additional 1099 requirements due to health care law

[cptacek]

Costly changes to 1099 reporting in health care law | AccountingWEB.com

Beginning in 2012, under a little discussed mandate of the health care reform legislation, businesses will be required to report all payments in excess of $600 for services or merchandise to the Internal Revenue Service on a Form 1099.

“Under the new law, businesses will be required to send a 1099 to other businesses for virtually all purchases,” said Chris Hesse, director of taxation at CPA firm LeMaster DanielsPLLC in Washington state, as quoted by Chris Edwards in a Cato Institute blog.

“And for the first time, 1099s are to be sent to corporations,” Hesse said. “This is a huge new imposition on American business, costing the private economy much more than any additional tax that the IRS might collect as a result.”

What this means, if I understand correctly, is if a business spends $600 or more at another business or to another person, the one doing the spending has to gather TIN and other information from the seller to send them a 1099 at the end of the year (and send that information to the IRS as well.) Currently you have to do this for entities (businesses or individual persons) that are not corporations, but this change will require you do it for corporations as well.

Think about a long haul trucking outfit. If they fill up at the same fuel station twice in a year (those truck tanks are huge!), they will have to gather not just receipts, but W-9 information from each of those stations, keep track of where they got each tank of fuel and send each of those companies a 1099.

If you buy $600 or more of office supplies, you will have to send a 1099 to Office Max. What if you buy these from two different stores? Are they the same TIN? Are they franchises? Will you have to keep track down to the store location where you buy this stuff and match up your receipts to exact stores?

Original article here (where the above article gets some information):
Costly IRS Mandate Slipped into Health Bill | Cato @ Liberty

I asked my tax preparer if he had heard of this and if it was in fact true, and here is what he said:
"Yes, I have heard about this. It's going to be a mess. I think the govt will change it but who knows. They are hiring an additional 35,000 IRS agents to inforce this and all the health care laws. Life will be fun."

And this is the guy that has told me "paying taxes isn't bad. It means you are making money." So he is not an ultraconservative guy.

[maat55]

As if our government was not wasteful and overbearing enough. Just another reason to implement the Fair Tax.

[cicy33]

This is beyond wasteful, this is crazy. This includes places like Staples, walmart, etc. just the mere paperwork is going to be crazy for a small business. I can't imagine what it will be like for a large business. I think that many places will be going to a cash only don't ask don't tell policy.

[Confetti]

Speaking as the office manager of a small business, I hope they change their minds on this one, although, it would mean a certain amount of job security for me. I doubt it would mean a raise, though, even with all the extra work and filing. It doesn't make any sense. You already show receipts for what you buy and sell and this just seems like it doubles that. I can see the need for all the extra agents with this bit of silliness.

[EEinNJ]

This goes further than what I had heard, which was that employers were going to be required to report the cost of your health insurance benefits on your W-2. This, of course, is the camel's nose under the tent, the forerunner to taxing the value of your benefits.
I was in favor of health INSURANCE reform, but instead what they created was yet another giveaway to the insurance industry and a screw-job to the taxpayer. Thanks for nothing.