New Law Increases Form 1099 Reporting

While no one was paying attention, Congress quietly expanded the business information reporting requirements and slipped it into the Health Care Reform Act passed in March 2010.  The new law will impact millions of businesses.

Under the old law, businesses were required to issue 1099s in limited circumstances, primarily to non corporate taxpayers for services received. Under the new law, effective for payments beginning in 2012, businesses that pay amounts greater than $600 during the year to both corporate and non corporate taxpayers, for either services or product purchases, will be required to file a Form 1099, Information Report to each taxpayer and with the IRS.

Businesses will need to collect all the necessary reporting information including taxpayer identification number, name and address from each vendor paid over $600 in aggregate during the calendar year.  This will be a huge burden on small business.