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Richard Martin
12-08-2010, 08:50 AM
I know everybody has been praying and hopeing that the new 1099 rules would be repealed but it's looking more and more unlikely every day. In case you haven't been paying attention...

Starting in January 2012 any and all businesses that conduct more than $600 a year with another business will be required to 1099 that business. If I buy $1200 a year worth of gas from Shell then I'll be required to 1099 Shell in order to use that gas expense as a deduction.

Here's the latest on attempts to repeal the new rules...

ObamaCare requires that businesses and self-employed individuals submit 1099 forms to the IRS for all business purchases of $600 or more. The stated purpose for this is to close the 'tax gap' which is the difference between the amount of what is "owed" and what is paid, due to lack of reporting and under-reporting, and is estimated at $300 billion dollars a year. Last week, the Senate failed to repeal the ObamaCare 1099 rule because they could not agree on how to make up the "lost" revenue that would be generated from strict reporting, which they estimated to be $19 billion over 10 years, which is a GROSS underestimate.


A document from the Senate Committee on Finance in 2009 states that the intention is to close the tax gap (estimated at $345 billion here). If the IRS is 100% successful, they will collect $345 billion a year in extra tax money.

The key issues are under-reporting and non-reporting, so the government's remedy is to require voluminous detailed record keeping and reporting by businesses and private contractors. They want to monitor how much each business brings in and how much they spend, almost down to the penny (or $600 anyway).

According to the Senate document, the IRS targets businesses with assets under $10 million for the 1099-MISC forms, as they found that only 8% of them file the forms. The IRS expects the so-called "voluntary" income reporting rate to jump from the current 46% to 95%. This means that the IRS aims to collect $345 billion a year by requiring mountains of detailed paperwork from businesses and independent freelancers. Individual filers are also targeted by the IRS. Traditionally, the IRS 1099-MISC form has been used primarily to report independent contractor income (a service), but it now includes the sales of goods totaling $600 or more in course of business.

The purchaser or buyer is responsible for issuing 1099 forms for all business transactions. However, this rule applies only to business exchanges, so individuals will be spared from collecting 1099 forms from grocery stores, for example, if the purchases are for personal use and outside of business.

The new measure is reported to have been waiting in the wings for the right opportunity and now that it is law, and with so much money on the line, it will be almost impossible to repeal. Even if it was repealed, the Housing Recovery Act, a companion to ObamaCare tax laws, goes into effect January 2011

And if you collect payment from your customers via a merchant account (credit card through one specific bank) or PayPal in excess of $20,000 annually then those rules are changing on January 1, 2011 or in 3 weeks. The big deal with this is the IRS will now be estimating cash payments your business receives based on the amount of money that you receive via your merchant account or PayPal.

Further, the IRS can guesstimate cash sales based on credit sales and compare those to similar businesses. If the IRS deems the cash sales as being too low, it could trigger an IRS inquiry or audit.

So if even you don't accept any cash the IRS can presume that you do and audit you.

The full text of the article can be found here...

http://www.activistpost.com/2010/12/new-rules-you-and-irs-this-january.html

JB1
12-08-2010, 08:55 AM
that will bury everybody with more paperwork.

gasracer
12-08-2010, 09:19 AM
I heard they are trying to repeal it.

djagusch
12-08-2010, 09:38 AM
A good way way for productivity to go down. Need to pay the accoutant more than hiring or giving more hrs to employees.
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Richard Martin
12-08-2010, 10:09 AM
I heard they are trying to repeal it.

Yeah. You have to read what I wrote and the rest of the article. It covers those efforts in some detail.

WorldsStrongestLandscaper
12-08-2010, 10:51 PM
And you call this the land of the free? BIG STEVE B CT STRENGTH WSL
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ed2hess
12-09-2010, 06:57 PM
that will bury everybody with more paperwork.

They will be buried with paperwork...that can't handle what they got now.

TimTim2008
01-12-2011, 09:19 AM
did this start 2011? or 2012?

zturncutter
01-12-2011, 09:34 AM
They will be buried with paperwork...that can't handle what they got now.

That is right on the money. From my end using quickbooks it will take just a few mouse clicks to generate the 1099's but there is no way they can handle their end of it.

zturncutter
01-12-2011, 09:35 AM
did this start 2011? or 2012?

As of now I believe 2012.

Richard Martin
01-12-2011, 12:31 PM
That is right on the money. From my end using quickbooks it will take just a few mouse clicks to generate the 1099's but there is no way they can handle their end of it.

It's not quite that simple. You'll have to have a social security number or a EIN from the company that you will 1099. Just to get these numbers from some companies could prove difficult especially from those companies that have something to hide or have security issues with giving this extremely sensitive information to any old Joe Blow that mows grass.

sjessen
01-12-2011, 12:53 PM
This new law may encourage more under the table business activity rather than less. People are rarely more creative than when trying to avoid taxes.

zturncutter
01-12-2011, 05:25 PM
It's not quite that simple. You'll have to have a social security number or a EIN from the company that you will 1099. Just to get these numbers from some companies could prove difficult especially from those companies that have something to hide or have security issues with giving this extremely sensitive information to any old Joe Blow that mows grass.

http://www.ehow.com/way_5969273_can-firm_s-tax-id-number_.html
In my case I could make a few phone calls and get the numbers but I am sure every ones situation is different.

zturncutter
01-12-2011, 05:28 PM
Here's the link for the W-9 form. http://www.irs.gov/pub/irs-pdf/fw9.pdf

Richard Martin
01-12-2011, 06:23 PM
http://www.ehow.com/way_5969273_can-firm_s-tax-id-number_.html
In my case I could make a few phone calls and get the numbers but I am sure every ones situation is different.

Yeah. Mine would be different. I wouldn't know who to call at Shell Oil to get that info. It's going to be a pain in the ass.

greenguy08
01-22-2011, 11:44 AM
Wasn't the health care act just repealed? This was supposed to be a way to fund it, right?

Richard Martin
01-22-2011, 12:12 PM
Wasn't the health care act just repealed? This was supposed to be a way to fund it, right?

Nope. The repeal bill passed the Republican controlled House of Representatives. Now it moves to the Democratically controlled Senate where it doesn't stand a chance of passing. If it did pass it would then have to go to President Obama and I can damn well guarantee you that he won't sign it. If the president doesn't sign it then it would then have to go back to the House and Senate where it would have to pass by a 2/3 margin to overcome the presidential veto.

The repeal bill is just a statement. They know it will never make it into law.

They stand a better chance of enacting a law that repeals the 1099 portion of the Health Care Act. Since this is a major financial component of the Health Care Act it's going to be tough to get any repeals through.

coolluv
01-22-2011, 12:16 PM
So what's the latest with this? I heard a while back that they were going to get rid of this part of the bill and both sides agreed to it. Where do we stand as of now? If you know.

Dave.

Outdoors_Unlimited
01-22-2011, 12:21 PM
Living off the grid sounds better every day. I think its time for a revolution.
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Richard Martin
01-22-2011, 12:29 PM
So what's the latest with this? I heard a while back that they were going to get rid of this part of the bill and both sides agreed to it. Where do we stand as of now? If you know.

Dave.

That was before January 4. Congress is almost completely locked up now due to partisan politics. The same thing happened back when Bill Clinton was president and it took years to get our political system to work again. President Obama is aware of this and that is why you see him at least trying to work with the Republicans now. The Democrats will have no parts of it and nothing is moving anywhere.

You probably won't see anything happen before May. The significance to May is that's when we are projected to bounce off of the debt ceiling. They'll be fighting over that for a while and then move onto other issues.

Treasury Secretary Geitner is making a mountain out of a molehill on the debt ceiling issue. It's not the end of the earth and it's happened before, ironically enough the last time it happened was under Bill Clinton.

Richard Martin
02-03-2011, 04:48 AM
Okay. Now the bill is sent back over to the House of Representatives.

http://www.politico.com/news/stories/0211/48726.html

coolluv
02-03-2011, 07:53 AM
Thank God.

Dave...

zimmatic
02-03-2011, 12:46 PM
Since the judge declared the health care law unconstitutional the law is void. I dont belive the govt has filled for a stay on the rulling. So it is void. Talk to you lawer first. IMO

Roger
02-03-2011, 06:15 PM
Since the judge declared the health care law unconstitutional the law is void. I dont belive the govt has filled for a stay on the rulling. So it is void. Talk to you lawer first. IMO

The Administration has been clear they intend to proceed with implementation, regardless of the judge's ruling. The judge said he did not issue an injunction because "it is assumed the defendant will respond accordingly to the ruling." This is not the case for the recent ruling -- ruling is just being ignored.

Having said that, the case will be elevated to the Appellate Court next. When that happens has yet to be determined. When the ruling is made at the Appellate level, it too will be appealed to the Supreme Court. There was some talk that the Administration would ask for the case to be elevated to the Supreme Court immediately, but nothing has happened on this front as far as I know.

This is all to say the Health Care Act, the legislation that contains the 1099 issue, has a long way to go before any final settlement. The recent ruling in Florida is only one small piece in the puzzle, and does not represent any finality to the 1099 question.

I think the 1099 issue will be resolved through the two Chambers and White House before the court rulings are sorted out. The fact that Pres Obama mentioned it front-center in the State of the Union, speaking in negative terms, means that he will sign a repeal of the 1099 provision. The repeal has already passed the Senate, and I think it will be repealed in the House too. A couple of CPAs I know personally agree with me -- it will be voted/signed out of the legislation.

zimmatic
02-03-2011, 06:26 PM
The Administration has been clear they intend to proceed with implementation, regardless of the judge's ruling. The judge said he did not issue an injunction because "it is assumed the defendant will respond accordingly to the ruling." This is not the case for the recent ruling -- ruling is just being ignored.

Having said that, the case will be elevated to the Appellate Court next. When that happens has yet to be determined. When the ruling is made at the Appellate level, it too will be appealed to the Supreme Court. There was some talk that the Administration would ask for the case to be elevated to the Supreme Court immediately, but nothing has happened on this front as far as I know.

This is all to say the Health Care Act, the legislation that contains the 1099 issue, has a long way to go before any final settlement. The recent ruling in Florida is only one small piece in the puzzle, and does not represent any finality to the 1099 question.

I think the 1099 issue will be resolved through the two Chambers and White House before the court rulings are sorted out. The fact that Pres Obama mentioned it front-center in the State of the Union, speaking in negative terms, means that he will sign a repeal of the 1099 provision. The repeal has already passed the Senate, and I think it will be repealed in the House too. A couple of CPAs I know personally agree with me -- it will be voted/signed out of the legislation.


when can I ignore paying my taxes and wait till it gets to the supreme court.

Richard Martin
02-03-2011, 06:29 PM
Since the judge declared the health care law unconstitutional the law is void. I dont belive the govt has filled for a stay on the rulling. So it is void. Talk to you lawer first. IMO

The judge's ruling is not vacating the law, only providing a conduit for the lawsuit to procede to the next step. This is way too important for a regular old federal judge to decide and the judge knows it. Kick it up to the Supreme Court.

JayD
03-24-2011, 11:50 PM
Nice job Richard.....

Man, I don't even know why I try anymore....I have been reading so much on here tonight that I just feel like selling everything and getting out....So depressing...:dizzy::cry::cry: