# Issuing 1099's for every purchase over $600!



## dakzaag (Jan 6, 2009)

I read an article today that states starting in 2012 a 1099 form will be required for every purchase over $600 dollars by any tax payer in the United States. 
 Can you imagine the amount of 1099’s a big box store would receive in January, if this were law today? Can you imagine how many phone calls you would have to make just to complete all the 1099's on every $600 purchase you make over the course of a year? 
Even some Democrats realize this is an exceedingly burdensome requirement on any business, let alone small business’s who have enough red tape to deal with as it is. :furious:
Part of the article states that there is currently a provision in place for many purchases over $600 that need to be reported and trigger a 1099 requirement. Personally I am amazed at the institutions and individuals I work for that do not send me a 1099. I report all income regardless of the source and documentation, but some very large entities simply pay the bill and that is the last I hear from them. :w00t:
I get a nervous twitch when a customer that I really didn’t care for calls and asks for TIN info. I always figure he is selling the information to the highest bidder on e-bay. Here is the link on Fox news.
http://www.foxbusiness.com/markets/2011/01/21/new-ugly-effect-tax-evasion/


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## Mike Finley (Apr 28, 2004)

This was part of the health bill in order to help pay for it. 9 billion dollars is what they figure they can collect as a result of this new law. The cost of compliance will be also in the billions for small businesses paying for time and accounting hours to comply with it.


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## Mr Latone (Jan 8, 2011)

INEPT


— *adj
*1. awkward, clumsy, or incompetent 
2. not suitable, appropriate, or fitting; out of place


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## Kgmz (Feb 9, 2007)

And don't forget it is a cumulative total for that $600, not a individual purchase. So lets say you buy $20 of gas every week at your neighborhood gas station for your work vehicle. That is a total of $1040 a year, so you will have to give them a 1099 at the end of the year.


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## dakzaag (Jan 6, 2009)

Mr Latone said:


> INEPT
> 
> 
> — *adj*
> ...


 
Ok... so what, I fit in just fine around here so who cares.:w00t:


I started to post in the basement, but decided I wanted it on the front page cause this isn't really politics directly, it is a business concern. Recording all transactions over $600 via 1099 is going to push a lot of businesses out or underground. 

Good excuse to contact our representation in Washington and alert them to the dangers of this situation (shouldn't matter if your liberal or conservative on this one... oh forget it, it is all political!)


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## J F (Dec 3, 2005)

It ain't gonna happen. :no:


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## aptpupil (Jun 12, 2010)

Mike Finley said:


> This was part of the health bill in order to help pay for it. 9 billion dollars is what they figure they can collect as a result of this new law. The cost of compliance will be also in the billions for small businesses paying for time and accounting hours to comply with it, but that's never a concern with this administration that is anti-business.


actually it's 19 billion over 10 years. this is because the political climate says that we have to pay for everything, even if it's the right thing to do. it's one of those b.s. add-ons that is in there to make both sides of the aisle look like they're getting something done.

my guess is it will get the axe since neither side really likes it, but it needed to be in there in order for the dems to be able to say "the health bill runs a surplus, rather than adding to the deficit."


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## angus242 (Oct 20, 2007)

Guys, this needs to stay politics-free if it's to stay in the open. Thems the rules.

If someone wants this in the basement to talk more freely about it, just request.


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## aptpupil (Jun 12, 2010)

angus242 said:


> Guys, this needs to stay politics-free if it's to stay in the open. Thems the rules.
> 
> If someone wants this in the basement to talk more freely about it, just request.


if you want to censor the politics out of it, that's totally fine by me, but i think it would be best to keep it equitable. finley has something about the obama admin being anti-business and it stays. i quoted obama's take on this every issue and it got edited out. sorry if that comes off as nit-picky, but i think i have a valid point.


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## angus242 (Oct 20, 2007)

Hey, I think it's a very important topic. However, the rules are what they are. We are free to discuss in public how it will affect our businesses. But once it starts getting into administrations and the gubment, it's gotta take the plunge into the basement. 

Perhaps a follow-up thread down there is necessary. Maybe there's one already going. I stay outta that place.

I'm doing what I can to keep this one afloat. You want it to stay? Keep the feds outta the discussion. 

ps. Finley's comment was already edited as best it could without completely deleting it.


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## Mr Latone (Jan 8, 2011)

dakzaag said:


> Ok... so what, I fit in just fine around here so who cares.:w00t:
> 
> 
> I started to post in the basement, but decided I wanted it on the front page cause this isn't really politics directly, it is a business concern. Recording all transactions over $600 via 1099 is going to push a lot of businesses out or underground.
> ...


I was referring to the legislators. And without the slightest political slant, this is clearly bad law.


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## aptpupil (Jun 12, 2010)

bottom line is i'm with JF on this. this portion of the law probably doesn't stand much of a chance. it's cumbersome and i'm hopeful it will get addressed in the next few months and we'll see something that is a little more common sense. i guess in the meantime we should all keep records as if it *will* happen and hope for the best.


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## rselectric1 (Sep 20, 2009)

aptpupil said:


> i guess in the meantime we should all keep records as if it *will* happen and hope for the best.


That is the *exact* advice my accountant gave me via a mailing to his clients. He did mention something about credit card purchases being exempt.?????

Does anyone know what that's all about? I am waiting to ask him when we file returns since he charges for every phone call.


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## thom (Nov 3, 2006)

Just wondering, do we need to 1099 the IRS? How about the Social Security Administration? How about Medicare, our states (for taxes paid) and the State employment bureaus (unemployment)? 

Who do I 1099 for speeding tickets? Parking tickets? Do I 1099 the building department? What if the inspector demands a bribe, do I 1099 him too?


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## J F (Dec 3, 2005)

:laughing:


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## aptpupil (Jun 12, 2010)

thom said:


> Just wondering, do we need to 1099 the IRS? How about the Social Security Administration? How about Medicare, our states (for taxes paid) and the State employment bureaus (unemployment)?
> 
> Who do I 1099 for speeding tickets? Parking tickets? Do I 1099 the building department? What if the inspector demands a bribe, do I 1099 him too?


good point. i paid over $800 in parking tickets to the city last year. :furious:


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## loneframer (Feb 13, 2009)

If credit card purchases are exempt, I'm golden.:clap:

I like all my purchases to show up on one statement, regardless of supplier. One check, bills are paid and I get a quarterly summary to boot.:thumbup:


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## Mike Finley (Apr 28, 2004)

I'd suggest a leniency in regard to topics like this in regard to sending them off to P&R. 

If a topic involves the IRS, taxes etc... it's governmental and political. It's fine to keep the forum on a nice polite footing, but 10,000 f'n posts about which hammer is better, or what's the best marketing for the dollar is enough. It's getting to the point that the only relevent and big boy topics other than, should I put a sign on my truck, are in P&R and the real section of the site where real contractor topics get discussed which is in the hidden hard hat area.

I'd only dumb down the rest of the place so much. If you're talking about the government it's poltitical and relevant. Let's not throw the baby out with the bath wate here. Real contractors talk about real subjects that effect them a bit more heavily then my customer wants me to line item my $300 project.

I think there's a big difference between talking about something political, or mentioning the political aspects of a subject that is 100% political but related to our businesses, and having some debate in the basement about whether Obama has a birth certificate or not.


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## Joasis (Mar 28, 2006)

Great idea Lone.....I use a debit card except for my monthly bills......so now I will ask my accountant.

On another note, the IRS does not have the manpower to scrutinize the volume of 1099's that will be generated, so look for that rule to change.


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## thom (Nov 3, 2006)

Now, where's that "What He Said" button?


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## tinner666 (Nov 3, 2004)

Mike Finley said:


> The issue is on the lumber company. The IRS wants to have an additional connection to the lumber companies income of the money you gave them. They want to eliminate hiding cash transactions and such. In short they want the lumber company to report the transaction you did with them and get taxed on the income. The 1099 would create a paper trail to the IRS that a transaction was made to the lumber company. Essentially if you bought $1000 worth of lumber, the IRS knows the lumber company took in your $1000 because of the 1099, whether the lumber company records the transaction or not, the IRS would know about it. If the lumber company wants to pull a fast one and throw out your transaction and pretend it never happened and not have their sales increase by $1000, they could get caught because of the 1099 showing the transaction.
> 
> It's all about increasing the chances of being caught and therefore increasing compliance and therefore increasing tax revenue by businesses recording more sales.


You ever look around your local lumber co., or Lowes? 1/2 or even 2/3 of their business must be cash by homeowners and hacks. If they do $200m. in 2010, only $75m. might 'qualify' for 1099's by legit businessmen. The only ones that will have issues are us contractors. Typos and omissions will sink many of them, and nothing else will change.


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## inmo (Feb 27, 2010)

Just what we need, is a nation full of 1099 snitches. 

Citizens now work more than 5 months each year just to pay all federal, state & local taxes. At what point will we stop working for ourselves? Pretty soon our main resonsibility will be towards the "state" instead of our families.

The cost of complying with government regulations is $4,680 per person - $1.4 Trillion - 14% of the economy - and there is zero budgetary control. Regulation compliance costs plus government spending consumes 58% of the economy.


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## Mike Finley (Apr 28, 2004)

robert c1 said:


> So what's the penalty to me for not giving XYZ the 1099? If you're sure they wont disallow the deduction then it must be a fine of some sort.


 
If you fail to issue the 1099s it would be no different then as now, you'd run the risk of being audited and a determination would be made based on what they found



> Penalties for not filing or late filing increase with time, ranging from $15 to $50 per form not filed or incorrectly filed. So for simply not filing them at all, the penalty is $50 per form. If you file an incorrect 1099 form, but correct it by Aug. 1, the IRS will usually forgive the penalty. On the other hand, if the IRS can show "intentional disregard" of the filing requirements or the accuracy of the information, the minimum penalty is $100 per 1099 form.


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## Mike Finley (Apr 28, 2004)

inmo said:


> Just what we need, is a nation full of 1099 snitches.
> 
> Citizens now work more than 5 months each year just to pay all federal, state & local taxes. At what point will we stop working for ourselves? Pretty soon our main resonsibility will be towards the "state" instead of our families.
> 
> The cost of complying with government regulations is $4,680 per person - $1.4 Trillion - 14% of the economy - and there is zero budgetary control. Regulation compliance costs plus government spending consumes 58% of the economy.


Do you part to support a constitutional balanced budget amendment to change things.

Senator Orin Hatch and 19 other Republicans are sponsoring a bill right now. This is almost the identical bill that Newt Gingrich almost got passed (failed by one vote) back in 1995.

The primary basis for a steady economy is to have a government that doesn't spend more than it takes in, just like you and I have to do in our own lives and our own businesses.

Maybe you know it or you don't but for next year we are going to take in 2200 billion dollars in revenue and they are planning on spending 3800 billion, or 1500 billion more than we have to spend.


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## aptpupil (Jun 12, 2010)

only problem with the balanced budget amendment is that in times like this i feel we really need the government to step up spending to help bridge the gap left by private enterprise. if the govt has to balance the budget in bad times then as personal revenue goes down tax revenues also decrease thereby decreasing the amount the govt can spend on the safety net and infrastructure projects, etc. then you have more people losing their jobs and you get a spiraling effect.
under clinton/gingrich the budget actually was in surplus for a couple years so it's clear that it can be done with the will and without the amendment. interesting debate though.


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