Major Changes to 1099 Information Reporting Laws were included in the Healthcare Bill.
The passage of the Healthcare reform bill included some of the most drastic changes to 1099 information reporting in over a decade. The bill included revenue raising provisions meant to seek greater compliance of the tax code via 1099 information reporting. General provisions included:
- The elimination of the corporate exemption from 1099-MISC reporting. (Public Law 111-148)
- The requirement to report payments for property (goods, materials, merchandise, supplies, etc.). (Public Law 111-148)
- A six fold increase in penalties from $250,000 to 1.5 million(H.R.4213,H.R.4849)
- A doubling of penalties per record from $50 to $100. (H.R.4213,H.R.4849)
Beginning for payments made after December 31, 2011, companies will be required to furnish and file form 1099-MISC for payments made to all for-profit companies regardless of corporate status. In addition all payments for goods, materials, merchandise, supplies, and other property will need to be reported as well. Early indication reveal that these changes will likely cause the 1099 reporting volume to increase significantly for most companies as well as the associated B-Notices.
While the law applies to payments made after December 31, 2011 companies need to make broad changes to: 1) W-9 procedures to include all vendors. 2) solicit W-9’s for corporate vendors. 3) Prepare for larger 1099 year-end printing, mailing and filing. 4) Make the appropriate budgetary and system updates to accommodate these changes.
Let Accounting & Tax Solutions, Inc. help you navigate through the many regulations and nuances of the tax laws, to ensure that you receive the expert advice of a licensed tax practitioner: Contact Form