more big gov.

[jrzcape]

What’s ahead? How about being buried under new tax forms! It was bound to happen. Something buried in the health care reform bill that will cause small business owners more grief than this year’s NBA playoff ouster for Cleveland Cavaliers fans!

This shocking news was revealed by Neil deMause on CNNMoney.com last week. If you saw it, you’re already ticked. If you missed it, you can catch up to the rest of us now!

Inside the 2,409-page health reform bill – you know, the one no member of Congress had time to read - was a provision for a massive expansion of requirements for businesses to file 1099 tax forms. In essence, all businesses will be required to file 1099 forms for every business from which they purchase $600 worth of goods or services! Just the thought of the paperwork, tracking, accounting costs and related administrative expenses should be sparking outrage among small business owners.

This is actually the latest move by the IRS to find unreported income that will rain down new tax forms. This expands the requirements for filing the “1099-Misc” form, which companies use for recording payments to freelance workers and other individual service providers. Until now, payments to corporations have been exempt from 1099 rules, as have payments for the purchase of goods.

But starting in 2012, all business payments or purchases that exceed $600 in a calendar year will need to be accompanied by a 1099 filing. It means obtaining the taxpayer ID number of the individual or corporation you’re making the payment to, at the time of the transaction, or else facing IRS penalties. Yes, it will even apply to giant retailers you might use like Office Max or Costco. Bottom line: the 1099-Misc will change from tracking off-payroll employment to one that must accompany virtually any sizeable business transaction.

Tom Henschke, president of the Pennsylvania-based SMC Business Councils, describes it like this: “Phone service: 1099. Computer service: 1099. Whoever does your postage meter: 1099. You do a little advertising, Yellow Pages: 1099. Your landlord: 1099. You might as well just keep them in your pocket and hand them out as you go around every day.” It would be funny if it were not true.

Henschke’s SMC had previously surveyed its members and found they averaged 10 filings a year of 1099 forms that took about 30 minutes each to prepare. The SMC survey further found that if 1099s were extended to services purchased from corporations, it would increase the number of filings to about 200 per year for a typical small business. That would add an estimated $6,000 to the cost of preparing the average tax return. But it’s a lot worse than that: the SMC study did not anticipate any requirement that 1099s be filed for all purchases of goods! That now puts costs and hassles in the stratosphere!

Surprise, surprise — no one in Congress is willing to take credit for how this got into the health bill. Some say it was a change waiting for the right moment. So, when debate was boiling over the costs of health care reform, supporters began a frantic search for “revenue-raisers” to bring down the net cost. Bingo – the 1099 provision went into the bill stealth!

So what can you do about it? Well, you can write your congressman and senators and tell them they should have read the bill and taken time to learn of the immense burden this IRS move will place on your small business. Of course, you gotta hope they have time to read your letter! Or, you can alert your accountant or IT person to start thinking about how to deal with this coming nightmare.
COMMENTSBuilder of small boats sold through dealers wrote:

May 25th, 2010 at 10:54 am
We make tax payments to the IRS that exceed $600.00.
My question is what is the IRS’s ID number? Or the states ID number? Or the county prperty taxing authorities ID number?
So in reality we will now be required to send our check register to IRS.

[seapower]

this must be in response to the practice's used by business to pay only the tax that's owed. It's quite criminal if you think about it. I mean why would anyone that own's his/her own business, work's 80 hour's a week, pay's atronomical insurance premium's, has to constantly duck trivial law suit's, etc....., not want to pay any additional taxes that are required.
The problem is with all the personal bail out's (welfare included), coorporate buy out's and bigger government in general. Some one's got to pay for it. The day's of "getting ahead" are fading fast. I'm not complaining, I'm making end's meet, but I could do that working at WalMart. Frank

[gottaflylee]

So if understand this right, where I get gas, I have to do a 1099 for them...

The bank where I pay my boat mortgage, I have to 1099 them...

To who I pay the electric bill, I have to 1099 them...

[JD5652]

Unfortunately it's all true......and it will be one huge PIA....just make sure that you do NOT file them electronically.....makes it easier for them...... send them all in paper format hand written.....

[Hatterized]

each passing day more and more AMERICANS are getting fed up with the "system"......perhaps the end will be when NO AMERICAN owned businesses exist.....

new agendas......new programs......and look who oversees and administers these programs......OUR US Govt.......talk about waste and over spending......each and every day i see US Govt workers.....many of whom go to work and do the minimum waiting for a GS rating increase....collecting a sizeable paycheck with benefits galore....counting down the days for an early out (retirement)......when many are not even qualified to work flipping burgers or taking out the trash....

yes we the American taxpayer pay these salaries.....and the biggest joke is the man in the White House and his regime who fail to forget what created AMERICA.....we the people...UNITED not divided as our leaders/politicians are now.....

this broke ass out of control system will break AMERICA...just like it has for so many businesses.......but not corporations.....they get treated carte blanche with bailout bonus'.....

WE CONTROL OUR OWN DESTINIES.....GET OUT AND VOTE !!!
some elected do listen and help the average businessman/woman stay in business.....NOT put them out of business with more fees....costs and red tape.....

[Chummin]

There is way too much complacency amongst the sheeple! JMHO

[Capt. Jon Tennant]

wow.... most charter boats will be getting a 1099 for every charter they run....

[burnside]

I pay taxes on every penny I get, why shouldn't everybody. is it a right of businessmen to cheat ?

[Avenger]

Who said anything about cheating?

You have no concept of the paperwork burden this will place on companies. The cost of complying with such B.S. and enforcing it will far outweigh any revenue the gov't expects to gain from it.

And trust me, businesses pay more in taxes and fees and administrative costs of all the regulatory B.S. that these idiots (none of whom have ever experienced what it's like to have to make payroll every week) concoct than you ever will.

[seapower]

I'm one of those idiot's that send's my invoice's to my accountant marked, paid, dated and signed, when a customer pay's in CASH. I pay, pay, pay and pay some more. This has nothing to do with folk's cheating, it's the honest guy's that take the hit once again. By the way it's us honest guy's that take the risk to form our own business's and make them run,that employ the majority of American's. If you saw the hour's of work it take's, and the absolute waste of time paper in work it takes to stay legal, you would have to ask (as most of us do) why do you do this??? I'm not complaining it's an honest living, but don't assume I'm a crook. Frank