Under Section 6041 of the Internal Revenue Code, as amended by the Section 9006 of the Patient Protection and Affordable Care Act, persons in business will have to issue Forms 1099 to anyone from whom they buy goods totaling more than $600 during any calendar year, starting January 1, 2012. This means that if you are in business and buy a computer from Apple, you will have to issue Apple a Form 1099. There are onerous penalties for failure to comply with the Form 1099 requirements.
The IRS has proposed regulations which will exempt credit card purchases from these new rules. (From the IRS: “Under a proposed regulation, many business purchases made with credit or debit cards would be exempt from the new reporting requirement because they are already reported by banks and other payment processors.”). However, these regulations are still proposed. Today, House Small Business Committee ranking member Sam Graves (R-Mo.) had this to say, as reported at thehill.com:
“Entrepreneurs are unable to plan for the future, expand their operations or hire new employees for fear that this mandate could force them to dramatically change the way they do business,” Graves said. “I respectfully reiterate my request that Commissioner Shulman and the IRS provide our small business owners with some much needed clarity on the scope of this rule.”
Let us hope when Congress returns that they repeal or substantially modify these new Form 1099 rules.