When does that “you must file a 1099 form for ever good or service over $600” nonsense go into effect?
Beginning in 2012, under a little discussed mandate of the health care reform legislation, businesses will be required to report all payments in excess of $600 for services or merchandise to the Internal Revenue Service on a Form 1099.
Under the new law, businesses will be required to send a 1099 to other businesses for virtually all purchases, said Chris Hesse, director of taxation at CPA firm LeMaster DanielsPLLC in Washington state, as quoted by Chris Edwards in a Cato Institute blog.
And for the first time, 1099s are to be sent to corporations, Hesse said. This is a huge new imposition on American business, costing the private economy much more than any additional tax that the IRS might collect as a result.
he reporting requirement will affect business in two ways, according to The Boston Globe. First, most of a businesss revenue now will be reported to the IRS by the businesses that paid it, so understating large amounts of revenue will be more difficult. Secondly, it will force businesses to identify the recipients of their business expense payments.
There is no doubt this will be an administrative nightmare for many businesses in the first year or two, Jamie Downey, partner at Downey & Co. said in The Boston Globe. Have a large business-related meal at a restaurant, this will need to be reported on a 1099. Spend a week in a hotel in Waco, Texas; you will need to send a 1099.
“[The IRS] told us that HHS is the one that is given the requirement to interpret this entire law,” Lungren said. “That was an extraordinary response as far as I was concerned...I have never known HHS in the past to be responsible for interpreting tax law.”
We are very much worried about this. If this is not fixed, it will mean we will have to lay off one of our guys. Right now we are slow, and we are barely able to keep our staff on hand, there are times when the guys are just out painting units, or working on trucks, but we eat the cost, hoping times will get better.
If this particular goes into effect, it will have a catastrophic impact on our book keeping, because as a small business, we already have to shop around over a hundred suppliers to find what we need at competitive prices.
Now, we will have to hire another full time office person, one with accounting/tax background, and probably some knowledge of the law, and who is able to handle interpretation of the health care initiative and every other thing in this bill that “we had to pass to find out whats in it”.
This means, a high end office person, and this means probably having to drop one of the guys in our service crew. And this is going to break the hearts of both my wife and I, because the few guys we have working for us are quite frankly, stronger than some of our family. They are more loyal then family, and they have kids and families too. And with this economy, and our slow business, there is little hope they will find work.
I am spitting mad at this congress, and this president to force us to have to do this. My wife and are actually just considering closing up shop next year and retiring, because of the heartache of choosing who will stay and who will go, and all the headache that this jackass is going to impose on our business.
It is OUR business, that is why we are in business, to run it the way WE want. If the gub’mint is going to control our business any more, we are both thinking that it may be time to call it quits, but not by choice, we love our business, we love the guys that work for us, but if we can’t do it right anymore, we are just not going to bother doing it, I’m afraid.
Last I heard, Jan 1, 1012.
I am a bookkeeper for 2 small businesses, which are one-man operations, & I am pretty sure I will not be able to comply with the demands of that new ruling.
It will apply to every drop of fuel that my clients buy in doing their installaions & service of their products. They re both in Los Angeles area, & lots of those gas stations are run by immigrants. I don’t see getting accurate information from such vendors. Won’t happen.