You're a business. If you make a payment to someone in the course of conducting your trade or business you are supposed to report that payment to the IRS on a 1099 form, with a copy to the person or business to whom you made the payment. The old law was that you didn't have to report payments to a corporation or payments for such things as merchandise, utilities, shipping or other similar transactions.
Now things are different thanks to a little addition from the Senate Finance Committe into the new Healthcare Bill. Starting in 2012 you'll have to file a 1099 with the IRS for any business, person or entity to whom you make payments in excess of $600 during any taxable year. This, of course, would include anyone you hire to do some minor labor during the year ... but would also include any corporation, no matter how big, to whom you make payments in excess of $600.
The average small business prepares less than 1099 forms a year under the current law. Estimates are that these same businesses will have to prepare more than 100 under the new Healthcare. What's more .. the demand for accuracy, and the punishment for incorrect filings will probably send many of these smaller businesses out there to hire accounting professionals. Just what we need; more tax compliance costs.
There is a move afoot to repeal this hideous 1099 mandate. Rep. Dan Lungren, a Republican from California, has
introduced legislation that would repeal the new 1099 requirements.
For those of you who want more details on this.
This is a good summary of the changes we are facing.
