Another “benefit” of the new health care bill is yet another IRS mandate. This one is a doozy.
When a business pays an outside consultant or contractor more than $600 in a given year, that business is required to issue a 1099 form reporting the payment to the consultant or contractor and file a copy with the IRS. That’s under the old rules.
Under the new rules a business has to file a 1099 for any other business with which it does $600 worth of business.
I asked the accountant at the small business where I work how many 1099’s he files a year under the current rule. His answer was about twenty. Then I explained the new rule to him. His comment was colorful, but both anatomically impossible and regrettably not suitable for reprinting here. He estimated our company would be on the hook to file over two hundred additional 1099’s with at least a man-day’s effort required.
I think he underestimated. If I understand the rule correctly, he’s going to have to review every travel reimbursement form, segregate costs by hotel chain, airline, rental car company, and restaurant, totaling them up and sending 1099’s to any of those companies with whom we do more than $600 in business.
I can’t imagine the IRS will recover more money than we will spend in compliance. But then, this isn’t really about the money. It’s about control – making sure the government has a complete dossier on anyone it chooses to scrutinize. Hat Tip: Neal Boortz.