Get ready for more scrutiny from the IRS and paperwork hassles. A revenue producing provision (Section 9006) of the new health care bill changes two aspects of reporting on Form 1099. Currently, the form is used to report payments of over $600 to non-employees such as freelancers and independent contractors. Starting in 2012, Form 1099 must be provided to most businesses, even if they are incorporated. Also, the new rule includes payments of tangible goods, not just services. Imagine sending forms to your utility companies, office supply providers, and inventory vendors. Yikes!!
All businesses will be required to collect taxpayer identification numbers for all types of purchases. This means bookkeeping systems will have to be designed to collect and collate data needed to generate reports so forms can be completed. Accounting departments will be overwhelmed trying to close year end and get their 1099s out in time.
Regulations have yet to be finalized. Let’s hope they call for some relief and less bookkeeping. The best thing that could happen is for Congress to repeal Section 9006 of the 2010 Health Care Act. The House recently voted down a bill that had such a provision. The AICPA and OSCPA are starting to lobby for the overturn.
Join the rumble! Write your congressman and state representatives and get them to pass the Small Business Tax Relief and Retirement Restoration Act. Let’s not have a tidal wave of 1099s descend upon us in 2012. Follow this link www.stop1099.org to sign a petition and help save a tree!
