Thu
Jan 20 2011
08:26 am
1099 mess resulting from health care act
By: bizgrrl

A requirement in the Patient Protection and Affordable Care Act (health care act) "would require businesses to report to the IRS any purchase from a vendor of goods or services worth $600 or more during the calendar year. The new requirements would be effective for purchases made in 2012 that will be reported on 1099 forms filed in 2013."

Can you imagine what it will be like for all businesses, large and small, to have to gather taxpayer information from every business they purchase $600 or more? The 1099 form requires the taxpayer identification number along with a street address of the company from the company that your business purchases $600 or more. What were they thinking? Business accounting is getting ridiculous, makes for plenty of jobs/income for accountants. Can you imagine how many 1099s Dell, Microsoft, even Home Depot, could get every year?

In September, Sen. Bill Nelson, D-Fla., introduced an amendment that "would have increased the threshold for reporting the purchases on a 1099 from $600 to $5,000, and exempted businesses with 25 or fewer employees from the new reporting requirement. His amendment was defeated on a vote of 56-42, also failing to reach the 60-vote threshold."

I'm betting this requirement will be amended somehow before Jan. 1, 2012.

Topics:
vibinc's picture

1099

Submitted by vibinc on Thu, 2011/01/20 - 8:37am.

So wait, if I, as a sole proprietorship, purchase a $1500 computer from Apple I would be required to send Apple a 1099? Is that what I'm understanding?

bizgrrl's picture

I'm no accountant, but I'm

Submitted by bizgrrl on Thu, 2011/01/20 - 9:23am.

I'm no accountant, but I'm thinking that could be the case.

R. Neal's picture

I'm no accountant Now you

Submitted by R. Neal on Thu, 2011/01/20 - 9:42am.

I'm no accountant

NOW you tell me.

bizgrrl's picture

I certainly hope so, although

Submitted by bizgrrl on Thu, 2011/01/20 - 10:29am.

I certainly hope so, although I couldn't find anything about a fix.

R. Neal's picture

No, not fixed. Unless you are

Submitted by R. Neal on Thu, 2011/01/20 - 10:32am.

No, not fixed. Unless you are referring to the DOA "repeal" of the health care reform bill.

(link...)

According to the above link, credit card transactions are exempt from reporting. Does this mean the IRS is tracking credit card transactions?

Jiminez Cricket's picture

That's exactly what it means

Submitted by Jiminez Cricket (not verified) on Thu, 2011/01/20 - 11:08am.

According to the above link, credit card transactions are exempt from reporting. Does this mean the IRS is tracking credit card transactions?

(link...)

The various credit card companies and the transaction processing companies will be submitting 1099s directly to the IRS regarding a business's credit card receipts assuming the business has at least 200 transactions and $20,000 per year in card proceeds.

Additional revenue for treasury to pay for various governmental programs, primarily ObamaCare and the first time home buyer's incentives.

GDrinnen2's picture

It is a sole proprietorship

Submitted by GDrinnen2 on Thu, 2011/01/20 - 3:02pm.

It is a sole proprietorship nightmare. I absolutely believe it will shut down LOTS of small business, or at least drastically reduce their profits.

reform4's picture

CLARIFICATION

Submitted by reform4 on Thu, 2011/01/20 - 6:51pm.

The requirement *does not* apply to CORPORATIONS.

However, a business owner such as myself now has to ask everyone I purchase from if they are a corporation, or a partnership/ LLC / Sole Prop and act accordingly.

Yes, it will probably be repealed, but we have to start the data collection as of January 1, with no idea how long we'll have to keep it up.

Apparently, the idea was to help finance the bill by cracking down on tax cheats. And there are a lot of them, especially people selling $1000's on E-bay and claiming to be individual sellers.

bizgrrl's picture

Au contraire, it does apply

Submitted by bizgrrl on Fri, 2011/01/21 - 7:15am.

Au contraire, it does apply to corporations.
There are documents found on the IRS.gove website that state, under new section 6041(h), payments to corporations that are not tax-exempt may be subject to information reporting.

--------------------------------------------------------
The Patient Protection and Affordable Care Act
...
TITLE IX—REVENUE PROVISIONS
Subtitle A—Revenue Offset Provisions
...
SEC. 9006. EXPANSION OF INFORMATION REPORTING REQUIREMENTS.
(a) IN GENERAL.—Section 6041 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsections:

"(h) APPLICATION TO CORPORATIONS.—Notwithstanding any
regulation prescribed by the Secretary before the date of the enactment of this subsection, for purposes of this section the term ‘person’ includes any corporation that is not an organization exempt from tax under section 501(a).

"(i) REGULATIONS.—The Secretary may prescribe such regulations
and other guidance as may be appropriate or necessary to
carry out the purposes of this section, including rules to prevent duplicative reporting of transactions.".

(b) PAYMENTS FOR PROPERTY AND OTHER GROSS PROCEEDS.—
Subsection (a) of section 6041 of the Internal Revenue Code of
1986 is amended—
(1) by inserting "amounts in consideration for property," after "wages,",
(2) by inserting "gross proceeds," after "emoluments, or other", and
(3) by inserting ‘‘gross proceeds,’’ after ‘‘setting forth the
amount of such’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to payments made after December 31, 2011.

reform4's picture

Yes and no.

Submitted by reform4 on Thu, 2011/02/03 - 10:08pm.

Corporations are not exempt when buying something from a sole prop or partnership.

You cant issue a 1099 to a corporation. It does not apply when the goods or services are procured FROM a corporation.

You can't issue a 1099 to Dell, as far as I understand IRS regs.

M. Silence's picture

Sen. Corker responds

Submitted by M. Silence (not verified) on Fri, 2011/01/21 - 1:39pm.

I sent this post to Corker's office and got this response:

(link...)

Pam Strickland's picture

What does this have to do

Submitted by Pam Strickland on Fri, 2011/01/21 - 4:29pm.

What does this have to do with health insurance?

bizgrrl's picture

Revenue offset provision

Submitted by bizgrrl on Fri, 2011/01/21 - 4:40pm.

This is one way they are hoping to pay for the new plan. They think they are going to catch more people not claiming income or some such thing.

Pam Strickland's picture

Well, it takes all kinds I

Submitted by Pam Strickland on Fri, 2011/01/21 - 8:41pm.

Well, it takes all kinds I guess.

CE Petro's picture

CBO Estimates

Submitted by CE Petro on Thu, 2011/02/03 - 8:58pm.

that the 1099 requirement (which was repealed today) would have added $19 Billion in revenue over the next 10 years.

So, now the question is where will that $19 Billion come from? Instead of cutting tax subsidies to BigOil (another failed amendment) the onus is now put onto the OMB to identify so-called "unobligated funds" from the budget, minus Department of Defense, Department of Verterans Affairs and Social Security Administration.

Granted I'm not happy that small businesses were targeted in the first place. Ideally, I'd like to see the massive loopholes that multinational businesses have been using closed, tax subsidies to Big Business (oil & AG for instance) cut to cover that shortfall. Unfortunately the corporatocracy in DC continues to refuse to look out for the people.

EricLykins's picture

Ideally, I'd like to see the

Submitted by EricLykins on Thu, 2011/02/03 - 9:15pm.

Ideally, I'd like to see the massive loopholes that multinational businesses have been using closed, tax subsidies to Big Business (oil & AG for instance) cut to cover that shortfall. Unfortunately the corporatocracy in DC continues to refuse to look out for the people.

(link...)

reform4's picture

naughty...

Submitted by reform4 on Thu, 2011/02/03 - 10:10pm.

Better to go after the guy selling $50 used video cards on EBay.

EricLykins's picture

Basically, it wasn't well

Submitted by EricLykins on Thu, 2011/02/03 - 7:59pm.

Basically, it wasn't well thought out and shortly after passage, both Democrats and Republicans agreed they wanted it gone. Forget today's 81-17 vote for a moment. Max Baucus, who wrote the freaking thing to begin with, introduced language that would have nixed it last year. Repealing it was even a bullet point in President Obama's State of the Union corporate pep talk on how to Win the Future.

Read more: (link...)

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