Accounting departments, beware! Beginning in 2012, companies will be required to report to the IRS all payments worth $600 or more per year to any vendor, including payments to corporations and payments in exchange for property. This greatly expands the number of Forms 1099-MISC that businesses must file. The new requirement was inserted into the Patient Protection and Affordable Care Act to help the IRS discover and collect unreported income, thus helping to fund some of the health care reform measures in the bill (P.L. 111-148, Sec. 9006). Currently, employers use Form 1099-MISC to report only certain nonwage payments, such as payments for services to individuals who are independent contractors.
Tips: If you dont work in accounting, pass this article along and then back away slowly. The change means that your organization likely will have to get tax ID numbers from every business from which it makes a purchase of $600 or more, and all businesses that provide a service worth $600 or more per year. Watch for further guidance from the IRS as the effective date draws nearer. Efforts are underway to repeal the provision, but it may be difficult to do so in an economic climate where every penny counts.
