News

May 12, 2010 NHRMA Mutual, MPIC News and Updates

Additional 1099 Requirements as of January 1, 2012

Section 9006 of the recent Health Care Bill amended Section 6041 of the Internal Revenue Code by mandating that beginning as of January 1, 2012, all companies, except an organization exempt from tax under Section 501(a) of the Internal Revenue Code, must issue 1099 tax forms not just to contract workers but to any individual or corporation from which they buy more than $600 in goods or services in a tax year. This means that you must issue more 1099s than you have in the past and that you must, in order to issue those 1099s, obtain the names and taxpayer identification numbers for every payee and vendor that you do business with because you may spend more than $600 with that payee or vendor in a tax year. 

The IRS believes that the Federal Government loses more than $300 billion annually in tax revenue on unreported income and that increasing the usage of 1099s is one way to reduce unreported income. However, legislation to repeal the new 1099 requirements has been introduced. 

The IRS is expected to release regulations providing more directive on usage of the 1099s sometime in 2011