1099 Time

I have had several businesses contact me regarding rumors that they have heard about a new law regarding 1099’s.

It’s no rumor, but I’m not getting too excited just yet.  Allow me to explain.

Currently, in general, a company must issue a 1099-misc to any company that provides services, that is not a corporation, that is not an employee (W-2 should be used), and the dollar amount is over $600.00.

Most common examples are accountants, lawyers, consultants – those individuals that provide your company with some type of service – no tangible goods.  Other uses are for landlords, if you pay rent, you should issue a 1099 to the landlord for the amount of rent you paid that year.  Finally, the other common use is for medical payments.  If you pay a 3rd party provider for sick pay, or if you pay a company to do drug tests on new employees etc, you should issue them 1099s.

Simple enough.  Not too complicated, not too taxing…

Enter in the proposed laws effective with the calendar year 2012.

About the only thing that remains the same is the $600 threshold.  Current lawmakers want all companies to issue Form 1099 to any individual or company for any goods or services.

What that sentence just said was that your company must issue a 1099 to every single vendor they have regardless what they purchase from that vendor, regardless if they are a corporation or not.

This is huge!

Companies will go from issuing a typical 3, 4 or 5 1099’s to a hundred or more forms!

That’s the current proposed law to take effect in 2012.  I personally feel that changes will be made and the lawmakers will realize just how much of a burden this will be on the small business owner.  I hope that they will realize that every company will have to request a W-9 form (request for taxpayer identification number) from every vendor/supplier they do business with.

AND I hope the government will realize that same company will have to issue a like W-9 form and issue one to every one of their customers!  Not to mention that these 1099 forms are printed up special for the IRS so they can’t be simply printed off your computer printer.

AND that’s assuming that your accounting software can even print them.  Many software packages won’t allow printing of 1099’s unless you subscribe to a “service” or their “maintenance plan” costing again the small business owner more money that they don’t have.

Let’s hope I’m right and changes will be made prior to the 2012 deadline.  If not, you better get ready for issuing and collecting more useless government paperwork!

Enjoy your end of year, this may be the last “easy” one!

2 comments on “1099 Time
  1. Mark Tojek says:

    There are several items that trouble me by your situation. While some sales folks are eligible to be considered 1099 independent contractors, it’s not the norm. If you work at a designated area (store), work specific hours as you are told, work in a manner described by your supervisor, you are an employee, not an IC. IC’s set their own hours, may or may not have to work at specific locations etc. I would need more particulars to know for sure, but it sounds like employment to me. The other thing that bothers me is that the company may be trying to get away with something here by not paying FICA taxes etc. A 1099 worker will not receive any employment benefits such as health insurance, so if they state you will be eligible for health insurance, you should have been considered an employee from day 1!

  2. Linda Smith says:

    I was hired on a new job 11/01/11 it is now 12/14/11 and I was supposed to be ona 30 day trial as a non employee with a 1099. Now they’ve extended it another 30 days. I’m a sales person I’ve never done this before. Is this normnal? I understnad the longer I am a NON employee the longer I will have to wait until I can receive medical insurance. Help!

Leave a Reply

Your email address will not be published.