I ran across an article today written by Bonnie Lee in Entrepreneur Magazine that will be of interest to all industrial and manufacturing firms. It explains the proposed changes to the tax code which will take effect soon. Starting in 2010, your industrial firm will be required to prepare a 1099 form for any products or services which are over six hundred dollars. As of now, it is only services over six hundred, so the change is to add products.
Also, starting in 2011, credit card companies will be reporting transactions which total over twenty thousand dollars and over two hundred transactions submitted to them by a business. They will do this on a new form 1099-K.
Now, if you’re thinking that you’ll have to prepare a 1099 for your purchases at the local Staples, do not worry, as long as you pay by credit card, in which the credit card companies will do it for you. Only cash or check. But any way you look at it, it’s going to increase the amount of paper in your office and, for small businesses, an upgrade in their accounting software.
Believe it or not, this is all part of the Affordable Health Care Act even though it doesn’t pertain to health at all. What it does pertain to is money, as in the government needs your money to pay for the bill.
To read the full text of the bill, you can review it here.
Look for SEC. 9006. EXPANSION OF INFORMATION REPORTING RE QUIREMENTS.
A) IN GENERAL. Section 6041 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsections: 2000 (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. 2001