In 2010, the Patient Protection and Affordable Care Act (“Health Care Bill”) was signed into law. Sounds good until you read what else was included in that bill to get it passed.
Starting in 2012, the IRS has new laws in the 1099 reporting requirements. In the pass, businesses were required by law to send 1099s to any independent contractor that received $600.00 or more within the calendar year. The government felt there was a loss in IRS tax revenue due to unreported taxable income and illegal tax deductions, both with individuals and businesses.
The new law will require that all business types must send 1099s to every individual and business with whom they have spent $600.00 or more. It seems like a reasonable request, until you realize how many different places a business can spend more than $600.00 or how many places a business can have that spends more than $600.00 with them.
Take for example a furniture company. Most would have some independent contractors for their business like furniture repair, reupholster, etc. Say a big, busy company would normally have 10 1099s that they would send out. Most furniture companies carry over 30 companies with whom they buy furniture from. Lets say they only buy gas at one place for their delivery trucks and use one repair shop. Any software renewal and monthly fees, any sales training literature, and training trips, any trips to furniture expos, etc. These could total easily up to an additional 50 1099s that have to be compiled, filled in, sent out, and reported.
Take for example the receiving end of things. Staples is a pretty well know and used business supply store. The store in Muncie, Indiana probably serve most of East Central Indiana. If only 10% of the businesses shopped there or online and spent over $600.00, Staples would receive over 500 1099s just from that area.
Now take the IRS, who seems to be, at the very least, two years behind on 1099 and W2 reporting. They now have an extra 1100+ 1099s to process just by the two examples above. 550 being reported by reporter, and 550 by the reportee.
This new law requirement will greatly increase the administrative burden on all businesses, as well as the IRS. This requirement is going through its appeal. Various Representatives to the US House have been involved such as Todd Rokita and Dan Burton. Many have websites with links to sign petitions to appeal this law. I would greatly encourage everybody to sign the petition, specially if you are a business owner or carry out administrative duties for your company.
As part of Total Payroll Solution's service, we do free 1099 fillings for all of our payroll clients. There is a small cost for non-payroll clients to do this yearly filing on their behalf. The forms are filled electronically with the IRS and confirmations are sent to all who file with us. Electronic copies are also sent to the companies for their own record keeping. At Total Payroll Solution, we believe in giving our clients more than they expect. You won't find any nickel-and-diming here, but an upfront cost that you can expect to be consistent.
Please contact us via our website, Payroll Quote, or by email at tps@tpspayroll.com for a free quote. You may also contact us by the same email or via website, Contact, for more information or question regarding 1099s and other payroll issues.
