Big Changes on the way....1099 Reporting Requirements

In an effort to capture unreported income, the IRS will require payments of more than $600 for goods and services to be reported on Form 1099 effective January 1, 2012.

There are two key changes that will have a major impact on companies and non-profit organizations:

1. 1099s must be filed for purchases of merchandise and services (now only required for services).
2. 1099s must be filed for ALL vendors (corporations, partnerships, sole proprietorships and individuals).

Many business organizations, including the AICPA, have argued for the modification or repeal of this mandate of the Healthcare Reform legislation. See CNN's news story about the upcoming changes at:

http://money.cnn.com/2010/05/05/smallbusiness/1099_health_care_tax_change/

Meanwhile, it might be an opportune time to review your organization's procedures for tracking vendors and issuing 1099s. If this rule does take effect as planned on January 1, 2012, it could create a significant burden on your staff and resources. Some prior planning may ease the transition and may enhance the controls your organization already has in place, even if the legislation is repealed prior to 2012.