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Comments

  • That is a nightmare!
  • Look on the bright side. There are likely much worse provisions tucked into that law that no one has found yet. In couple months, these will be the Good Old Days. Or maybe Daze.
  • It will be interesting to see how this is received in the small private company where I work. Personal family vacations have always been 'expensed' by the owners. :roll:
  • Somewhere I've seen the phrases "non-profit corporation" and "1099 requirements" used in the same paragraph. It referred to Section 9006. Can anyone point me in the right direction for any info the may apply?
  • non profit corporations will continue to be exceptions -
    the new law also requires "the secretary" to issue regulations to reduce duplicate reporting -
    What that says to me is that there may actually be a reduction in the reporting burden in some areas - And, at the same time, reduce some of the tax gap.

    For example, if you use "P" cards and/or credit cards, the card issuer is the one making the payments to the vendors - for example - the large business meal or the hotel bill for a convention - if the business issues a check (or checks) the A/P system should be able to handle that - if a credit card is used, the business pays the credit card company (and issues a 1099 to it) and the credit card company issues a 1099 to the vendor. - I saw a similar question on a blog - how many times to fill up the pick up truck before you hit $600 - Pay by one card and send a 1099 to the card issuer who issues 1099s to the the various gas stations that many other people have paid with cards.

    Note this also brings into the picture 1099 reporting (card issuer to vendor) for payments that are not otherwise reportable (gas to fill up the personal car) and will make skimming a bit more difficult except in the case of cash payments - and businesses are not supposed to make cash payments.

    I don't know this is what will happen, but it makes sense to me - because there is no distinction as to the type of thing paid for (services or goods) unless it is something like rent or payments to attorneys - it may also eliminate some boxes on the 1099-Misc as the type of vendor will, to a great extent, determine whether the payments are subject to SE tax.

    There is also a law similar to the paperwork reduction act called the Regulatory Flexibility Act -
    The RFA requires agencies to review the prospective impact of proposed regulations on small entities—small businesses as well as small governmental jurisdictions and small nonprofits—and to consider significant alternatives that minimize small entity impacts.

    I would suggest that those of you concerned about this think about what could work (not what is currently in place) and start writing letters and start planning for the change (look into P cards for example) to minimize the impact. Costs can also be reduced by moving away from paper checks.
  • Very interesting to read these posts, especially the "P" card comment.

    I'm not in A/P but I can sympathize with the new regs. I had never considered that my company's payments to their Amex business cards would result in a single 1099 for all of the 16 million different things they are used for, and that Amex would then bear the burden of churning out 1099s. Awesome!

    We've been using Amex for years and we pay nearly everything with it, so hopefully that will make a difference when these regs come into play.
  • Also, arguably you want to get a W-9 for all vendors anyhow prior to making any payments. Most employers I have worked for did that anyhow. And most modern AP systems can easily issue issue 1099s to everyone for whom W-9 information has been collected. The bigger the employer, the more likley that they are already doing this. I am used to having my AR department come over and whine about all these 1099s people are sending them when the employer is a large corporation who under the existing rules did not need to receive one. It is often easier to just auto-issue to everyone, then have to manually decide who gets one.

    Also, "make Amex do everything" is an interesting concept, but who provides Amex with the W-9 information?
  • Also, "make Amex do everything" is an interesting concept, but who provides Amex with the W-9 information?

    If you are a vendor submitting customer charges to AMEX - doesn't AMEX have your tax ID already? (Not to mention a whole lot of other credit report type information?)
  • I'm not in A/P but I can sympathize with the new regs. I had never considered that my company's payments to their Amex business cards would result in a single 1099 for all of the 16 million different things they are used for, and that Amex would then bear the burden of churning out 1099s. Awesome!

    Well, that just makes sense to me - AMEX would simply send out 1099's to the businesses it paid - no longer any need to sort out what the payment was for or who the customer was - And rather than the customer having to obtain a W-9 from every vendor where the card was used, simply send a 1099 to AMEX for the amount paid to AMEX. Nominee 1099's have been around for a long time - all that has to happen is that the gross proceeds reported less the nominee 1099's issued should be equal to or greater than gross proceeds reported on 1099's received. Most businesses have that happen anyway because some customers are not required to issue 1099's.

    Note it also says that all businesses will be reporting and the regs are to minimize duplicate reporting. Keep in mind that the IRS system will have to handle all the reports as well - so they will be looking to keep it down.

    The big problem I see currently is the requirement to report all payments on the 1099 regardless of how made - so you could be searching checking accounts and various credit card accounts to make sure you are reporting everything paid to a particular vendor - that is really awkward and needs to be addressed anyway. The new reporting requirements look like they would drive a solution to that particular problem. I see that as an improvement over the current situation.
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