Section 9006 is a small part of the Healthcare Bill that passed congress earlier this year with big consequences for small businesses. The section 9006 regulation mandates that starting January 1, 2012 all businesses will have to issue an IRS Form 1099 to any individual or business it buys $600 or more in goods or services from in a particular tax year. The IRS currently requires that businesses issue 1099′s to independent contractors paid $600 or more per year for services rendered. The new regulation extends it to goods. This would be a major burden for small businesses in having to collect tax payer identification numbers and file 1099′s for each vendor you paid $600 or more to.
As a contractor, think about how many different supplier vendors you pay in excess of $600 to each year. Even a small contractor could easily have 50-75 suppliers. You then would have to request and collect Federal taxpayer identification numbers from each, track every expense made to each vendor (QuickBooks and other similar accounting software can do this for you), produce and submit 1099′s to the vendor and IRS each year.
There are a few proposals out there to amend this regulation before it goes into effect. Stay tuned!
Also see CNN.com for more information.
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