The New York Times article - "Why the New 1099 Rules Aren’t That Bad for Small Businesses" by Robb Mandelbaum (3/14/11) suggests that with software and technology, it is not that difficult to file 1099s including for purchases of goods. It notes, for example, that QuickBooks can track the information and print the 1099s.
I don't think that is entirely correct because the 1099s have to be on scannable forms that are obtained from the IRS, unless electronic filing is used.
The article also notes that if payments are made on credit or debit card, they don't need to be included on a 1099 issued by the purchaser of the goods or services. Well, what if a business uses both check and credit card when buying from particular vendors? I think it has to track it separately and just file a 1099 for the check payments. While software can separate these amounts, will the 1099s be that useful to the recipient?
Also, some of these recipients are publicly-traded corporations that are likely compliant. And, large companies, likely to also be on accrual method and a fiscal year, won't bother reconciling the 1099s - it will be a waste of time.
The cost-benefit of the expanded reporting just doesn't seem to be there. See "1099s - the good, the bad and the ugly," AICPA Corporate Taxation Insider, 11/11/10.
Comments?
Wednesday, March 16, 2011
1099s - manageable for small businesses?
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#1099 reporting
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