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Sometimes it seems that the little guy, in this case small business gets the raw end of the deal with each new policy change. This time it is hard to argue that we are not. CNNMoney reported on the latest policy change regarding the issuance of 1099s. The policy today is any worker that is paid $600 or more is issued a 1099. A worker is in person typically not apart of company (think independent consultant) that is not an employee for which withholding tax is held. The new rule slated to go in 2012, requires
that any worker or VENDOR that has been paid $600 or more in that tax year be issued a 1099.
Depending on your business this could result in a lot more administrative work. Work that many small businesses have not had to deal with in the past. I agree with the CNNMoney contributing writer Neil DeMause, that I see credit card companies offering services to help. Companies such as American Express already offer year-end summary reports, providing a report to facilitate the issuance of 1099s would not be a huge stretch.
If you are a small business owner who deals more in cash and cash equivalents, not much help. The point is said to fill a tax gap, but does it? At first glance it looks like a new revenue stream for credit card companies, again agreeing with DeMause.
Click here to read the CNNMoney article by Neil DeMause and see if you agree.
Click here to review the 1099 forms and instructions on IRS site.