Healthcare Reform Bill Changing Tax Reporting in Business
In much the manner as the healthcare reform bill seeks to revolutionize American healthcare, one of its stealth provisions aims at overhauling Form 1099 tax reporting requirements. The country’s spiraling deficit spending and phantom uncollected taxes, whispered to amount to as much as $350 billion, constitute a lucrative means of financing the deficit, if only someone could figure out if they’re for real – and, if so, how to collect them.
What Does the Tax Reporting Change Mean for Businesses?
The new Internal Revenue Service (IRS) reporting obligations will go into effect January 1, 2012 and will require businesses, for the first time, to issue 1099s not only to individuals paid $600 or more annually, but also to other businesses to which they make such payments. Payments for merchandise, previously exempt from reporting, are also within the purview of the new 1099 mandate.
The paperwork implications of the 1099 extension are tremendous. Businesses must now begin collecting employer identification numbers for vendors and other businesses, and of course they must create the ensuing 1099s.
But what about the IRS itself? The IRS will be flooded with 1099s as businesses comply with the latest reporting requirements. The IRS will have information aplenty, but will it have staff to do anything useful with the mountains of paperwork?
Knowing that the fearsome tax agency collects the paperwork may be enough to foster accurate reporting on the part of the majority of businesses. But there’s always the possibility that they’ve been reporting honestly all along. And the unwieldy paperwork will constitute an unnecessary expense and burden all around.
So, while the new 1099 provisions might be a panacea for reigning in an out-of-control deficit, they might also prove once and for all that those phantom uncollected taxes are the IRS version of an urban legend.
Consult With an Attorney
For more information regarding the new Form 1099 tax reporting requirements and how they may impact you and your business, speak to a knowledgeable tax attorney in your area today.