New IRS Rules on 1099's

[wms7328]

I understand from my accounting buddies that the IRS will start requiring us to send in 1099's at the end of the year showing the amount we paid to anyone over $600. Apparently this takes effect in 2012 and would require every vendor that is paid more than $600 to be sent a 1099. While PC can do this, it will greatly increase the number of those forms we currently send out. Our church has about $450,000 in expenses and it appears I would have to send out about 200 forms. According to my sources it appllies to any vendor, the power company, credit card companies, anyone apparently.

Just wondering if others understand the new rules. I've searched the IRS website but haven't found this stated exactly this way. Apparently the rule is still under discussion and could be changed before 2012.

[bjlogcabin1]

The rule requirres anyone you deal with to receive a 1099 unless they provide you with a W-9. Unfortunately you have to send a request to everyone when you receive an invoice asking for the form or have them risk receiving a 1099. I started doing this last fall and have not run into any problem. It is similiar to vendors asking us for our tax exempt #.Just keep a file of those you receive. Version 11 will let you check off if a vendor is a 1099 & list them for you. I have very few who have not submitted the form. You can look at it on the IRS web site.

[NeilZ]

From the IRS website:

A Form 1099-MISC is:

Generally, used to report payments made in the course of a trade or business to a person who is not an employee or to an unincorporated business.
Required among other things, when payments of $10 or more in gross royalties or $600 or more in rents or compensation are paid.
Provided by the payer to the IRS and the person or business that received the payment.

I think the first sentence governs on who to send 1099s to:

If you hire an independent contractor: 1099. If you hire an incorporated business: NO 1099 !!
So I think that most utlities are not going to get a 1099, nor would most stores, nor most other businesses except for those like cleaning services.

Again, I would check with a Tax Accountant (ask a friend who works for H&R Block) for more info.

[Jeff]

From our research, for 2012 you will have to provide anyone you pay more than $600 for goods or services, corporation or not. You would not be required to provide the 1099s until January 2013, but you will need to keep more accurate records starting in 2012.

The hope is they will make changes to roll back these changes as it will cause an avalanche of 1099s and make the record keeping much more complicated.

[NeilZ]

From our research, for 2012 you will have to provide anyone you pay more than $600 for goods or services, corporation or not. You would not be required to provide the 1099s until January 2013, but you will need to keep more accurate records starting in 2012.

The hope is they will make changes to roll back these changes as it will cause an avalanche of 1099s and make the record keeping much more complicated.

Something tells me that whoever made this rule, was not thinking, let alone logically thinking. Having to issue 1099's for utility bills, purchases from Staples or Office Max, etc is ridiculous. Talk about paper overload for the poor sod at those companies who need to receive and file these things. Even if they're just scanned into the system, that will increase the storage requirements, not to mention costs to upgrade software and so on.

[Jeff]

This was passed as part of the health care changes. It is supposed to bring out people and companies who are under reporting their income. It is going to greatly increase the paper work for the rest of us who are trying to do everything the right way.

[NeilZ]

Did some further research. The IRS is asking for comments on ways to eliminate duplicate reporting, and basically some ideas to eliminate much of the 'paperwork'. How that can be done is beyond me.

Anyway, from what I found it appears that this had 'bipartisan' support in both the House and Senate, and was something that both the Bush and Obama Administrations were trying to get done.

Well, guess we had better get some 1099s on order next December

[bookkeeper-sheila]

I also heard about this new 1099 rule. I started this year, as prep for 1099s, to ask everybody for their tax ID number. I found a lot of them on the internet. If a company is big, like Walmart or Office Depot, you can usually find in the very small print at the bottom of their website an option for investors. What I found was that any company big enough for stock options had to list their SEC filings for investors to see. On the front page of the SEC filing was their tax id number. I didn't need to go through phone tag to find someone who had the number; it was there on the website,...just took a little bit to find it. So now I have about 80% of my a/p database updated...corporations and all...with tax-id numbers. Just a tidbit to pass on. I hope the healthbill gets repealed so we don't have to do all of this paperwork!!

[Jeff]

But just think of all the local businesses that will not have those websites. For example, you may have to research the ownership of gas stations to find out who owns that franchise and then track down their tax id and corporate address.

[Eden Whitehead]

... Just a tidbit to pass on. I hope the healthbill gets repealed so we don't have to do all of this paperwork!!

Sheila,

Thanks for sharing your tip! I doubt I would've been aware of this looming complication were it not for this thread - so thanks to all!

What a headache! I'm with you, Sheila - repeal the healthbill to prevent this from happening!

Eden

[tborgal]

I honestly don't think our highly intelligent legislators in Washington have a clue what a nightmare they have created here. Not just for those of us who have to chase done the information needed to issue the 1099's, but for both the companies we need to issue them to and the IRS. I can't imagine how much paper the IRS will be buried in if this is not repealed. I just don't understand why the purchaser should be responsible for the lack of a seller reporting it's income properly.

[wms7328]

This probably comes under wish list but thought I would post here since everyone seems to be looking forward to this issue. As I printed about six 1099's recently and had a couple of misfeeds that required reprinting a few forms, it occurred that maybe we need a better way to reprint just a few 1099's. When I start printing a few hundred of these forms, most definitely will have misfeeds and have to reprint some. Would like to have a selection screen with checkboxes to just select a few to reprint, similar to select screen for printing W-2's. Since we print two forms to page, would always have at least two vendors to reprint.

Another better way would be to actually print the forms that you could file with IRS, like what was just done with 941's. This way the form is always aligned and I'd rather buy printer ink than the expensive forms.

I do have one question. Has anyone had any luck ordering W-2's and 1099's from IRS that can be used in inkjet or laser printer? I ordered them in Oct. 2009, what I though was the laser forms. Received the forms at the end of March, 2010 and they were once again the impact carbon forms. Just for info, I also received another duplicate order in April with the same forms. Whoever runs the IRS forms dept. needs some serious help!!!

[NeilZ]

I do have one question. Has anyone had any luck ordering W-2's and 1099's from IRS that can be used in inkjet or laser printer? I ordered them in Oct. 2009, what I though was the laser forms. Received the forms at the end of March, 2010 and they were once again the impact carbon forms. Just for info, I also received another duplicate order in April with the same forms. Whoever runs the IRS forms dept. needs some serious help!!!

Don't get them from the IRS, the ones they have at Staples or Office Max work great. In fact, they had packs of 40 W-2 and 50 1099s at Sam's Club the other day. All ready to load up in your inkjet or laser printer.

[wms7328]

Yes, I do buy them from OfficeMax, but they are somewhat expensive. Didn't think about Sam's Club, will have to check there next year. When we start having to send out a few hundred 1099's, it's going to be even more expensive. Just trying to get something back for my tax dollars.

[NeilZ]

Just trying to get something back for my tax dollars.

I figure life, liberty and the pursuit of happiness is enough