Health Care Law : The tax change requiring 1099s for ANY purchase over $600.

[tranche]

This was posted a few days ago, but has already been archived. It's making its rounds today in the internet consultants circles -- is why I bring it back up. I'm a small business/contractor and from the initial read (from CNNs article), it's starting to look like I'm going to have to total expenditures and create 1099s for places like Costco, Home Depot, Staples, Office Depot, Ma & Pa Stationary, and even Comcast and PG&E starting in 2012.

Wanted to see if anyone's had much time to think this one over:

http://money.cnn.com/2010/05/05/smallbusiness/1099_health_care_tax_change/index.htm

NEW YORK (CNNMoney.com) -- An all-but-overlooked provision of the health reform law is threatening to swamp U.S. businesses with a flood of new tax paperwork.

Section 9006 of the health care bill -- just a few lines buried in the 2,409-page document -- mandates that beginning in 2012 all companies will have to issue 1099 tax forms not just to contract workers but to any individual or corporation from which they buy more than $600 in goods or services in a tax year.

The stealth change radically alters the nature of 1099s and means businesses will have to issue millions of new tax documents each year.

All I know is that I hope this is one of things that can be "fixed" later on. I see that it's a way to enforce tax law better, but it just seems like a "mountain" of paperwork. I'm not a big "get off by back" kind of guy when it comes to regulations, but this would get me a little riled up.

Here's the original DU post that's already been archived:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x8282166

[jdlh8894]

1. My accountant is going to hate this!! n/t

[no limit]

3. Atleast you can afford an accountant. I'll be shit out of luck.

[notesdev]

2. The government is desperate for any revenue it can get its hands on

It probably costs more than $600 all told for processing a 1099 from genesis to completion, when you figure in the accounting (on both sides of the transaction), delivery, and then processing at the IRS.

This is why you don't support 2000 page bills where they don't tell you what's in it. The only reason at all to make bills that size is so people can hide things in it that will only come out later when it is too late for anyone to do anything about it.

I can guarantee this is only the start of the unpleasant surprises to come out of that bill and others like it. Just wait until people realize that that law made it more profitable to drop employees' health care plans entirely than to comply with its provisions.

[area51]

6. +1 (n/t)

[femrap]

4. I believe that I read

where the Roman Empire headed downward because of all the stupid regulations imposed. Just another nail in the our coffin.

I so miss Common Sense and Efficiency.

Off topic but I thought rather funny...I read where the Republicans are considered like the Mafia and the Dems are simply Unorganized Shoplifters. :rofl:

But I have to admit the Dems are getting better at sticking it to the taxpayers.

[NV Whino]

5. So, if I buy a $600 office chair

I have to issue a 1099 to the supplier?

[tranche]

7. According to the article. Yes.

But under the new rules, if a freelance designer buys a new iMac from the Apple Store, they'll have to send Apple a 1099. A laundromat that buys soap each week from a local distributor will have to send the supplier a 1099 at the end of the year tallying up their purchases.

The bill makes two key changes to how 1099s are used. First, it expands their scope by using them to track payments not only for services but also for tangible goods. Plus, it requires that 1099s be issued not just to individuals, but also to corporations.

Taken together, the two seemingly small changes will require millions of additional forms to be sent out.

Now, I followed this from the CNN article (it's from CATO, but there is a number in there):

In a recent summary, tax information firm RIA notes the types of transactions covered by the new 1099 rules:

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.

[starroute]

8. The Costcos and Home Depots won't like this much either

They're not only going to be receiving a flood of 1099's and have to process and file them all -- but they're going to have to deal with a steady flow of I-9's during the year from small businesses asking them to furnish their EIN number and certify that they're not subject to backup withholding.

So this will be as much of a pain for big businesses as for small ones -- which suggests there shouldn't be that much of s struggle to get it reversed.

[WeDidIt]

11. If anything will insure this nonsense is ended

That will.

[starroute]

12. Oops -- meant to say W-9 form

The I-9 is the I-am-not-an-illegal-alien form. I apologize for getting them confused.

[Tumbulu]

9. Oh my goodness!

what a drag- plus on 1099's one the needs the tax id # or it cannot be filed. So all of us with small businesses will have to have all these tax ID #'s? Won't this freak all these company's out that their tax ID # will be come so public?

Plus, I do all my tax preparation and 1099's are just plain irritating!

One has to buy the forms, can't download them ....I, too hope this get's removed.

[notesdev]

10. I have a feeling...

that many people simply will not comply, and the government will be powerless to do anything about it since it will cost more to enforce this than they could possibly collect.

[dems_rightnow]

13. Could be a HUGE revenue generator.

No, not for finding unreported income...... from the $50 per form penalty for not properly filing 1099's. $100 per form for willful disobeyance.

[Edweird]

14. As if it wasn't bad enough already.