Friday, May 7, 2010

Who slid this in?

As reported at CNN yesterday, Buried deep within the Obamacare law is a change in rules that have a huge impact on 1099 reporting for all businesses. Currently only noncorporate vendors receive 1099 forms for amounts paid for services. However, starting January 2012, businesses will need to issue 1099 forms to all vendors that were paid over $600 in a year FOR ALL GOODS AND SERVICES.

This means that if you are an independent contractor, or landlord, or any other form of business, you will issue 1099 forms annually to every vendor (ie Office Depot, Verizon, etc.) for any amounts you paid totaling over $600, including purchases of supplies, equipment, and inventory. Corporate vendors will no longer be excluded.

This will result in a massive increase in 1099 filings, as well as a massive increase in related correspondence with IRS for all businesses. If you run a business you will need to obtain addresses and Federal ID #’s for every company you do business with and keep them on file for end of the year reporting. Further, if you are a corporation, be prepared to receive an avalanche of 1099 forms each year and be able to demonstrate to IRS how they were all reported.

Questions that should be asked: What has all this have to do with Health Care? (nothing), Who pays the hidden cost of all this record gathering, keeping and correspondence? (we do), Why was this written into the law?

To answer the last question, consider this: Once a system is set up to report to the government every business transaction that occurs, how difficult would it be to tweak it and add a VAT tax?

No comments: