Remember the good old days when companies only had to issue Form 1099’s to non-corporate companies that they paid over $600 in a calender year for services. A recently enacted healthcare law imposes new Form 1099 reporting requirements that are going to cause havoc to all businesses – small and large.
Expect not only a huge paperwork burden but also additional costs associated with the new rules that apply to payments made after January 1, 2012.
Imagine, virtually everyone you pay over $600 to is required to receive a Form 1099. This includes all vendors that you purchase merchandise from to the corner gas station that you go to fuel up your delivery truck at.
If your business doesn’t receive the vendor’s (and others) taxpayer identification number you may be required to set up backup federal income tax withholding at a rate of 28 percent on all payments.
What if you don’t issue a proper Form 1099? The IRS can assess a $50 penalty for each Form 1099 you do not file. Also, the penalty for an intentional failure to file can be $100 or more.
So, what does this have to do with the healthcare law. Nothing as far as I can see, just Congress putting more strains on small business.