- January 31, 2019
- Posted by: admin
- Category: Accounting Advice
If you can’t kill small business with a bad economy, let’s kill them with unworkable paperwork requirements! Come on Congress are you kidding? In an effort to collect taxes on an estimated 300 billion dollars a year in tax underpayment, and in the infinite wisdom of the president and his congress, Section 9006 of the health care bill 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.
Under the new rules, if a PCO (or any other small business) buys a new iMac from the Apple Store, they’ll have to send Apple a 1099. A PCO that buys chemicals from a 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. But the cost of that paper trail could swamp the small companies that must comply with the rules. A company that currently issues ten 1099s per year could easily see that number pushed to more than 200 filings per year.
The IRS will have broad leeway to interpret the rules — and it’s already showing signs that it will look for ways to minimize the paperwork flood. For example, anything purchased on a credit card will not have to be reported as credit card companies will have their own reporting requirements. Hmmmmm… Sounds like a windfall for the credit card companies. In an effort to mitigate the reporting, small businesses will need to comply with, they may just start making all their purchases by credit card!! I wonder if congress realized in their infinite wisdom that they’ve created a windfall for big business while making it more difficult to operate as a small business!! Stay tuned…