Here's some news you might well need to hear -- but news which certainly won't make you feel any more pleasant towards Barack Obama, that fellow in the White House who is taking your freedom, taking your safety, taking your money, taking your kids' future -- and giving you in return nothing but headaches and heartbreaks.Read "Why the Self-Employed Might Owe OfficeMax a 1099" by Laura Sanders over here at the Wall Street Journal.
And then put your accountant on speed dial.
Small businesses and self-employed workers, look out: There is a blizzard of new tax paperwork on the horizon.
The reason? To help fund the health-care changes, lawmakers passed a provision aimed at stopping cheats responsible for a big chunk of our "tax gap," the $300 billion-plus of revenue lost to tax evasion every year.
Starting in 2012, businesses could have to file hundreds of millions of new 1099 information reports with the Internal Revenue Service. The forms will be due whenever a firm buys more than $600 a year in goods or services from a vendor, even when the vendor is a giant company like Staples...
To see how the new rules make a difference, consider this hypothetical case: Susan owns a restaurant, and last year she wrote a $2,000 check to a freelance plumber. Because the plumber was unincorporated and her payment greater than $600, she owed the IRS a 1099 report. But she didn't have to file a different report for the $1,000 she paid to a big-box store for sinks and materials. Under the new rules, Susan would now have report the sink payments. In fact, she will have to file 1099s with the IRS for each vendor who supplies goods or services totaling over $600 a year, whether the payments are for forks, food supplies, paper napkins or consulting. That will mean tracking small payments throughout the year to see if the total is greater than $600...
The potential new record-keeping "is making my accountants cross-eyed," says Pat Felder, the co-owner of Felder's Collision Parts, a regional auto-parts supplier in Baton Rouge, La., that employs 25 people. For example, several times a year Ms. Felder may throw a steak cookout for her staff after a good month, spending $300 for meat. Under the new law, she says, "We'd either have to track those purchases or buy from somebody else, just for tax reasons."
It gets worse: If the vendor won't supply his tax ID number, then the payer is supposed to stand in for the taxman by withholding 28% of the payment and sending that amount to the IRS...
