Monday, September 13, 2010

The ULTIMATE 1099?

Robert Preston, playing the lead in The Music Man, sings, “You've got trouble, my friends!” and accountants do have trouble, and not just in River City.

Beginning January 01, 2012, 1099s must be issued for virtually all payments made by a trade or business aggregating $600 or more to any single vendor. Here is Code Section 6041(a) and 6041(h). Reading the statute is important.

6041(a) Payments of $600 or more.
All persons engaged in a trade or business and making payment in the course of such trade or business to another person, of rent, salaries, wages, amounts in consideration for property, premiums, annuities, compensations, remunerations, emoluments, or other gross proceeds, fixed or determinable gains, profits, and income (other than payments to which section 6042(a)(1) , 6044(a)(1) , 6047(e) , 6049(a) , or 6050N(a) applies, and other than payments with respect to which a statement is required under the authority of section 6042(a)(2) , 6044(a)(2) , or 6045 ), of $600 or more in any taxable year, or, in the case of such payments made by the United States, the officers or employees of the United States having information as to such payments and required to make returns in regard thereto by the regulations hereinafter provided for, shall render a true and accurate return to the Secretary, under such regulations and in such form and manner and to such extent as may be prescribed by the Secretary, setting forth the amount of such gross proceeds, gains, profits, and income, and the name and address of the recipient of such payment.

6041 (h) Application to corporations.
Notwithstanding any regulation prescribed by the Secretary before the date of the enactment of this subsection , for purposes of this section the term "person" includes any corporation that is not an organization exempt from tax under section 501(a).

In the fall seminars, Gear Up will discuss this significant change and how to cope with it. But, wait, there's more in the proposal chain. The President's Economic Recovery Advisory Board, Paul A. Volcker, Chairman, on page 60, Small Business Bank Account Reporting, proposes a simplified tax accounting system for small businesses that permits cash accounting. But the cost of that proposal is that “a small business would be required to use a designated bank account for all business receipts and expenditures that is segregated from any personal bank account. The bank would be required to report the receipts and expenditures within the designated account annually.”

Call it the lifetime 1099.

Robert Preston worried about bringing in a billiards parlor. Ah, those halcyon days of yore!

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