May 28, 2010
Form 1099 Change
Dear Congressman Brad Sherman:
The new national Health Care Law includes a dramatic change in the IRS Form 1099 reporting requirements, effective January 1, 2012.
Prior to the change, businesses are required to file a Form 1099 for payments, made to independent (unincorporated) contractors, of $600.00 or more during a calendar year for services rendered. In order to fulfill the reporting requirement, the recipient must provide a completed Form W9, which includes the recipient’s name, address, and taxpayer ID number (TIN).
Effective January 1, 2012 payments (of $600.00 or more in a year) made for merchandise and to corporations will also be included. Whether the business purpose purchase is for an automobile, gasoline totaling more than $600.00 from the same oil company, plumbing, or business meals bought from the same restaurant (i.e. Tony Roma’s or McDonalds) during the year, they all will have to be reported on a Form 1099.
Obtaining the recipients’ W9 information might become a lot more complicated than currently. Since the rate of sales tax varies between states, and cities, determining the actual amount of sales will become considerably more difficult. Form 1099 recipients will feel compelled to summarize the totals of all 1099s received to verify accuracy.
The cost of the substantial increase in volume and complexity of reporting on Form 1099 could more than offset any additional revenue. While the cost of compliance will be excessive for business in general, it will particularly be quite oppressive on small business.
For the foregoing reasons, the United Chambers of Commerce of the San Fernando Valley strongly calls for the complete repeal of the new Form 1099 filing requirements as stated in the Health Care legislation.
Victor N. Viereck, Co-chair
Government Affairs Committee
Platinum Investor- Providence Tarzana Medical Center
Gold Investor- Gelb Group, A Family of Companies
Silver Investor- Metropolitan Water District · The Gas Company
Bronze Investor- Aaron Thomas & Associates * Alperstein, Simon, Farkas, Gillin & Scott · The Boeing Company * The Valley Economic Alliance · San Fernando Valley Business Journal · Time Warner Cable · Warner Center Marriott · VEDC Benefactors- SFV Business & Professional Association * Hunter Communications · Southland Regional Association of Realtors * Herman Berman, Inc * Beverly Garland’s Holiday Inn * Western Commercial Bank