by Charlie McCrudden
As
has been previously reported here at the Hot Air blog (here and here), starting in 2012, every business will be required to issue a Form 1099 to any vendor
of services or property to which the business has paid more than $600 a year for those services or property. Yes, we said
ANY vendor. The Form 1099 must also be sent to the Internal Revenue Service.
But there may be hope on the way,
as legislation has been introduced to repeal this provision from the books before it takes effect.
In addition to issuing the forms,
you will have to get Taxpayer Identification Numbers (TINs) from all of those vendors and withhold payments to any such vendor
until you receive the TIN. Penalties apply if that business fails to issue the Forms 1099.
This provision expands on existing law that requires businesses to issue the Form 1099 only to individuals who provide
services to a business. The new health care law will make two changes to the current law in 2012: the Form 1099 must
be issued to corporations of all sizes and shapes as well as to individuals AND a Form 1099 must also be issued to individuals
and corporations that provide property to a business.
The payments that are included under this are not only those made by check but also
those made by other means such as credit cards. This includes payments made to airlines, hotels, rental cars, gas stations,
coffee delivery services, office supply stores, and restaurants, just to name a very, very few. Anyone who you spend
more than $600 on in a given year!
Also, if you are in the business of selling or distributing goods, all of your suppliers of products are also vendors
under the new law. While there are some limited exemptions under current law, small businesses will still be the one
responsible and liable for issuing the information report and it will not be easy.
ACCA opposed the health care reform bill passed earlier this
year, in part because of this ridiculous provision that burdens small businesses with a paperwork nightmare -- and has absolutely
nothing to do with healthcare! It was included merely as a way for Congress to claim higher revenues to offset the costs of
the healthcare reform proposal.
The result is new and expensive compliance costs on America’s small businesses. Obviously mistakes will be
made on those forms, people will have difficulty chasing down TINs, and the whole thing will become a noose around the neck
of daily operations for businesses of ALL sizes. Expect more audits and notices of non-compliance from the IRS
-- in fact, those audits, notices and fines are the whole point of the provision.
But there is hope to repeal this onerous rule. The Small Business
Paperwork Mandate Elimination Act has been introduced by Representative Daniel Lungren (R-CA) to repeal section 9006
of the Patient Protection and Affordable Care Act.
You can help move this bill forward by asking your Member of Congress to co-sponsor H.R.
5141. Use ACCA’s
Grassroots Action Center to send a message to your Representative today.
Charlie McCrudden is ACCA vice
president of government relations.
ACCA-Texas Offers Apprenticeship Program