Investing Blog

This is the most insane thought ever. We need to begin the repeal now!! You can really tell that lawmakers are not business people. I think they should have to produce a 1099 for everyone they write a check to or get a check from

THIS IS SO UNBELIEVABLE SO ASININE THAT IT CANNOT WITHSTAND OUR DEMAND THAT IT E REPEALED

Hey Pat,you are right-none of those bureaucrats ever worked in the private sector-Obama is scraping the bottom of the barrel to pay for his insane policies

AS they say-You can’t fix stupid.

Where do I go to petition to have this ridiculous increase in government cost and paperwork repealed?

Hold on everyone. This is really much easier than it sounds. If you use Quickbooks, it will generate your 1099′s for you. Here’s a link to show you just how easy it is: http://knovaadmin.intuit.com/IPH/Core/QB2K7/payextras_n/1099_n/task_1099_setting_up.html

Initially, I was shocked too – but then I remembered my Quickbooks has this taken care of. I’m sure some of the other small business accounting programs do the same thing. To make this even easier – if you don’t have your tax id number on your invoices yet – put it on. If you are using you SSN as your tax id number – get a tax id number instead. Here’s a link for that: http://www.irs.gov/businesses/small/article/0,,id=102767,00.html

Kelly, what makes me think you’re entirely missing the point?

Maybe we should get the Environmentalist Groups to save the trees!
The paperwork will be horrendous, and don’t think the accountants are not going to have their prices go UP as their costs increase. So will mine as I have to spend the time to gather up and send out all this info. This is government control at its worst and only the beginning….WE HAD ALL BETTER WAKE UP! It’s time to replace EVERYONE who voted for this. Id like to know what it was doing in the HEALTHCARE bill. Of course they never read it. Transparency in Government? Hah!

@Kelly

Kelly, you are kidding right? We’re discussing the government’s requirement for us to generate an onerous, ridiculous mountain of useless and unmanageable paperwork, and your first thought is it isn’t so bad since QB can gin out the forms? I think we are referring to a broader, more troubling issue.

Sure, all of this might make sense if you have QB AND you know the TIN/SSN (federal tax id or ssn) of the individual or business from which you make purchases. Oh yeah, read further in the legislation and you will see that you are in violation of the law if you pay the vendor and do NOT have his TIN or SSN. Look at it this way, it is against the law to pay your teen babysitter if he/she does not give you their SSN … provided you pay over $600 per year to the babysitter.

What are most impressive about the comments offered by this BLOG re this tax law change are its omissions. 1) Regulations regarding the specifics of application and enforcement have yet to be defined. The IRS is requesting public comments on how to minimize the burdens. (http://www.irs.gov/newsroom/article/0,,id=225029,00.html) 2) Per the IRS, itself, “Under a proposed regulation, many business purchases made with credit or debit cards would be exempt from the new reporting requirement because they are already reported by banks and other payment processors.” 3) If #2 is in fact implemented, reporting burdens will likely be far less than suggested, as a great number of small businesses make their purchases with credit and debit cards. It seems likely to me that those that don’t now, will want to use this simple solution. 4) Readers please note that this BLOG failed to give you any concrete points of reference regarding the implementation of the regulation. It didn’t identify the specific law or sections thereof that would have allowed you to investigate. It didn’t suggest checking out the IRS website and press release providing basic reference information. It didn’t mention that you have the chance to comment, directly to the IRS, regarding implementation. (Instead of whimpering, contact the IRS and speak up for your ideas. Do it now.) It didn’t even suggest you contact a legislator or tax professional for additional information. 5) In my opinion, such “reportage” amounts to willful misinformation (i.e., misrepresentation) and may simply be considered propaganda.6)Propaganda parading as reportage is bad for the health of our country. This BLOB could and should be rendering its readers a true service. That it chose not to speaks volumes.

@Kelly this is total bull shit.

how can we the small business owners appeal and repeal this???????????????????????????????????????????????????????????????????

this is NOT REFORM MR OBAMA – YOU SIGNED A SHITY ASS BAD CORRUPT BILL AND YOU KNOW IT.

gsmichaels – Thanks for the facts. I’m working on some 1099 year end close for several mid-cap companies and would love any other concrete evidence that can be offered on the changing use of the 1099 form in 2012. The IRS website seems to be a good source. Any other ideas, sources, website? Thanks again.

I have a question. I own a small piano retail shop. We use a delivery truck to obviously deliver pianos to my clients. We purchase about $5000 in gasoline a year to fuel my truck. My question is: After Jan. 1, 2011 if I purchase more than $600 within a year from any one gas station would I have to submit a 1099 form to the IRS and to each individual gas station?

it is a crying shame how our fuck up government has treated the small business man for the pass 50 years. We work a 100 hours a week just to try and have something just like everybody else in this country. I have to say it but the government can take my 1099′s and stick them right up there fucking Communist ass. These bastards are above the law down in Washington. I will take all my assets a turn them into cash so they cannot steel it . So fuck all of you crooked money monger bastards in Washington.

Take a look at the wetbacks in this country they don’t pay any fucking tax’s so fuck all of you

Ahhh the Anger is buidling – We are ripe for a revolution!

I can’t wait. I want to see Washington burn down, we have to throw the bums out and that means Republicans and Democrats.

If your curious, the 1099 form has already be posted to the IRS website having only minor form changes added and/or removed . The provision for 1099ing all purchase orders over $600 is just that, a provision. This same provision was in the 2010 GreenBook & the 2011 GreenBook. Many tax professionals that I know state that they think many of these, especially the new purchase order provision will never pass.

Rather than bitching about the potential tax change, you can actively comment against it on the IRS website. (http://www.irs.gov/newsroom/article/0,,id=225029,00.html) This is where your comments will make the most difference. I agree that this bill is ridiculous, which is why I’ve already posted my opinions.

I also think that Mr. Jerry should be charges a racist and idiot tax as well, but unfortunately that provision wasn’t added to the Green Book this year.

Tell the IRS your thoughts, make a difference.

You wrote: “…business transactions of *over* $600″ and “You could purchase from your usual supplier for $700, and you wouldn’t face any additional paperwork since you buy from them already. Or you could purchase from a new vendor for $690. Hmm, $10 to save yourself an accounting headache seems like a good deal.”

Didn’t you mean to write $601 and $591?

M.K.: No, he could have used any number. I had a similar reaction but then read what he wrote more carefully. Here is the scenario he was referring to: You are in the market for something that will exceed $600 and get quotes from several places, some of whom you already do over $600 a year in business with and some of whom you don’t. Let’s say that the quotes range from $1000 to $1100. However, let’s also say that the lowest quote from a company that you already do $600 worth of business with is $1040. The question you will have to ask yourself is whether saving $40 is worth it given that you will now have one more company that you have to get the TAX ID from, track separately for the rest of the year, and send an additional form to. This will act as a disincentive to people doing business with small or new (to them) companies.

It will have the opposite affect, in fact. Consider that I want to by a an item in January. I find it for $50 at a store I already do business with (at any level) and for $45 at a store I don’t do business with. If I save the 10% and buy from a new store, I have locked myself into having to track all future purchases against that store for the rest of the year to be sure that I don’t exceed the $600. I already am gonig to ahve to do that with the other store, so I am likely to spend the extra $5 in order to keep the total number of businesses that I have to track transactions with to a minimum. That does two things, it encourages me to concentrate my purchases with as few large suppliers as possible and also results in my costs being artificially inflated to make that happen (above and beyond the cost of the actual additional tracking and paperwork). Thus small suppliers have a harder time attracting business, large suppliers can charge more for their goods and services, and my customers get to pick up the bill.

As for QB and other programs being able to generate the 1099′s, that’s only part of the story. Being able to print the form is trivial. The extra time is in collecting the mountain of information needed for those programs to do the work. And it is far from obvious what that information needs to be. For instance, you fuel the company trucks at Bob’s Gas Station and at Mary’s Gas Station. At the end of the year you find that you spent $400 at Bob’s and $300 at Mary’s. Do you need to fill out a 1099? What if both Bob and Mary are Sinclair stations? Do you need to combine them and send a 1099 to Sinclair? What if they are both Sinclair stations, but one of them is an indepentendly owned franchise?

The IRS’s notion of not makiing me track purchases that I make with a credit or debit card isn’t going to work, either. The credit card companies would be required to report on accounts that exceeded $20,000/yr or 200 transactions per year. So what about a company that doesn’t reach that threshold? Gee, now they are responsible for doing the 1099s. But since they aren’t going to know whether they are or aren’t going to meet the threshold, they are still stuck with doing all of the tracking in case they don’t.

And this will be a nightmare for QB and the other programs as well. For instance, let’s say that I make two purchases from a given company during the year. I purchase $500 by credit card and I also purchase $400 by EFT or some other non-credit card means. Let’s say that my total credit card purchases for the year exceed the $20,000 threshold. What 1099′s will get produced? Will the credit card company report the $500 on one 1099 (even though it didn’t exceed the threshold) and I have to report the $400 on another? Or do I have to report the entire $900. The only way that makes the slightest sense is that I will have to report the total amounts for any companies for whom my credit card purchases (on a given card) do not meet the $600 threshold. Otherwise, the credit card company will have to prepare a 1099 for every single merchant I do business with, even if I only make a single purchase for $1.25 from a vending machine at the mall because they have no way of knowing whether I did $599 or more with them elsewhere thus making that $1.25 reportable.

It gets even more fun because the business that the credit card company sees as the vendor on a given transaction may not be the same business that I see. So I might buy $400 from Bob’s Habidashery but the credit card company sees it as B&M Holdings. I might also buy $500 from Mary’s Footwear Emporeum, but the credit card company also sees this as B&M Holdings. Now, let’s say that I also buy $300 from Bob’s Habidashery by check and $500 from Mary’s Footwear Emporeum by check. So, thinking that the credit card company isn’t going to gen a 1099 for either business, I prepare a 1099 for $700 to Bob’s Habidashery and a 1099 for $1000 to Mary’s Footwear Emporeum while, at the same time, the credit card company gens a 1099 for $900 to B&M Holdings. How is QB or any other program going to have a chance of dealing with this nightmare?

@jerry
The illegals have it made & they get away with it. We turn a blind eye& the taxpayers pay for it.

Dad works for cash gardening construction etc. mom collects welfare for her 5-6 kids & all the other freeebies. It is happening her & it makes me sick.

Illegals from arizona are moving here right on my street. 3 truck loads of furniture with Arizona Plates.

Does anyone know if you pay with a debit or credit card do you have to send 1099 to the credit card co or 1099 each vendor on the cc bill???

Even low end accounting packages like Peachtree should handle this with absolute ease. Just have to check the 1099 box and it is all automatic. I don’t see it as being more work. More paper and a few more stamps once a year but more work no. The computer does it automatically. Should help with getting the buyers to put in the right data for the vendor records, too.

Re how is QB or any other program going to do this. Simple when you rectify your credit card bill you break things out. You might be amazed at how many errors credit card companies make.

YOU are the business
YOU will have to fill out the form EVERY TIME YOU BUY A CAR A TV SET BEDROOM FURNITURE: eveything over $600.
the goal is to monitor ALL FINANCIAL TRANSACTIONS.
government has no legal /constitutional authority to do this.

@Bill Couture
How can you say it will not be any more work, that the computer does it all. Have you thought about chasing down all your vendors to complete W-9 forms to get their ID #’s. Then the time to input them in your program. Oh, and how about all the notices you will receive from the IRS for people who give you wrong numbers. Then send out the B-forms to get the proper numbers (I get enough of these already). And what happened to going green…all the more paper being generated. This is the government’s way of insuring the post office stays in business. It’s more than just a few more stamps.

Lisa Barry, you are absolutely correct sans the info we might receive about the new W-9 (it may already exist, I just don’t know). The large companies will most likely post on their web sites, but it’s still a pain to retrieve; your point about chasing down the small ones is still valid.

@Kelly
you still have to program Quickbooks with all the vendors’ information. The problem will be getting that information from the vendor. Most do not publish their TIN on their invoices.

the tax code at 2.5 million pages represents 5000 reams of paper. Ooops sorry, since the paperwork reduction act it equates to 2500 pages. They now make copies on the front AND back.

Also, do you think that the credit card companies are exempt because the IRS already knows everything they are doing anyway because they own them.

If a company is buying minerals, do they have to file a 1099-MISC? Is the new law effective for 2011 activity or 2010 activity?

Does this refer only to purchases made from businesses, or ANY time you spend $600 or more? Say I give my Mom $600, do I have to make out a 1099 for that? What if I buy a puppy for $1000… does that require a 1099 as well?! UGH!!

It seems as though this is simply a way for the government to pry into our private affairs and find out where virtually every penny of our money goes!

@Bill Couture
Are you insane? It’s not more work for you to create additional 1099s? it’s not more work to obtain the w-9 forms? it’s not more work to verify that you or your staff have entered everything correctly in the accounting system? it’s not more work or more cost to obtain the 1099 forms? I do this for a living…trust me this is the governments overreaching arm that will do nothing but end up costing all consumers more $$ in the end.

Two issues: 1) sole proprietors generally use their SS# and operate out of their home. If they print that info on their invoices, can you say identity theft? 2)small businesses will need to complete a vendor profile for everyone BEFORE making a purchase. Large companies have depts to handle approval of vendors and payments. A small business owner is going to stop by local store or order online without thought about getting information at POS, but they are required NOT to pay for purchases if information is not obtained & a $50/missing 1099. Imagine the backtracking time to be done in Dec to comply & increased bookkeeper/CPA fees to fill out 1099s.

This is not insane. It is all about forcing businesses into using credit cards instead of cash. Eventually it will be about getting rid of cash completely.

WHY???
Because the banks loan you “fairy Dust” every time you use a credit card. They receive wages representing labor in return when you pay it off. 100% ROI minus operating costs! These two articles explain it.

http://www.webofdebt.com/articles/dollar-deception.php
http://www.marketskeptics.com/2009/03/us-banks-operate-without-reserve.html

The Central Bankers really want to get rid of cash because cash is what runs the untaxed underground economy. Since the bankers get most of our tax dollars in the form of interest on the Federal and state debts, the banks have a vested interest in killing cash transactions and grabbing every cent of tax dollar they can.

Also selling the information on what you buy is now BIG BUSINESS.

Another reason to make everyone use credit and debit cards is it is much easier to spy on people.

I am going to do as many 1099′s as I can in 2012. This will not only help swamp the IRS, it will help swamp places like Walmart and Office Depot and Loew’s Home improvement.

I suggest everyone else do the same. OH and send a copy to your Federal REPRESENTATIVES TOO!

By essentially forcing everyone to use credit cards to avoid 1099 hassles, the banks get a windfall of between 2.5% and 6% of every single business transaction in the US. Call it, say, 3% of GDP or $400 billion annually right into the pockets of the banks. Gee, I wonder who is behind this legislation?

Not more work? Are you kidding? We have hundreds of vendors, if not a thousand. Before a 1099 can be generated by QuickBooks, the tax ID numbers/SS numbers have to be obtained. How long does it take YOU to prepare a thousand W9s, many of which you will not get back without a fight? Then each and every vendor must be updated and their G/L account number tracked properly. I don’t know about you, but mailing out a thousand W9s, updating each vendor, printing a thousand 1099s and stuffing them into envelopes is going to take more than a few minutes, not to mention the additional postage cost. Wake up, people.

The 28% withholding apply’s when the supplier refuses to provide a w-9.

NOTICE: This is ALREADY in effect for landlords! It started Jan 1, 2011.

Something no one is mentioning is the FINES for failure to comply. As I understand it, they would be $250 per 1099, and $100 for failing to give my vendor a 1099, for a possible total of up to $350 per 1099. The gov’t is estimating a LARGE windfall just in these fees. Also, we, the businesses, are held responsible for verifying the exact name/TIN match.
Also, to the QB discussion; QB does NOT differentiate from payments by EFT/Check/Cash vs debit/credit cards in it’s 1099 reporting. Thus, it will NOT automatically spit out the forms. Also, the 1099 is a form which is not downloadable, but MUST be filled out on the Govt printed form (you can order free on IRS website) or approved equal which you can PURCHASE.
A nightmare for small businesses.

KELLY, not only are you missing the point, your points are wrong. This is not going to be easy. If you purchase from costco and use your credit card and then you purchase again with a different card, or a check or cash you have to find a way to compile all those payments into one 1099. Also, you cannot just use your tax id number instead of your ssn. If you are a sole proprietor/individual or LLC Disregarded, it doesn’t matter if you have a tax id number you MUST use your SSN. The ssn is used for those business type to file taxes. Your 1099 must have the correct name and ssn number. If they do not match you get a nasty IRS letter and possibly a fine. Not so easy. Not so safe for the Sole Proprietor/LLC-d/ or individual who has to provide their ssn to possibly hundreds of people. All the Sole proprietors/LLC-d and individuals will ahve to become a CORPORATION so they can use the other Tax ID number… because for the the SSN IS THE TAX ID NUMBER. The only entity that can use a tax id number other than their ssn are Corporations (s or c), LLC-partnerships, and LLC-taxed like a corporation (s or c)

How does bank track these details and provide 1099-MISC Extract for its customer from the customer point of view as well as Bank point of view

This has now been partially implemented at the state level in Louisiana.

http://noblenomads.com/2011/10/20/a-terrifying-precedent

@LORI
I have been preparing personal and business income tax returns for many years. I run my tax prep business as a sole proprietorship. You CAN have a TaxID number for a sole proprietorship just like you would a Corporation or LLC. You can obtain a Tax ID number from the IRS for any type of business. I have my own Tax ID for my sole proprietorship to avoid my SSN being out there and exposed to identity theft. I also have a preparer tax id number aka PTIN so my SSN does not show on the tax returns I prepare so my clients do not get it. Do some research on the business EIN (tax ID #’s)!

Wow, really! And as we open up a new tax season, for most of us, we are heading into more and more fear of oppression. I would like to see our disassembled gov’t actually try to track all these 1099′s. I can already smell all the confusion. And, so what about people being audited? I mean, the tax code, business owners keep receipts like insulin, and this keeps things fair. You know what, let’s fix all the fraud of the social welfare programs. Why go after the working people, why? I worked in social welfare after being self employed, wow, what an f*uped mess with a bunch of selfish idiots running everything and or ice-skating job fed pay. So, your either a fed. employee or on welfare, I am pretty sure this is about when USSR collapsed. I went back to being an entrepreneur and struggle with all this stuff everyday. You want to balance out federal projects and belly programs and agencies.

Stop all the welfare fraud, woman shouldn’t be giving birth only for a continued paycheck, I was paying out 2-10yr. old kids with adhd (bullsh*t, healthy kids) left and right 100 thousand or more $ in back pay all day long.

You want to control drug problems, drug test randomly welfare and ssi and ss recipients and penalize them for life if so (of course aside from their medicine), stop doctors and clinics and counseling agencies and nursing home and home health leg companies from bilking our funds of bilions and billions of dollars every year, stop illegal immigration and tax seasonal workers at a higher rate and make sure their documented, stop attacking the small business people and all this non-sense why would a company want to stay in the us?

Stop giving top notch care to welfare ricipents give veterans this care and make the ssi and ss recipients use the va clinics system instead and treat our veterans with respect, yet retrieve the right for those of medical necessity, create a grocery store for people on food stamps (wic) to only shop there and only offer nutritous foods, make people on these food stamp programs pack their kids lunches instead of getting free lunches from our broke school systems.

It is the first of the month here, I go to grocery store to get food for my family on a small budget and by the end of month we have no food, yet you know who welfare recipient is pulling two or more grocery carts full of food and throw it out the window-yes, you fucking lobbysit this go’s to you too for corp greed and it will all come back soon as people wil realize this and not buy into it.

Hey, those are just a few ideas, yes, ideas they are and or if they are right or not, or politically and totally left-winged or right-winged is not a mention. The point is, there is soooo many ways to create a more healthy and balanced gov’t then go after the small business people who are the ones that keep our country afloat.

If any of you people read this and disagree or think its all wrong what I wrote this you probably have not much of a real understanding of what is actually going on in our country. Hey, most posts above reflected in the same ways as my comments and feelings as they know-so if you don’t, wake up!