1099 Forms - Health care law's massive, hidden tax change

[Apple Of Sodom]

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

"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."

As a small business owner with a lot of different suppliers I find this to be incredibly stupid and will end up costing me quite a bit in both time and money. Thanks to this stupid line item I will have to issue 1099 forms to Amazon, Newegg, Google, Dell, 2m Host, Wal-Mart, eBay, Fred Meyer, AT&T, Home Depot, Lowes...the list really does go on and on. $600 is nothing.

Let us not forget about the millions and millions of new 1099 forms flooding the IRS office and the additional staff required to process these forms.

Healthcare bill aside...how do you feel about this being slipped into it? Do you like the healthcare bill but think this is a bit much?

 

[palehorse]

Are you sure that there are no exceptions for certain types of "goods or services"?

If not, then you're right, that will get f'n ugly. I mean hell, can you imagine being Dell's accountant in this situation? Imagine if they receive 1099's from every business that purchased $600+ in any given year... They'd need gigantic warehouses, trucks, or trains just to store and haul the 1099's around!

Seriously, this can't be right... wow.

then again, it doesn't surprise me. After all, most of our "representation" in Congress never read the final bills before voting on them.

 

[Apple Of Sodom]

Are you sure that there are no exceptions for certain types of "goods or services"?

Positive - it is for all goods and services. In the article one of the "benefits" to the rule is it simplifies the process for business owners who, apparently, often wonder "Do I send a 1099?" If it is a business expense and tops $600 for the individual or company, you 1099 it.

Long haul trucker filling up your tanks? 1099 the gas station.
Buy artwork for decoration at your office? 1099 the artist.
Flying somewhere on business? 1099 the airline.
Renting a mid-size car while you are there for business? 1099 'em.
Staying a week at Holiday Inn on that business trip? You'll need to get their Tax ID so you can 1099 them.

 

[xj0hnx]

Are you sure that there are no exceptions for certain types of "goods or services"?

If not, then you're right, that will get f'n ugly. I mean hell, can you imagine being Dell's accountant in this situation? Imagine if they receive 1099's from every business that purchased $600+ in any given year... They'd need gigantic warehouses, trucks, or trains just to store and haul the 1099's around!

Seriously, this can't be right... wow.

then again, it doesn't surprise me. After all, most of our "representation" in Congress never read the final bills before voting on them.

I'd have to hope you're right in your skepticism, if it is true, and there isn't an exemption, this is complete lunacy. We have many vendor accounts and pretty much every invoice I receive is over $600. This can't be right.

 

[rudder]

See... nancy pelosi was right. The healthcare bill needed to be passed so we could find out what is in it.

 

[Skitzer]

I bet CNN made a typo in that article and it is actually $6,000.00

 

[cubeless]

they need to trap all you crooks... need that documentation to ensure tax revenue... especially if the vat is coming...

 

[Apple Of Sodom]

One thing I'm curious about -

Let's say I have an old MacBook Pro and I buy a new one to replace it. I then post my old MacBook on Craigslist for $600.

Someone like me, a small business owner who watches his bottom line, thinks that the laptop is a good deal. He purchases it with a check.

Come tax time I get a 1099 from this small business owner who uses it as a write-off (justifiably). Now I have to claim this as income? Are you kidding me?

 

[Docnasty]

Page on 1,960 of the Bill:

SEC. 9006. EXPANSION OF INFORMATION REPORTING RE17
QUIREMENTS.
18 (a) IN GENERAL.—Section 6041 of the Internal Rev19
enue Code of 1986 is amended by adding at the end the
20 following new subsections:
21 ‘‘(h) APPLICATION TO CORPORATIONS.—Notwith22
standing any regulation prescribed by the Secretary before
23 the date of the enactment of this subsection, for purposes
24 of this section the term ‘person’ includes any corporation
1961
HR 3590 EAS/PP
1 that is not an organization exempt from tax under section
2 501(a).
3 ‘‘(i) REGULATIONS.—The Secretary may prescribe
4 such regulations and other guidance as may be appropriate
5 or necessary to carry out the purposes of this section, in6
cluding rules to prevent duplicative reporting of trans7
actions.’’.
8 (b) PAYMENTS FOR PROPERTY AND OTHER GROSS
9 PROCEEDS.—Subsection (a) of section 6041 of the Internal
10 Revenue Code of 1986 is amended—
11 (1) by inserting ‘‘amounts in consideration for
12 property,’’ after ‘‘wages,’’,
13 (2) by inserting ‘‘gross proceeds,’’ after ‘‘emolu14
ments, or other’’, and
15 (3) by inserting ‘‘gross proceeds,’’ after ‘‘setting
16 forth the amount of such’’.
17 (c) EFFECTIVE DATE.—The amendments made by this
18 section shall apply to payments made after December 31,
19 2011

 

[GuitarDaddy]

The author of that article is an idiot and doesn't have a damn clue. So wrong it hurts
Nothing in the bill require 1099's to be issued as the author suggests.

Yet more faux outrage from misinformed fools

 

[Apple Of Sodom]

I bet CNN made a typo in that article and it is actually $6,000.00

http://www.accountingweb.com/topic/tax/costly-changes-1099-reporting-health-care-bill

They make the same typo too?

It is $600. I've been on business dinners that would've required the corporation to file a 1099. It is fucking stupid.

And according to this article it is up to the Department of Health and Human services to interpret this law since it is a healthcare bill. Apparently the Internal Revenue Service is waiting to hear from Health and Human Services on how to interpret a tax law.

Why don't we just start having Department of Defense start making decisions on how the FCC should make rulings, and then we'll have the FDA start telling the Department of Defense how to make purchases. We can have the Department of Energy start running the Department of Agriculture too...

 

[Apple Of Sodom]

The author of that article is an idiot and doesn't have a damn clue. So wrong it hurts
Nothing in the bill require 1099's to be issued as the author suggests.

Yet more faux outrage from misinformed fools

Bullshit.

From the other article I linked "Under current law, businesses send Forms 1099 for payments in excess of $600 for rent, interest, dividends, and non-employee services when these payments are made to entities other than corporations. Payments made to a corporation and payments for merchandise are not required to be reported."

The HC Bill extends this need for 1099 forms to ANYONE, corporation or not, who receives payment in excess of $600.

All of these authors are idiots too?

http://www.acca.org/blog.php?id=448
http://thefinancebuff.com/2010/05/1099-filing-requirement-in-health-care-law.html
http://www.cato-at-liberty.org/2010/04/26/costly-irs-mandate-slipped-into-health-bill/


Edit for GuitarDaddy who apparently cannot read. Remember, the problem is that we used to not have to issue 1099s to corporations, such as Dell. Now we will.

Are you a business owner, GuitarDaddy? Do you even know what the fuck a 1099 is?

Page on 1,960 of the Bill:

SEC. 9006. EXPANSION OF INFORMATION REPORTING RE17
QUIREMENTS.
21 ‘‘(h) APPLICATION TO CORPORATIONS.—Notwith22
standing any regulation prescribed by the Secretary before
23 the date of the enactment of this subsection, for purposes
24 of this section the term ‘person’ includes any corporation

 

[DesiPower]

Corruption and tax evasion is the answer, we can hire consultants from India and China who can teach Americans how to do that!!!

 

[GuitarDaddy]

Bullshit.

From the other article I linked "Under current law, businesses send Forms 1099 for payments in excess of $600 for rent, interest, dividends, and non-employee services when these payments are made to entities other than corporations. Payments made to a corporation and payments for merchandise are not required to be reported."

The HC Bill extends this need for 1099 forms to ANYONE, corporation or not, who receives payment in excess of $600.

All of these authors are idiots too?

http://www.acca.org/blog.php?id=448
http://thefinancebuff.com/2010/05/1099-filing-requirement-in-health-care-law.html
http://www.cato-at-liberty.org/2010/04/26/costly-irs-mandate-slipped-into-health-bill/


Edit for GuitarDaddy who apparently cannot read. Remember, the problem is that we used to not have to issue 1099s to corporations, such as Dell. Now we will.

Are you a business owner, GuitarDaddy? Do you even know what the fuck a 1099 is?

Page on 1,960 of the Bill:

SEC. 9006. EXPANSION OF INFORMATION REPORTING RE17
QUIREMENTS.
21 ‘‘(h) APPLICATION TO CORPORATIONS.—Notwith22
standing any regulation prescribed by the Secretary before
23 the date of the enactment of this subsection, for purposes
24 of this section the term ‘person’ includes any corporation

FYI I am a CPA with over 30yrs experience and I control the issue of 1099's for a multimillion dollar multi national corporation. And just like the idoit authors of the misinformed article you quote you overlooked an inportant part of SEC. 9006 which has already been posted in this thread

HR 3590 EAS/PP
"1 that is not an organization exempt from tax under section
2 501(a)."

That little phrase means if the corporation posseses a tax exemption certificate which 99% of all corporations do, that sending a 1099 is not required.

But by all means send all the 1099's you feel necessary to Walmart, Target, Apple, IBM, Exxon and the like I'm sure they will get a kick out of it.

You guys are too funny, common sense doesn't even register with you guys

 

[Apple Of Sodom]

Corruption and tax evasion is the answer, we can hire consultants from India and China who can teach Americans how to do that!!!

Maybe if we evade taxes long enough Obama will nominate us to become czars, like Tim Geithner and Tim Daschle.

I couldn't live with the fear of evading taxes. Saving a few thousand dollars here and there wouldn't be worth the worry of getting audited and sent to jail. Let's be honest - if you make enough money where tax evasion becomes an option, I think you make a comfortable living and shouldn't need to evade them.

You know, if we instituted a Fair-Tax and there was no such thing as a business write-off we wouldn't need any of this horse shit legislation.

 

[Apple Of Sodom]

FYI I am a CPA with over 30yrs experience and I control the issue of 1099's for a multimillion dollar multi national corporation. And just like the idoit authors of the misinformed article you quote you overlooked an inportant part of SEC. 9006 which has already been posted in this thread

HR 3590 EAS/PP
"1 that is not an organization exempt from tax under section
2 501(a)."

That little phrase means if the corporation posseses a tax exemption certificate which 99% of all corporations do, that sending a 1099 is not required.

But by all means send all the 1099's you feel necessary to Walmart, Target, Apple, IBM, Exxon and the like I'm sure they will get a kick out of it.

You guys are too funny, common sense doesn't even register with you guys

When did Wal-Mart, Target, Apple et al become tax exempt organizations? Please explain this to us. Not being a smart-ass.

 

[highland145]

That little phrase means if the corporation posseses a tax exemption certificate which 99% of all corporations do, that sending a 1099 is not required.

What is that exactly? How does that apply to me buying their goods/services? And would I still need to send a 1099 to the guy that fixes the company truck?

 

[Vette73]

When did Wal-Mart, Target, Apple et al become tax exempt organizations? Please explain this to us. Not being a smart-ass.

They don;t pay tax on re-sale goods. They get a tax number for that. As GH said, 99% of business's do this.

 

[Apple Of Sodom]

They don;t pay tax on re-sale goods. They get a tax number for that. As GH said, 99% of business's do this.

But it states exempt under 501(a). I looked at IRS Publication 557 and it states that 501(a) exemptions and 501(c) exemptions must be a specific type of business. I understand that 99% of businesses don't pay taxes on goods for re-sale. But it specifically states it must be tax-exempt under 501(a).

--

501(c)(1) — Corporations Organized Under Act of Congress (including Federal Credit Unions)
501(c)(2) — Title Holding Corporation for Exempt Organization
501(c)(3) — Religious, Educational, Charitable, Scientific, Literary, Testing for Public Safety, to Foster National or International Amateur Sports Competition, or Prevention of Cruelty to Children or Animals Organizations
501(c)(4) — Civic Leagues, Social Welfare Organizations, and Local Associations of Employees
501(c)(5) — Labor, Agricultural, and Horticultural Organizations
501(c)(6) — Business Leagues, Chambers of Commerce, Real Estate Boards, etc.
501(c)(7) — Social and Recreational Clubs
501(c)(8) — Fraternal Beneficiary Societies and Associations
501(c)(9) — Voluntary Employees Beneficiary Associations
501(c)(10) — Domestic Fraternal Societies and Associations
501(c)(11) — Teachers' Retirement Fund Associations
501(c)(12) — Benevolent Life Insurance Associations, Mutual Ditch or Irrigation Companies, Mutual or Cooperative Telephone Companies, etc.
501(c)(13) — Cemetery Companies
501(c)(14) — State-Chartered Credit Unions, Mutual Reserve Funds
501(c)(15) — Mutual Insurance Companies or Associations
501(c)(16) — Cooperative Organizations to Finance Crop Operations
501(c)(17) — Supplemental Unemployment Benefit Trusts
501(c)(18) — Employee Funded Pension Trust (created before June 25, 1959)
501(c)(19) — Post or Organization of Past or Present Members of the Armed Forces
501(c)(21) — Black lung Benefit Trusts
501(c)(22) — Withdrawal Liability Payment Fund
501(c)(23) — Veterans Organization (created before 1880)
501(c)(25) — Title Holding Corporations or Trusts with Multiple Parents
501(c)(26) — State-Sponsored Organization Providing Health Coverage for High-Risk Individuals
501(c)(27) — State-Sponsored Workers' Compensation Reinsurance Organization
501(c)(28) — National Railroad Retirement Investment Trust

 

[highland145]

But it states exempt under 501(a). I looked at IRS Publication 557 and it states that 501(a) exemptions and 501(c) exemptions must be a specific type of business. I understand that 99% of businesses don't pay taxes on goods for re-sale. But it specifically states it must be tax-exempt under 501(a).

--

501(c)(1) — Corporations Organized Under Act of Congress (including Federal Credit Unions)
501(c)(2) — Title Holding Corporation for Exempt Organization
501(c)(3) — Religious, Educational, Charitable, Scientific, Literary, Testing for Public Safety, to Foster National or International Amateur Sports Competition, or Prevention of Cruelty to Children or Animals Organizations
501(c)(4) — Civic Leagues, Social Welfare Organizations, and Local Associations of Employees
501(c)(5) — Labor, Agricultural, and Horticultural Organizations
501(c)(6) — Business Leagues, Chambers of Commerce, Real Estate Boards, etc.
501(c)(7) — Social and Recreational Clubs
501(c)(8) — Fraternal Beneficiary Societies and Associations
501(c)(9) — Voluntary Employees Beneficiary Associations
501(c)(10) — Domestic Fraternal Societies and Associations
501(c)(11) — Teachers' Retirement Fund Associations
501(c)(12) — Benevolent Life Insurance Associations, Mutual Ditch or Irrigation Companies, Mutual or Cooperative Telephone Companies, etc.
501(c)(13) — Cemetery Companies
501(c)(14) — State-Chartered Credit Unions, Mutual Reserve Funds
501(c)(15) — Mutual Insurance Companies or Associations
501(c)(16) — Cooperative Organizations to Finance Crop Operations
501(c)(17) — Supplemental Unemployment Benefit Trusts
501(c)(18) — Employee Funded Pension Trust (created before June 25, 1959)
501(c)(19) — Post or Organization of Past or Present Members of the Armed Forces
501(c)(21) — Black lung Benefit Trusts
501(c)(22) — Withdrawal Liability Payment Fund
501(c)(23) — Veterans Organization (created before 1880)
501(c)(25) — Title Holding Corporations or Trusts with Multiple Parents
501(c)(26) — State-Sponsored Organization Providing Health Coverage for High-Risk Individuals
501(c)(27) — State-Sponsored Workers' Compensation Reinsurance Organization
501(c)(28) — National Railroad Retirement Investment Trust

So I still send one to my mechanic and janitor?

Edit: Sorry, janitor already gets one.

 

[Apple Of Sodom]

So I still send one to my mechanic and janitor?

I think so. It specifically states that unless they are tax exempt under 501(a) AND if it exceeds $600 then you 1099 them.

I'm trying to get clarification as to how 99% of organizations are 501(a) according to our resident CPAs.

 

[GuitarDaddy]

What is that exactly? How does that apply to me buying their goods/services? And would I still need to send a 1099 to the guy that fixes the company truck?

From what I read of sec 1096 in the UHC bill it doesn't seem to change anything and just reiterates the wording in the 1986 law that dictates 1099 reporting requirements.

As a small business owner it means ANYONE that you pay over $600 to is potentially subject to requiring a 1099. About the only ones you don't have to worry about are major corps that are certain to have a tax exemption cert, anyone else including the guy or shop who fixes the company truck you should ask for a copy of their tax exemption cert or get their SS# or TaxID # and file a 1099 for them.

 

[highland145]

LOL. My CPA gets a 1099 from me.

 

[Apple Of Sodom]

So I still send one to my mechanic and janitor?

Edit: Sorry, janitor already gets one.

Your janitor gets one. But he may have to 1099 Wal-Mart because he bought over $600 in cleaning supplies. And your mechanic may have to send one to Snap-On if he spent over $600 in tools, which is like two scredrivers and a hammer.

I still am trying to figure out why 99% of businesses are 501(a) organizations...that baffles me. Anyone?

 

[highland145]

If I can blind the irs with enough paperwork, I may be able to cheat on my taxes. "I sent you copies of the 1099 and 1096. What did you do with them?"