Welcome to Healthcare Tax Compliance Hell!

  • Beginning in 2012, all businesses, including sole proprietors, partnerships and corporations will have to issue a 1099 to any person or business when they purchase any goods or services that exceed $600 per year.

    That’s correct, now when Larry the landscapers buys gasoline from Bill’s Stop & Go because he has the cheapest gasoline, and spends more than $600,  Larry will have to issue Bill’s Stop & Go a 1099.  When Joe the plumber purchases more than $600 at Home Depot or Lowe’s he will have to issue them a 1099.

    Every business, including sole proprietors and consultants, are subject to this new law.  No longer will it be enough to have the name of the corporation, it’s Employer Identification Number (EIN) and receipts for purchases from them to write off as a business expense.  You will now be required to issue them a 1099 and submit that information to the IRS.

    For example, a small business owner of an autobody shop or supply store that purchases thousands of items, in a given year, from hundreds of different vendors, will have to issue every vendor, where he spent more than $600,  a 1099.  This will require a business to spend additional resources and  money on 1099 compliance.

    The reasoning behind this, is that it will allow the IRS to track all income, to every individual or business where more than $600 was spent in a given year by any one business owner.  This little requirement buried in the Health Care Bill places a major burden on all companies across the country.  Now managers and owners, rather than spending their time running and growing their business to create jobs, will have to spend their resoucres to deal with this additional, burdensome, tax reporting requirements.

    Neil deMausein in his article Health care law’s massive hidden tax change, reports on this little hidden gem from the Health Care Bill.

    Section 9006 of the health care bill–just a few lines buried in the 2,409 page document–mandates that beginning in 2012 all companies will have to issue 1099 tax forms not just to contract workers but to any individual or corporation from which they buy more than $600 in goods or services in a tax year.

    Nancy Pelosi was right when she said they had to pass the bill to see what is in it….a massive new tax filing requirement for all businesses.