1099s Required for $600 Business Purchases

August 30, 2010 at 7:55 pm 1 comment

Inside the healthcare reform legislation is a small drop of language that is causing a big storm.   The language — Section 9006 — requires reporting to the IRS via 1099s any transaction valued at $600 or more.  Previously, the only requirement was to report wages, not goods.

Excerpt from Patient Protection Affordable Care Act

This change has the potential to be a documentation nightmare.  The cumulative value of just about any good a business procures is typically over $600.   Because of this, there is already a growing grass-roots movement to modify, if not repeal, this provision.

Businesses know how difficult it is to the get the right information for creating 1099s — legal business names and addresses, tax id numbers, etc.    If this rule applies to you, now is the time to start collecting the W9s that you need to meet the requirement.   Make it part of your contract renewal process this year, and you’ll be in good shape for next year.   Your vendor management system is a good place to house this information.

And, for the silver lining perspective, you might enjoy what Marianne Couch, a principal with the Cokala Tax Group in Michigan, had to say in a CNN Money article.  That this might actually make some record keeping easier.  “The new rule is simpler:  If it crosses the $600 threshold, it’s in.”

Entry filed under: vendor management. Tags: .

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