New 1099 Reporting Requirements-All Businesses Beware

This will be an accounting nightmare. Under current law, you only have to file a 1099 on an individual who provides you services that you pay $600.00 or more to per year. Under the new 1099 law that is scheduled to go into effect starting in the tax year 2012, the law expands 1099 coverage to tangible goods and services. Just to give you an idea on how disastrous that can be, imagine you are a freelancer who purchases a computer from Target. If the computer costs more than $600.00, you will have to send Target a 1099 at the end of the year. This will mean you will need the Federal ID number and address of Target and keep track of your purchases to send 1099's at the end of the year. I am sure you are getting what a logistical nightmare this can be. For the companies we currently do books for, we will be requiring you to get your vendors to sign a W-9 so we have the information necessary to complete all required 1099's.