Thursday, July 15, 2010

Form 1099 tax change in health reform law exposed

An overlooked provision in the recently passed Patient Protection and Affordable Care Act (PPACA) is drawing attention due to its major financial and administrative implications for American businesses.

Scheduled to take effect January 1, 2012, Section 9006 of the law mandates that all companies issue 1099 tax forms to any individual or corporation from whom they buy more than $600 in goods and services in a tax year. Currently, the IRS Form 1099 is only used to document income for contract workers.

While the provision is seemingly unrelated to health care reform, it is intended to capture unreported income, which will generate more government revenue to help offset the cost of the health bill. The new requirement imposes a heavy administrative burden on businesses, expected to result in millions of additional forms being sent out each year.

The IRS has not commented on when it will release regulations on the new law or schedule public hearings. For more information, please view Health care law’s massive, hidden tax change from CNNMoney.com.

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