|major new 1099 reporting requirements for U.S. businesses|
this affects anyone with a U.S.-based business
Many are not aware of this, but Section 9006 of the health care bill [money.cnn.com] contains a provision that has nothing to do with health care, but will potentially affect all U.S.-based businesses.
Starting in 2012, businesses will be required to issue 1099s to ALL businesses where they spend $600 or more, not just to individuals. This means that at the end of every year, you will have to go through your receipts and figure out every place where you spent more that $600, exactly how much you spent there, and then figure out how to get their tax ID to issue a 1099.
Do you have a favorite local business where you take clients to lunch frequently? You'll probably have to issue a 1099. Fly more than a couple of times a year for business? Issue to 1099 to your airline of choice. Bought a new Dell computer for your business? There's another 1099. Use your car a lot for business? Good luck allocating all your gas purchases between Shell, Texaco, and all the other gas stations that you use!
Most likely, the better credit card companies will probably issue annual summaries. But how about all those companies where the employees use their personal cards and get reimbursed by the company? What a nightmare if those amounts are to be included!
Oh, there's also the issue of being caught between the IRS and the vendor who issued an inflated 1099 to you. The IRS will initially go after YOU because your numbers don't match what was reported. Yes, the heat will eventually go to the vendor, but it's still a lot of time and resources that YOU will have to spend for something that wasn't your fault to begin with.
REMINDER: Please keep politics out of the discussion. Although this issue is part of the health care bill, all other parts of the health care issue are off limits for this discussion.
Spending $600 is easy, rent a dedicated server?
Hosting companies will be buried in paper, it'll look like an avalanche at tax time.
Every computer company will be flooded.
Costco, I'm chuckling at how this will bury them.
Also, I sell a bunch of flat rate advertising for $50/mo with recurring billing that will
result in a flooded mailbox at the end of the year.
Off to adjust my price to $49.95/mo to solve this issue.
Hopefully, this reporting requirement can get repealed. There's already some legislation being floated to do that. Sigh, these days it seems like we business owners have to spend more of our time contacting our legislators than actually running a business!
Thanks for the info. This really blows - I already can barely keep up with the paperwork at tax time. This will surely make my accountant even more excited to see me ...
LifeinAsia - Thanks for posting this. I saw it but didn't think to post it here.
This is going to cause death by paperwork for a lot of smaller firms. Combine stuff like that with a VAT tax and.......
I've called my misrepresentative in congress on a number of issues and I have to add this to the list.
I am a member of my local chamber of commerce. I plan to raise whatever h*(( I can there to get them to try to fight the anti business nonsense.
Oh, one other thing. Congress will only index for inflation when it suits them. In cases like this, they will not index for inflation. This means that the threshold actually becomes lower every year.
What I would suggest is that we all try to get our fellow business people to call your rep in the house (the senators are a bit too isolate to easily effect). If you can, get about 20 people to protest outside their local office.
Also, a lot of newspapers allow reader comments. There are a lot of articles about the congressional candidates. It wouldn't hurt to inform the public by mentioning this debacle in the reader commnents.
Arrgg.. gotta do something to get my blood pressure back down.
It's probably all part of the U.S. Government's
Paperwork Reduction Act (44 U.S.C. 3501 et seq.).
What a freaking nightmare that will be. Every distributor, gas station, costco, pizza place will be slammed with paperwork.
Gawd I hate paper!
Under the initial proposed rules (see the IRS website), all purchases via Credit Cards or Debit Cards will be excluded from the reporting rule.
(Because those transactions will already be reported by the CC/DC processors.)
FYI, the stated intent is to help ensure that the folks receiving the money are reporting it on their taxes as income (whether its an individual or business).
|Hopefully, this reporting requirement can get repealed. There's already some legislation being floated to do that. Sigh, these days it seems like we business owners have to spend more of our time contacting our legislators than actually running a business! |
What a joke! Leave it up to politicians who likely have NEVER run a business before dump a ridiculous burden like this on small businesses. I agree with another poster, I can barely keep up with all the paperwork I currently have to deal with. If this is like all the other government rules I have to follow forgetting to do it will bring a nice little fine of $50 bucks or so per incident so it can add up to a nice revenue enhancement project for the government as well. Now that is hope and change I can believe in! Sorry I couldn't resist.