Tax Form 1099

There has been a lot of talk in recent days about one provision in the health reform law that would require the filing of a large number of 1099 federal tax forms by all sorts of businesses.

Let's first look at the actual language that was put into the health law:

SEC. 9006. EXPANSION OF INFORMATION REPORTING REQUIREMENTS.

(a) In General- Section 6041 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsections:
`(h) Application to Corporations- Notwithstanding any regulation prescribed by the Secretary before the date of the enactment of this subsection, for purposes of this section the term `person' includes any corporation that is not an organization exempt from tax under section 501(a).
`(i) Regulations- The Secretary may prescribe such regulations and other guidance as may be appropriate or necessary to carry out the purposes of this section, including rules to prevent duplicative reporting of transactions.'.
(b) Payments for Property and Other Gross Proceeds- Subsection (a) of section 6041 of the Internal Revenue Code of 1986 is amended--
(1) by inserting `amounts in consideration for property,' after `wages,',
(2) by inserting `gross proceeds,' after `emoluments, or other', and
(3) by inserting `gross proceeds,' after `setting forth the amount of such'.
(c) Effective Date- The amendments made by this section shall apply to payments made after December 31, 2011.

As usual, unless you know what you are looking at, you would have no idea what Section 9006 actually does, but it impacts just about any transaction that is worth more than $600.

Why?  It's all about tax enforcement, as the number crunchers think a lot of businesses aren't reporting income to Uncle Sam.  The estimate is that this 1099 change would bring in $17 billion over 10 years.

Maybe the most important item is the effective date, which is the end of 2011.

So, for those of you worried about the Form 1099 requirement, it does not take effect until the start of 2012.

In other words, there is still time for the Congress to change it.

But, you'll have to find $17 billion in cuts to offset any change.

The IRS is taking comments and giving out more information at http://www.irs.gov/pub/irs-drop/n-10-51.pdf

There has been a lot of talk in recent days about one provision in the health reform law that would require the filing of a large number of 1099 federal tax forms by all sorts of businesses. Let's first look at the actual language that was put into the health ...