Doomsday believers tell us the end of the world will come in 2012. Given the new 1099 reporting requirements that go into effect that year, they may just be right!

The Mayans were known to have been incredibly advanced. The Mayan Clock is not only incredibly advanced, it is far more accurate than the long term clocks we use today. Their long clock comes to an end in December 2012 as you already know unless you’ve been living under a rock. Many look to the skies for some type of big change. Perhaps the Mayans were really just forecasting the future of taxes in the United States, particularly the huge burden that will come with the new 1099 reporting laws.

The 1099 form comes in many variations. Some report dividends paid to individuals while others report the interest on bank accounts. Perhaps the best known is the 1099-MISC that reports payments in excess of $600 to independent contractors. The purpose of all these returns is to provide the IRS with information on who is paying who what so that said figures can be compared with subsequently filed tax returns to see if anyone is underreporting their gains. 

The 1099-MISC is a minor pain to deal with currently, but it is about to become a much bigger burden for everyone. Why? The Affordable Care Act, which is better known as the health care reform law. What does a 1099 tax reporting form have to do with health care? Nothing directly, but the IRS has reported a consistent $300 billion or so annual gap between the tax that should be paid and the revenues it actually receives. To cure this and pay for the health care law, the new 1099 provisions require that we report any payments totaling $600 or more a year to any party including corporations. 

Let’s think this out for a second. The law basically holds that we will have to 1099 just about everyone for, well, everything. Do you ring up more than $600 in phone bills a year? Probably and you need to 1099 your phone company. Bought a new computer for your business down at Walmart? You’ll need to 1099 the company. Paid more than $600 in hosting for your website during the year? Yes, you’ll need to 1099 the hosting company. It just never really ends.

The new 1099 reporting requirements are an abomination. Think about it. You are going to spend a good chunk of every January trying to figure out who you paid more than $600 to during the previous year, getting their tax identification number and then filing the necessary forms. Hmmm…anyone think identity theft incidents will increase dramatically given all that information floating around?

It is going to be a debacle. It is enough to make you hope some asteroid lands in Washington, D.C.!