Thursday, April 29, 2010
The hits just keep coming, and people wonder why business people are demoralized, not investing, not borrowing, and not hiring: Another pointless burden on American business, and another step toward the all-surveillance, all-the-time society.
In other news, I've been staying up late and getting up early packing up my house so that I can move tomorrow, so I admit I am approaching all news of unnecessary bureaucratic work with an already grumpy attitude.
Any transaction in excess of $600? Good grief begets a 1099? Good grief! I can imagine a large company will have to issue hundreds of thousands, if not millions of 1099s, and if they actually sell things, they'll be receiving a like number.
This is what happens when laws are made by people who have never held a real job.
Jim -- it's worse than you say. It's not "any transaction in excess of $600", it's when the "$600 aggregate payment threshold" is reached. So if you made a $300 payment to someone in March, another $300 payment to him in November would trigger the 1099 requirement.
This forces nearly every business to buy accounts payable software and formalize its purchasing and tracking of payments, which the accountant in me says is good but the libertarian says is bad. (A/P systems request the input of TINs, names, addresses, and even bank account numbers during vendor set-up.)
I can already foresee how some companies will adapt--they will simply file a 1099 electronically with the IRS whenever a payment is made, which means payors will issue multiple 1099s to each payee instead of just one. This may be easier than adding up all the payments at year-end.
Most large companies I'm familiar with ignore the 1099s they already receive and don't bother reconciling them to revenue (just the difference between 1099-cash-based versus accrual-based revenue isn't worth anyone's time to figure out). Such companies just rely on the design of their sales and receivables systems to satisfy auditors.
Why didn't lawmakers go after another source of untaxed revenue and require compliance from all taxpayers? I guess if individuals had to tote up how much they paid to credit-card companies, utilities, supermarkets, and landlords, much less get their TINs and file 1099s (with 1096 summary form) with the IRS by Feb. 28th, that would've been a bridge too far.