(snip)"Beginning in 2012, under a little discussed mandate of the health care reform legislation, businesses will be required to report all payments in excess of $600 for services or merchandise to the Internal Revenue Service on a Form 1099.
“Under the new law, businesses will be required to send a 1099 to other businesses for virtually all purchases,” said Chris Hesse, director of taxation at CPA firm LeMaster DanielsPLLC in Washington state, as quoted by Chris Edwards in a Cato Institute blog.
“And for the first time, 1099s are to be sent to corporations,” Hesse said. “This is a huge new imposition on American business, costing the private economy much more than any additional tax that the IRS might collect as a result.”
The health care bill mandate aims to collect lost revenue from companies that under-report on their tax returns. The provision is expected to raise $17 billion over 10 years."(snip)
(snip)"In order to file the required 1099, a business would have to get a Taxpayer Information Number (TIN) from the vendor. Under current tax law, one copy of the form is sent to the IRS, and another copy is sent to the person to whom the business made the payments.
The reporting requirement will affect business in two ways, according to The Boston Globe. First, most of a business’s revenue now will be reported to the IRS by the businesses that paid it, so understating large amounts of revenue will be more difficult. Secondly, it will force businesses to identify the recipients of their business expense payments.
“There is no doubt this will be an administrative nightmare for many businesses in the first year or two,” Jamie Downey, partner at Downey & Co. said in The Boston Globe. “Have a large business-related meal at a restaurant, this will need to be reported on a 1099. Spend a week in a hotel in Waco, Texas; you will need to send a 1099.”(snip)
(snip)"According to Lungren, the IRS is awaiting instruction from the U.S. Department of Health and Human Services on how to enforce the reporting requirement, according to The Hill's "On the Money."
"[The IRS] told us that HHS is the one that is given the requirement to interpret this entire law," Lungren said. "That was an extraordinary response as far as I was concerned...I have never known HHS in the past to be responsible for interpreting tax law.""(snip)
if allowed to proceed without changes, this provision of the national health care law will require independent contractor dancers to separately account for, and separately issue 1099's to ... clubs for house fees paid - DJ's, bouncers, house moms etc. for tipouts paid - hotel chains for 'road trip' expenses etc. ... if the dancer wishes to deduct these business expenses from her taxable income.



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