A few wording changes to the tax code’s section 6041 regarding 1099 reporting were slipped into the 2000-page health legislation. The changes will force millions of businesses to issue hundreds of millions, perhaps billions, of additional IRS Form 1099s every year. It appears to be a costly, anti-business nightmare.Better start collecting that 1099 info from OfficeMax, OfficeDepot,Staples, and every provider of any service to your corporation (yes, even you mom and pop S Corps).
Basically, businesses will have to issue 1099s whenever they do more than $600 of business with another entity in a year. For the $14 trillion U.S. economy, that’s a hell of a lot of 1099s. When a business buys a $1,000 used car, it will have to gather information on the seller and mail 1099s to the seller and the IRS. When a small shop owner pays her rent, she will have to send a 1099 to the landlord and IRS. Recipients of the vast flood of these forms will have to match them with existing accounting records. There will be huge numbers of errors and mismatches, which will probably generate many costly battles with the IRS.
I'm glad we closed down our little monthly newspaper business. All those 1099s from small advertisers and having to generate them for our suppliers and service providers... and now I wonder if I will have to file 1099s with my Continuing Legal Education providers. . .