Are you strapped in? Oxygen mask at the ready?
Nicknamed by several writers as "The Mandate from Hell", there's a provision buried in the Patient Protection and Affordable Care Act (PPACA) that staggers the imagination. As Nancy Pelosi promised, "We'll have to pass this so you can find out what's in it."
Well, we're finding out. This requirement, simply stated, is that as of January 1, 2012, all companies will have to issue 1099 tax forms not just to contract workers but to any individual or corporation from which they buy more than $600 in goods or services in a tax year. Anything. Anywhere. Link to full CNN article....
Think of it. You'll need to collect (require) EIN's & mailing addresses from every vendor on your vendor list, including retailers, restaurants, hotels, etc. and send them a 1099. You'll need to know the difference between a franchise location (like many hotels) and a company-owned location. You'll need an EIN and a mailing address from every airline, as well as Orbitz, Travelocity, Hotwire and Priceline. Don't forget the phone company, UPS, FedX and the mechanic who works on the company vehicles.
And, worse yet, everyone you sell to will be sending you W-9 forms asking for your EIN (you might as well post a W-9 with your EIN on your website), and then they'll each be sending you a little envelope about February 1st with your 1099. The post office will be out of the red. And what in the world will you do with a wire basket full of 1099s?
I don't even know what to suggest on this one, except perhaps to write your Senator or Representative who voted for this, thanking them for their brilliant plan for flushing out tax cheats (the argument for this abomination). My concern is that it won't get the treatment it deserves -- full repeal -- but rather a morass of regulation writing exempting this and that from the requirement (which you'll need to sort out after it happens).
Good news: Rep. Daniel Lungren (R-CA) has introduced legislation to repeal this requirement, H.R. 5141, the Small Business Paperwork Mandate Elimination Act. Perhaps in your letter to your Senator or Representative, you could urge passage of that act as proposed -- a 100% repeal.
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Terry WeaverCEO
Chief Executive Boards Internationalhttp://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com
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