The "1099" Form - A Paperwork Nightmare for Businesses9/16/10
Question of the day: has your business ever made a purchase of over $600?
On computer equipment, telecommunications, inventories, office supplies, rent, or any of the virtually limitless costs that are incurred during normal business operations?
Currently, businesses are required to file a “1099 Form” with the Internal Revenue Service (IRS) for services performed by independent contractors that value $600 or more.
In the past, payments between businesses have not been required to be reported under a “corporate exemption.”
Section 9006 of the new health care law, P.L. 111-48, removes this corporate exemption. While the requirement is supposedly starting in January of 2012, the paperwork requirement already appears to be having affects on businesses.
Now, both large and small businesses will be required to file a 1099 form for any purchase over $600.
**Businesses are already requesting social security information in order to begin compliance with this new reporting burden.
This not only means a huge increase in paperwork for all businesses, but an incredible increase in data collection, with the increased chances that there will be lost data vulnerable to identity theft.
The provision will require businesses to obtain a Taxpayer Identification Number (TIN) from their vendors for the vast majority of business expenses, an extremely onerous reporting requirement for businesses.
Further, this could impact how businesses select their vendors, as this new provision may lead them to rely on a single large supplier rather than use a number of small companies.
I am a cosponsor of H.R. 5141, the Small Business Paperwork Reporting Elimination Act of 2010, which would simply strike this section of the health care law. I assure you I will continue to work to see H.R. 5141 signed into law as soon as possible!
"Many push for Repeal of Tax Provision in Health Law" in September 12th's New York Times.
"The 1099 Insurrection" in September 15th's Wall Street Journal.
Let me know how this will affect your business here.