October 05, 2010

1099 Misc Changes

A section of the new healthcare reform legislation impacts the administrative burdens of all business, including religious and nonprofit organizations, though IRS regulations may soften the blow. As of now, beginning with payments made on January 1, 2012, if you pay any person or corporation more than $600 in a year for goods or services, you must report that to both the IRS and the entity or person whom you paid. For example, if you bought office supplies for $1,000, you would have to report that on your income tax returns and issue a 1099 to the company from which you made the purchase. Fortunately, there is now an exemption for credit card transactions, but that doesn’t apply if you paid by cash or check. (Section 9006 of the Healthcare Bill expands Section 6041 of the Internal Revenue Code.)

Note also, for those receiving credit card payments, the new Form 1099-K will be filed with the IRS by payment settlement entities, with a copy sent to the payee. The form is aimed at preventing underreporting of credit card sales by businesses. The forms will be required for credit card payments made after December 31, 2010.