1099 forms are only for contract employees, right? A little thing called Section 9006 of the recent recently passed healthcare bill might just change that. If the rule is not repealed the new tax-reporting requirement will go into effect January 1, 2012. Here’s what you need to know:
1). New legislation in the healthcare bill mandates filing of 1099 forms with the IRS for any company that provided or sold product or service to you exceeding $600 over the course of the year. Costco, Staples, Kinko’s, Jet Blue…wherever. Previously, this rule only applied to services, not products.
2). The National Small Business Association estimates that the average company will have to file 95 1099 forms under the new measure, making it a significant administrative burden.
3). US Rep. Dan Lungren (R-California) has introduced The Small Business Paperwork Mandate Elimination Act (HR 5141) which is pending in Congress and would repeal the new rules requiring a 1099 for product purchases.
4) What information do you need to track? You will need to keep detailed records of every transaction with every vendor over the course of the year and collect Tax Identification Numbers for every vendor meeting the threshold so you can file your 1099 forms.
5). Don’t like it? You’re not alone. Countless small businesses have signed “The Petition to Repeal Section 9006” at www.stop1099.org and “Liked” the “Americans Against New 1099 Tax-Reporting Requirements” on Facebook.
6). The good news even if it is not repealed? You can track which vendors meet the $600 threshold, retain detailed documents supporting your filings, and more easily track all your vendors tax ID numbers with Bill.com. It’s just one other way we’re committed to taming the tsunami of paperwork facing your business.
via blog.bill.com
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