Changing Role for 1099 MISC Tax Form
The 1099 MISC tax form has been a staple filing for most businesses. Starting in 2012, it will become an utter headache as it will be redesigned to have a changing role.
The 1099 MISC form is a form used to track non-wage payments from one party to another. If I hire you to redesign this website and pay you more than $600, I will issue you one of these forms. A copy is sent to the IRS. It allows the IRS to track the payments being reported and then compare them to what you report. If the numbers are skewed, you get audited.
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The 1099 MISC has traditionally been used for a small scope of payments. For instance, I have to report payments if you are an independent contractor, but not if your business is a corporation. Well, this is all about to change for the worse.
The government is dead broke. It is as simple as that. The deficit is reported at roughly 13 trillion dollars, but we face nearly 100 trillion in unfunded liabilities when taking into account Medicare and Social Security. Given this, your politicians have been looking around for tax revenues. One horse they've been whipping is the "tax gap." This is the amount of money paid in each year versus the amount that should be paid in.
The IRS reports the annual tax gap is in the $300 billion dollar range. Our beloved politicians want that money so they can spend, spend, spend. As part of the Obama healthcare overhaul, they inserted a clause radically changing the 1099-MISC form. Starting in 2012, you'll have to report any and all transactions that totaled more than $600 for the fiscal year.
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Let's think about this for a minute. Let's say you go out to Staples and buy a new laptop for your small business. You will have to issue a 1099 MISC to Staples, which means you'll need to ask them for their social security number. You'll also have to issue the form to your telephone company since you'll have more than $600 in payments over the year. The same goes for your landlord, your health insurance, your accountant and so on. It is going to be a huge burden and mess.
The massive deficits have given a lot of people pause about the future of our governmental system. Instead of harassing taxpayers with tax increases and a god awful mess of new tax forms, might I suggest something? How about cutting spending?!