sign the petition, visithttp://www.stop1099.org
Money magazine published an article that we have found to be helpful and informative regarding this 1099 reporting issue. If you would like to read more, please follow the link below.
If you have questions about the new 1099 reporting regulations or would like to discuss how the new requirements will impact your business, please contact Paul Treinen, Partner and Director of the Taxation Advisory Group at White, Nelson & Co. Paul can be reached at 714-978-1300 or via email at email@example.com