1099 Changes Are Coming
June 7, 2010
Included within the 2010 Health Care Reform Bill were substantial potential changes to the current 1099 reporting requirements. Some of the key changes are as follows:
• The corporate exception is ending and, with few exceptions, all corporations will need to be reported on Form 1099-Misc for payments made after December 31, 2011.
• Payments for property (goods) will need to be reported on the 1099-MISC if at or above the familiar $600 annual payment threshold. These changes are effective for all payments made after December 31, 2011.
• Establishment of Form 1099-K which aims targets currently hard-to-track payment stream: credit cards. Starting in 2011, financial firms that process credit or debit card payments will be required to send their clients, and the IRS, an annual form documenting the year’s transactions.
So how large of an impact will this have on small businesses? No one currently knows; however, the accumulation of payee data will be the area where companies will need to devote additional time to comply. Assuming the $600 threshold is met, all vendors will have to provide their name and taxpayer identification number, generally on Form W-9. Currently, many companies required such information and report payments made for services. The new law includes reporting for amounts paid for goods. For instance, a 1099 will be required to be issued if you purchased a computer at a local retailer. However, there appear to be benefits of the change due to the $600 “bright line” for all payments. Another key change is that financial firms that process credit or debit card transaction will now be required to provide that information on Form 1009-K. What does this mean? All payment processors, including Paypal, eBay, Amazon, etc that service individuals and very small businesses will be providing information to the IRS regarding processed transactions. The goal of the new regulations is to capture income that is unreported to the IRS. This requirement has the potential to cause significant tax issues for various individuals and small businesses who conduct ecommerce transactions without reporting the income. Could the impact be as big as recent Foreign Disclosure (UBS, etc.) rules? Only time will tell.
Please note that final regulations are still be interpreted by the IRS and will likely not appear until next year. However, we have been guiding our clients at dbbmckennon to be aware as the reporting requirements will affect substantially all businesses in the US and doing business in the US. Please contact us if you have any questions.
dbbmckennon moves its Orange County office to a new location within Newport Beach, CA
June 1, 2010
Newport Beach, CA –dbbmckennon moved its Orange County office to:
20321 SW Birch Street
Suite 200
Newport Beach, California 92660
All other contact information including phones and email will remain the same.
Our new building provides for our future growth, and enables us to incorporate the latest technologies and space efficiency to achieve cost effectiveness. For more information, contact dbbmckennon at 949-203-3010 or info@dbbmckennon.com.
dbbmckennon is a full service public accounting firm in which was established to provide tax, attestation and consulting services to individuals and businesses through our two offices located in Southern California. Our partners have represented hundreds of small businesses and audited over a hundred smaller reporting public companies in the United States and abroad. We deliver high-quality professional services, in a timely manner, and focus on providing value to our clients. Our technical skills rival those offered by our strongest competitors, which enable our clients comply with the rules and regulations of our profession. We take every engagement seriously with the expectation that our clients will be completely satisfied with our performance. In addition, the firm has a highly competitive fee structure for the Southern California market. We take every engagement seriously with the expectation that our clients will be completely satisfied with our performance and fees. Our rate structure is intended to be the most competitive in light of the current economic conditions.
Syndication
