Thursday, May 27, 2010

A Heads Up on Major, Hidden Federal Change on 1099's

I attend a monthly CEO meeting with Vistage.  I am always enlightened with a few tidbits of information.  Let me share one of those from today.

Hidden in the health care bill that passed in March was a provision that 1099's be issued for every purchaser over $600.  Heard about this?  I hadn't.

For some time, every business has had to request independent contractors or other non-corporations to provide a W-9 and send 1099's at year end.  Business also take responsibility for proper-reporting and face nastygrams from the IRS and, even, fines for something like a wrong address or being unable to find a vendor who moved or went out of business.

However, now its grown from a handful, percentage-wise, of the businesses with which we transact business to all of them.

For even a small shop like the Port Authority, this means a ten-fold or greater increase in paperwork.

Though one doesn't issue 1099's under these new rules until January 2012, the need to start assembling paperwork to comply begins with the first payments you make in 2011.  If you make a payment to someone and fail to get a W-9 from them, you may have trouble getting it after the fact.

I don't hate paperwork because of all the trees that will gasp their last breath because of this new law. I hate it because it's one more burden, one more thing that makes us uncompetitive against foreign competition, and more thing that could criminalize or penalize us and make big issues out of otherwise simple issues.

I, for one, look for and hope for a change to this.  See CNN's coverage online.  Time to repeal this part of the health care bill NOW.

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