Most of you are aware of the 2010 Health Care Reform Bill that was signed into law this year. However, many of you may not know about the potentially overwhelming new 1099 reporting requirements that are included in the law.
The new law requires a business to issue a 1099 to any individual or corporation from which it purchases more than $600 in goods or services during a tax year. The previous law only required a 1099 to be issued for income paid to individuals other than wages and salaries and just applied to services, not to the purchase of goods. In addition, businesses were not required to issue a 1099 to corporations.
The effect of the new reporting requirements is that businesses will see a dramatic increase in time, expense and paperwork. For example, if your business buys more than $600 in office supplies from Staples in 2011, it must issue a 1099 to Staples. Imagine how burdensome and expensive this process will be, not only for small businesses, but for the large corporations that will receive millions of 1099s.
The bad news is that so far, attempts to amend or repeal this provision have failed. The good news is that now you know about the law and can take steps to deal with its impact on your business.
Please contact us to discuss and develop a strategic plan to minimize the effect of this new reporting requirement on your business.