Many businesses are familiar with the method of reporting payments to independent contractors to the IRS. Request a W-9 form from the contractor, keep track of how much you pay them, and any contractor who receives more than $600 in a year gets a 1099-MISC form from the company. Easy, right?
Now imagine you have to apply that $600/year threshold to everyone you pay, including vendors, suppliers, and service providers. Ridiculous, huh?
Unfortunately, it may become reality. According to a small section on page 737 of the new healthcare bill, companies will have to start issuing 1099 forms to any vendor who receives more than $600 a year starting in 2012. This includes goods AND services. Stop and think about how many of your vendors would be included. “Hi, Apple, this is Gina. Can I get a W-9 form from you? And OfficeMax, and Costco, and Verizon, and Best Buy…”
See, this is what happens when a bunch of lawyers sign off on something they didn’t bother to read. Damn lawyers, anyway.
One person in Congress has avoided the Kool-Aid. Republican Representative Dan Lungren from California is trying to get this provision withdrawn. Let’s keep our fingers crossed he’s successful.