Flood of 1099 forms coming

[WolfeMacleod]

I was thinking more about this the other night, and just how far it could actually go.

Here's a few thoughts for you to ponder:

What does every store in America sell a lot of?
Ciggarettes. Imagine every mom & pop store and franchise quickie-mart in America 1099'ing Phillip Morris and the other companies.


Imagine every trucker who fills up 1099'ing the truck stops they stop at.
Imagine every company who uses FedEx, UPS, USPs 1099'ing them.
Pretty sure the UPS/FedEX/USPS number alone could number in the hundreds of thousands.

Imagine every independently owned gas station 1099'ing the fuel supplier (and being 1099'ed by thier business customers)




I really don't think they could print that many 1099 forms.
And even if they could, imagine the postal service trying to deliver them all.

[red-beard]

It isn't just the 1099 that we have to send out, now we will have to send in copies of each 1099 with our taxes. That means that EVERY transaction in the USA over $600 will be reviewed by the IRS. EVERY single one.

You buy a used car from someone? Yes, you will have to generate a 1099 and send it in to the IRS. This is going to be much more of a nightmare than we think. Or it will create a thriving black market, where people just don't report things.

Now, the IRS is going to have he ability to look at a bank account and say, "Hey, where are the 1099s for that support that much money in your account?"

WTF is in the Financial bill? Healthcare mandates?

[notmytarga]

Hewlett Packard is behind this. We will print the online forms and use their ink.

I thought that the onboard ability to create/print graph, music, and binder paper was cool until I realised it was another way to spew ink.

[berettafan]

Originally Posted by red-beard

It isn't just the 1099 that we have to send out, now we will have to send in copies of each 1099 with our taxes. That means that EVERY transaction in the USA over $600 will be reviewed by the IRS. EVERY single one.

they can't even review a very, very small % of the tax returns that get filed. i don't think it's going to be like you're saying here.

am MUCH more concerned about getting erroneous 1099's and the earlier statement that this could be a lead in to a VAT.

[legion]

Another aspect of this is that almost no one will get it right. We will all become criminal tax cheats because the tax law is too complex for anyone to interpret correctly.

And once everyone is a criminal, it becomes very easy to use threat of enforcing tax laws to coerce people and companies into other behavior. I've witnessed states and a certain city by the lake behaving this way...

[RWebb]

Current U.S. tax law requires businesses to submit a Form 1099 for every contractor paid at least $600 for services during a year. Although this requirement usually does not apply to corporations receiving payments, amendments made by the Patient Protection and Affordable Care Act would remove this exemption beginning in 2012.

[GothingNC]

I'm sure the postal service is welcoming the extra revenue that this will produce.

[red-beard]

You can e-mail them...

[Tidybuoy]

Originally Posted by m21sniper

So basically any time one spends $600 for something, they need to 1099 it, is that what i'm getting?

Ie, go buy a widescreen TV, and the CONSUMER has to send a 1099 to the store he bought it at, AND to the IRS?

Yeah....that'll work.

No!

This will not affect consumers, just business. It's still very bad though. Currently, businesses must issue a 1099 to all contractor/service work that exceeds $600 in a year. Companies do not have to 1099 corporations for service work.

The new law will still only affect companies but 1099's will have to be issued to all companies (including corproations) that you spend more than $600 with. It won't matter if you are purchasing a service (like restaurants may hire a band), of if you are purchasing copy paper.

The original intent of 1099's is to reduce under-the-table payments to workers.

This will have no effect on the ordinary consumer - EXCEPT prices will eventually rise as companies must pay for all the additional useless accounting burden.

[m21sniper]

Originally Posted by WolfeMacleod

I was thinking more about this the other night, and just how far it could actually go.

Here's a few thoughts for you to ponder:

What does every store in America sell a lot of?
Ciggarettes. Imagine every mom & pop store and franchise quickie-mart in America 1099'ing Phillip Morris and the other companies.


Imagine every trucker who fills up 1099'ing the truck stops they stop at.
Imagine every company who uses FedEx, UPS, USPs 1099'ing them.
Pretty sure the UPS/FedEX/USPS number alone could number in the hundreds of thousands.

Imagine every independently owned gas station 1099'ing the fuel supplier (and being 1099'ed by thier business customers)




I really don't think they could print that many 1099 forms.
And even if they could, imagine the postal service trying to deliver them all.

Imagine every used car buyer in America having to fill out a 1099.

How about for every gun purchase?

Or every TV purchase?

It's ludicrous.

[Zeke]

This is tiring and I intended to abandon the thread. Howeversomuch, I have to point out the McLovin's links produce some new language inserted into existing code that mean very little beyond what is already stated.

BUT, the references to the sections of exempted requirements appears to remain exactly as it was written.

From his linked page:
"The original section of the Internal Revenue Code reads:

Sec. 6041. Information at source

(a) Payments of $600 or more

All persons engaged in a trade or business and making payment in the course of such trade or business to another person, of rent, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable gains, profits, and income (other than payments to which section 6042(a)(1), 6044(a)(1), 6047(e), 6049(a), or 6050N(a) applies, and other than payments with respect to which a statement is required under the authority of section 6042(a)(2), 6044(a)(2), or 6045), or $600 or more in any taxable year, or, in the case of such payments made by the United States, the officers or employees of the United States having information as to such payments and required to make returns in regard thereto by the regulations hereinafter provided for, shall render a true and accurate return to the Secretary, under such regulations and in such form and manner and to such extent as may be prescribed by the Secretary, setting forth the amount of such gains, profits, and income, and the name and address of the recipient of such payment."

The revised text says (allow me to highlight the insertions):
"All persons engaged in a trade or business and making payment in the course of such trade or business to another person, of rent, salaries, wages, amounts in consideration for property, premiums, annuities, compensations, remunerations, emoluments, or other gross proceeds, fixed or determinable gains, profits, and income (other than payments to which section 6042(a)(1),6044(a)(1), 6047(e), 6049(a), or 6050N(a) applies, and other than payments with respect to which a statement is required under the authority of section 6042(a)(2), 6044(a)(2), or 6045), or $600 or more in any taxable year, or, in the case of such payments made by the United States, the officers or employees of the United States having information as to such payments and required to make returns in regard thereto by the regulations hereinafter provided for,shall render a true and accurate return to the Secretary, under such regulations and in such form and manner and to such extent as may be prescribed by the Secretary, setting forth the amount of such gross proceeds, gains, profits, and income, and the name and address of the recipient of such payment."

I Italicized the part that I don't have time to read. This is probably where the meat is. IOW, the exemptions. Anyone care to spend awhile on this?

[McLovin]

Reading and understanding statutes is tiring work.

You skipped over this part of the new law:

‘‘(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)."

Under the old law, when an employer paid a human person money for independent contractor services, etc., the employer had to 1099 them.

That is a fairly limited scenario.

Now, "person" is expanded to mean a corporation, too (except for a 501a corp, i.e., a non-profit corp). So, now Home Depot is included as a person, which was not the case before.

And, payment for paper clips bought from Home Depot ("amounts in consideration for property," as you accurately bolded in your post), are also now included.

Thus:

Pre-change:

$600 in paper clips bought by a business from Home Depot does NOT require a 1099 to HD.

Post-Change:


$600 in paper clips bought by a business from Home Depot DOES require a 1099 to HD.

Capiche?

[Zeke]

I just picked up on the blind side of all this. Rather than this being so much about a cross reference for the IRS to scrutinize where the money goes, it's a much better vehicle for states to collect sales tax on out-of-state purchases, especially online ones.

CNNMoney has a good article that might support my contention that this isn't total mayhem yet. The last paragraph reads,
"The IRS has a draft version of the 1099-K form available now for public feedback, and will begin requiring the form's use next year. The additional 1099 requirements take effect in 2012. The agency is in the process of drafting its guidance on them.
link:
Stealth IRS campaign mandates millions of new 1099 tax forms - May. 21, 2010

Hopefully, some sort of common sense will prevail, but now that I see the state tax aspect, I see this taking off. IOW, you get a choice, pay the state sales tax or forgive your deduction.

[island911]

Like I said, this 2700+ page HC 'reform' bill is nothing more than a Trojan horse --packed full of federal power-grab. ...or ankle-grab if you have a business.

[Zeke]

That's the damn truth with the majority of bills, isn't it? Politicians suck donkey balls.

[pete3799]

I've got an idea....
Why don't we all direct deposit our pay checks to the IRS and they can give us a weekly allowance, you know, enough for bread and water and stuff.

[m21sniper]

Originally Posted by pete3799

I've got an idea....
Why don't we all direct deposit our pay checks to the IRS and they can give us a weekly allowance, you know, enough for bread and water and stuff.

It's coming.

[island911]

Originally Posted by milt

That's the damn truth with the majority of bills, isn't it? ...

No, not really. I think that most bills are much much more simple. Such as a Levy for a school library, or a toll on a new bridge. Even the AZ law, of such recent DC scorn, is only a dozen pages - yet none of the DC people seem to have read that, as all it stipulates is that the local law enforcement must follow the Federal law. --I digress. sorry.

Anyway, 2700+ pages (and that's before the reams of Standards & Practices are written) ... it is absolutely outrageous.

And, increasing the tax overhead/ppr-work burden on the people is just wrong wrong wrong. Govt should seek to simplify, not complicate, the extraction of our life energy.

[Racerbvd]

It won't matter if you are purchasing a service (like restaurants may hire a band)

That is already required, and they are mailed out. I already spend a lot of time & postage sending out 1099s, I also have to send a lot out to clients who use our services. So to add even more 1099s will take more time away from income producing work, which in time, cost us money.. Those of us small business owners & partners in multiple businesses are the ones who get hurt the most as we have the most limited man hours..

[island911]

Perhaps this massive cluster-bill can be undone, after November.

Apparently 63% of people (Rasmussen Poll) want the whole thing repealed.

...and that number is growing as more hidden elements are uncovered.

:-/