Two big fat Whiskey Tango Foxtrots in one day
From Coyote Blog
-- an excerpt from an email he received:
A little noticed provision in the recently passed health care reform bill will require every payment to corporations over $600 to be reported on a Form 1099 to the IRS, including payments for the purchase of merchandise and services. This provision takes effect in 2012.
The current law requires a Form 1099 to be submitted to the IRS when your business pays more than $600 for rent, interest, dividends, and non-employee services if the payments are made to entities other than corporations. Currently, payments made to a corporation and payments for merchandise are not required to be reported.
To file the required 1099, a business will have to obtain and keep track of a Taxpayer Information Number (TIN) from every vendor before submitting the 1099 to that business and the IRS. Under current tax law, one copy of the form is sent to the IRS, and another copy is sent to the person to whom the business made the payments.
Rep. Dan Lungren (CA-3) introduced �The Small Business Paperwork Mandate Elimination Act� (H.R. 5141). The legislation would repeal the expanded 1099 reporting requirement. Lungren correctly asserts that the burdens placed on small businesses by this reporting requirement would be overwhelming.
Call your U.S. Representative today and ask them to cosponsor H.R. 5141. The House switchboard number is 202-225-3121. Ask to be connected to your Representative�s office.
Chris Edwards at Cato Institute corroborates this with some additional information
Costly IRS Mandate Slipped into Health Bill
Most people know about the individual mandate in the new health care bill, but the bill contained another mandate that could be far more costly.
A few wording changes to the tax code�s section 6041 regarding 1099 reporting were slipped into the 2000-page health legislation. The changes will force millions of businesses to issue hundreds of millions, perhaps billions, of additional IRS Form 1099s every year. It appears to be a costly, anti-business nightmare.
Under current law, businesses are required to issue 1099s in a limited set of situations, such as when paying outside consultants. The health care bill includes a vast expansion in this information reporting requirement in an attempt to raise revenue for an increasingly rapacious Congress.
In a recent summary, tax information firm RIA notes the types of transactions covered by the new 1099 rules:
Basically, businesses will have to issue 1099s whenever they do more than $600 of business with another entity in a year. For the $14 trillion U.S. economy, that�s a hell of a lot of 1099s. When a business buys a $1,000 used car, it will have to gather information on the seller and mail 1099s to the seller and the IRS. When a small shop owner pays her rent, she will have to send a 1099 to the landlord and IRS. Recipients of the vast flood of these forms will have to match them with existing accounting records. There will be huge numbers of errors and mismatches, which will probably generate many costly battles with the IRS.
The 2010 Health Care Act adds �amounts in consideration for property� (Code Sec. 6041(a) as amended by 2010 Health Care Act �9006(b)(1)) and �gross proceeds� (Code Sec. 6041(a) as amended by 2010 Health Care Act �9006(b)(2)) to the pre-2010 Health Care Act categories of payments for which an information return to IRS will be required if the $600 aggregate payment threshold is met in a tax year for any one payee. Thus, Congress says that for payments made after 2011, the term �payments� includes gross proceeds paid in consideration for property or services.
This is fscking stupid. At the store we probably have over one hundred vendors with whom we do more than $600/year business. To sit down, collect the vendor information from them, run the reports on QuickBooks to generate the numbers and print the 1099's would take several weeks all the while regular business needed to be done -- payroll, ordering, stocking, paying bills, etc...
These congressmen are all lawyers -- they have never run a business before and have zero practical real-world experience.
No wonder congressional approval is in the terlit.
2010 and 2012 - counting the days...
Posted by DaveH at May 3, 2010 8:42 PM