New Tax Rules Are Bad News For Micros
Jun 14th, 2010 | By Dawn Rivers Baker | Category: RegulationsAmidst all the jumping up and down and yelling about the health care reform bill that was signed into law earlier this year, very little attention was paid to an obscure provision about 1099s. But that obscure tax provision is expected to increased the tax compliance paperwork burden for microbusinesses by an absurd 1250%, according to a survey released last month by the National Association for the Self Employed (NASE). The provision in question requires that businesses collect Tax Identification Numbers (TINs) from every business and individual (including corporations) they pay more than $600 to in goods and services.
If the business or individual will not provide a TIN number, then the buyer must withhold a certain percentage of the payment and remit that amount to the IRS. If the business or individual does provide a TIN number, then the buyer must file an IRS Form 1099 for that vendor when filing taxes for that tax year. Survey results indicate that almost 80% of microbusiness owners expect these new rules to make tax compliance take more of them time, while three in four expect it to cost them more. There were no questions in the survey asking how the microbusiness owners felt about this additional burden but, if I were forced to guess, I would say they probably don’t like it very much.
