Monthly Archives: July 2010
Starting in 2012, all business payments or purchases that exceed $600 in a calendar year will need to be accompanied by a 1099 filing. That mean all. Not just contract labor or sole proprietor vendors. It means restaurants, car rental companies, conference centers. It means obtaining the taxpayer ID number of the individual or corporation you’re making the payment to — even if it’s a giant distributors like CDW or Newegg — at the time of the transaction, or else facing IRS penalties. In essence, the 1099-Misc is having its role changed from a form for tracking off-payroll employment to one that must accompany virtually any sizeable business transaction.
The 1099 changes were attached to the health care reform bill. They change the requirements for filing the “1099-Misc” form. Until now, payments to corporations have been exempt from 1099 rules, as have payments for the purchase of goods. Eliminating the 1099 exceptions for corporations and goods was seen as an easy way to bring in more cash without raising tax rates.
Our politicians at work! Next year, we need to take a close look at how 1099’s are prepared.