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Stealth IRS changes mean millions of new tax forms


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  #1  
Old 05-24-2010, 09:13 AM
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Default Stealth IRS changes mean millions of new tax forms

Stealth IRS changes mean millions of new tax forms

The result: A blizzard of new tax forms that the Internal Revenue Service will begin rolling out next year.

The new 1099-K aims to shine a light on a currently hard-to-track payment stream: credit cards. Starting in 2011, financial firms that process credit or debit card payments will be required to send their clients, and the IRS, an annual form documenting the year's transactions.
The 1099 changes attached to the health care reform bill are another kettle of fish. These massively expand the requirements for filing the "1099-Misc" form, which companies use for recording payments to freelance workers and other individual service providers. Until now, payments to corporations have been exempt from 1099 rules, as have payments for the purchase of goods.

Starting in 2012, that changes. All business payments or purchases that exceed $600 in a calendar year will need to be accompanied by a 1099 filing. That means obtaining the taxpayer ID number of the individual or corporation you're making the payment to ** even if it's a giant retailer like Staples or Best Buy ** 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.

"Just with business travel it would include hotels, rental cars," Henschke says. "Phone service: 1099. Computer service: 1099. Whoever does your postage meter: 1099. You do a little advertising, Yellow Pages: 1099. Your landlord: 1099. You might as well just keep them in your pocket and hand them out as you go around every day."

How did this sweeping provision end up hidden in the health reform bill? No one is willing to take credit for introducing the new legislation, which appeared in the Senate Finance Committee's version of the health bill last fall. Committee chairs Don Baucus, D-Mont., and Chuck Grassley, R-Iowa, both referred calls to committee staffers, who wouldn't comment on the record.

Still, the form the new law took was surprising ** especially the requirement that businesses file 1099s when they purchase goods, which hardly anyone saw coming.

Henschke's group had previously surveyed its members and learned that they average 10 filings a year of 1099 forms, each of which takes about half an hour to prepare. That's in line with the GAO report, which found that a typical small business spent between three and five hours per year filing 1099s.

But SMC's survey found that extending 1099s just to services purchased from corporations would push that number to at least 200 filings per year for a typical small business ** adding an estimated $6,000 to the cost of preparing the average tax return. And that's without even accounting for the requirement that 1099s be filed for purchases of goods, a provision that Henschke's group didn't see coming when it conducted its survey last year.

Starting in 2012, you will have to get the filing information from every company you make purchases totaling over $600 a year and supply the same information to any business that pays you more than $600 a year. These 1099ís must be filed at the time the $600 is met and then for every transaction after that or face IRS penalties.

Arn't you really glad they crammed through the "Health Care Bill"?

Steve
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Old 05-24-2010, 03:15 PM
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What a pain in the butt!

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The new 1099-K aims to shine a light on a currently hard-to-track payment stream: credit cards. Starting in 2011, financial firms that process credit or debit card payments will be required to send their clients, and the IRS, an annual form documenting the year's transactions.
Next thing you know it, you will get a 1099-K for each check you deposit in the bank, from the bank.
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Old 05-24-2010, 04:06 PM
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Default You missed the bigger point

Steve, you missed the bigger point! You will have to file a 1099Misc When you pay one of your suppliers $600 in a year and then every time you make another purchase from that supplier. Any and all business expenses. Advertizing, supplies, travel, phone expenses, uniforms, etc.

What other business expenses do you have that total over $600 a year?

How many 1099misc form will you have to fill out and send in per week? At what cost? How about IRS fines for not submitting immediately? What other regulations and impositions are in store fr small businesses?

This s**t was secretly put into the 2000+ page health care bill and passed against the will of the American people. What othe "stealth" supprises are in store for free enterprise?

Steve
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Old 05-24-2010, 05:42 PM
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This is nothing short of insane and talk about big brother watching every breath you take, I am sure there are other ways to increase revenue while cracking down, this to me is not a prudent way to go about it.
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Old 05-25-2010, 04:50 PM
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What kind of fines can they hit you with if you don't file such a form? I could see how many business owners would miss that through out their year.
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Old 05-25-2010, 05:03 PM
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Default Fines

Either yet to be determined or a secret until after the elections!

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