Correction: The new reporting requirements under these amendments apply to payments made after December 31, 2011. ASMP has it wrong below:
One of the provisions of the new healthcare reform legislation will significantly impact the administrative burdens of your business unless the IRS changes it. As of now, starting next year, if you pay any person or corporation more than $600 in a year for goods or services, you must report that to both the IRS and the entity or person whom you paid.
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17 Comments
So, did you have a good time at the Glenn Beck rally?
Been doing this for years now, I thought that was always the case, that’s why you have to 1099 anyone you pay $600 or more a year too.
@Baldomero Fernandez,
That was only for contract employees, independent contractors and/or consultants. Now to include anybody or anything… that’s what I’m told anyway.
@A Photo Editor, you wrote: “that’s what I’m told anyway.”
That actually sounds like you aren´t sure about it and it is more like gossip than anything else:/ there isn´t anything wrong about reporting about this but at least consult an expert to get all the bits of this before publishing it…. :/
@Karlz,
ASMP wrote the story.
now there’s some change we can believe in.
Baldomero – goods OR services! This means that B&H photo, your local cable internet provider, Lost Luggage, the city water department, electric company, your local print shop, Home Depot, Travelocity, Expedia, Wal-Mart, Mobil, Exxon, Jiffy Lube, Discount Tire, your grocery store, Office Max, Tiger Direct, and the dozens of other business expenses will all need 1099s now.
I’m with Baldomero – been doing this for years. And, if you use a payroll service the process can be quite simple.
Believe it or not the IRS is seeking public comments on this issue.
Send your concerns to Notice.Comments@irscounsel.treas.gov
@Ranger 9, Glenn Beck’s rally was a blast, thanks for asking !!
It’s wise to be a little skeptical of any “big government is out to get you” claims in the current political climate. There seems to be a lot of misinformation aimed at keeping a segment of the electorate enraged until at least the November elections.
Taken at face value this reporting rule change would create a mountain of paperwork that no one involved could effectively process.
For starters, big companies pay taxes on net revenue, not individual transactions. So sending Amazon.com, B&H, et al 1099s on individual transactions would be a meaningless exercise. What would they do with them? There are already accepted accounting principles in place to track transactions. I suppose 1099s could create an alternate record of transactions which the IRS could be use to flag anomalies; but that would suggest someone at the IRS is going to cross reference millions of 1099 forms. Even if they could automate the process, the IRS doesn’t have the headcount for what would be an elaborate fishing exercise.
Second, even if you assume everyone was honest and tried their best to comply with this reporting requirement, there is a significant chance of erroneous reporting. How would the IRS enforce compliance? And why exempt credit card purchases?
Requiring 1099s for contract employees has a practical purpose. This just doesn’t make sense.
I’m going to guess this is an issue of inarticulate wording in a congressional bill, which most likely will be fixed; or this is an attempt by some right-wing-nut to manufacture an issue in an election cycle.
@Tom,
Right on. Glad someone is actually thinking this through. i see the link to asmp, but don’t see where they are getting their info from. agreed that this sounds deliberately inflammatory and misleading. everyone- before you start to fume over an article like this, first question who benefits from such publicity- there might be some insight there as to how accurate the source is.
This lays the ground work for Value Added Tax (VAT).
Don’t whine about it, contact your Rep and Senators, and tell them to have the IRS fix it.
How about interviewing an expert in this field to see what are the REAL and ACCURATE details in this new IRS requirement? I am not trying to disrespect you but dude… get all the info together and then report back :/
@Karlz,
follow the link genius:
Help ASMP – Protest New 1099 Requirements!
Regarding the Request from Victor Perlman, ASMP Managing Director & General Counsel, the wording should have read “after” next year. Referring to the change in the tax code would impact the 2012 not the 2011 tax year.
Either way this is a burden on small business. back in May, Money Magazine reported on this here
btw this will be for any purchase or purchases from any vendor for over $600 for the calendar year. Not just independent contractors as it is now. In the current version of the proposal, credit card purchases will be exempt.
Richard Kelly
President
ASMP
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