I have been a full charge bookkeeper for over 35 years.
This requirement is more crushing than you realize.
For a small business that buys it’s fuel at only one station, you only need to coherce the immigrant from Pakistan who runs the station to give you correct information. W-9’s & 1099’s will be taking down a number of forests in the USA to accomplish this.
For the business that has employees working all over the country, it means getting information from hotels-motels-rental car companies-airlines-restaurants- places you would never think of. I think you would even have to get out a 1099 for your postage purchases from the USPS. Your freight companies-UPS-Fed Ex-local delivery guys.
I have never seen software that will allow me to separate fuel purchases from a number of different sources. Got 6 salesmen putting gas into rentals cars all over the country? They have to get the w-9 info first!!
Buying office supplies? Staples will be really happy!! NOT.
This breaks the backs of every small business in the country. All the rhetoric from NObama & his administration about getting small business back up on it’s feet is just smoke & mirrors.
I have done books for small businesses for over 35 years of self-employment. I am used to preparing 1099’s for rent & outside labor or services which are not incorporated. Not too bad. But this explodes the problem beyond anything I could envision.
One of my clients goes across 4 different So Calif counties doing heating & A/C work. He buys gas where & when he needs it. Even if he does so on a Chevron card- I will have to know the w-9 info on probably as many as 100 different stations he might purchase from.
He buys stuff from Amazon- jackets from Texas- it just goes on & on.
This could create a huge CASH network of services.
I honestly do NOT know how I can properly comply with this kind of demand by NObama for my 2 remaining clients.
A couple of years ago, I needed to send a 1099 to a contractor I hired to help with a video shoot. First time I had paid any individual more than $600 a year. Only time I’ve had to send out a 1099.
Getting the numbers wasn’t so difficult or time-consuming. The problem was printing the 1099. I think you need special software to print them.
By the time I would have bought the forms and the software, it would have cost me much more than the penalty for not sending the 1099, I think. Is there a penalty, or do they just throw you in jail?
I just had my CPA handle it. I forget what he charged me, but at least I didn’t have to struggle with it.
If this new provision goes through, I’m going to be spending a whole lot of money to obey the law. Just tracking my Amazon purchases will be a nightmare.
Did you see the part at the end of the article?:
“The buzz on the internet is that this will create mounds of unnecessary paperwork for small businesses across the country. It is true that the number of 1099s will increase significantly, however, I see two positive implications of these changes. First, it will force business owners to keep better records, report income more accurately, and pay the proper amount of taxes. Second, will also cut back on fraudulent business deductions, which will ease the burden on the IRS to catch tax cheats and, hopefully, save the rest of us honest taxpayers the hassles associated with overbearing IRS scrutiny. The work involved in issuing 1099s to your vendors and processing the 1099s you receive will not be overbearing. Think of it as high school math class – you don’t get an A without showing your work.”
I hear you! I travel extensively for my job; domestic and international. I have lots of questions:
- I rent from Enterprise, most of the time from corporate-owned lots, but sometimes (and over the $600 limit) from franchisees. Do I send each individual lot a 1099, corporate, or what?
- When I fly to China (where I do half my work, and the company I work for is based in Hong Kong) do I 1099 Delta for the Seattle-to-Tokyo portion only, or include the Tokyo-to-Shanghai part as well?
- I buy my business cards and sales brochures from a printer in Suzhou, China. Do I send him my 1099, even though he’s a 3 man operation in China?
- For that matter, my bookkeeper? He’s a great Chinese guy, working in Shanghai. Costs me $60 a month, tracks all my expenses worldwide, does all the tax issues I need in China, HK, Thailand, and prepares the reports I need for the US. Do I have to 1099 him in order to deduct his expenses? Yes, he’s licensed...
- How about the pizzas I buy factory workers for rewards when I’m over there? I spend about $1000 a year on pizza bonuses (you’d be surprised how well it works in terms of quality and productivity of work), from Papa John’s. It’s a wholly-owned foreign company in China, owned by Papa John’s corporate in the US. Do I send them a 1099 for transactions strictly overseas?
- What about phone calls? I use a lot of China Mobile and SS123 in Thailand, over the $600/yr limit. Do I have to 1099 them?
- As a traveler yes, I indulge in a McDonald’s or other chain meal every once in a while. Do I record the purchases of a McDouble in Tokyo or Singapore for my 1099?
- What about the Slurpees I buy in Singapore - do those count towards my 1099 for 7-11 corporate?
- How about gas from ExxonMobil/Esso? I buy from them around the world, can I only deduct the portion that I 1099, that which is inside the US, not Canada or the EU?
This is simply a nightmare, there’s no way it can be tracked or adequately explained. The entire franchisee issue is massive as I may spend $1200 with a company nationwide, with maybe only $700 at franchises (rather than company owned stores). Do I now have to track each franchise independently, or do I have to consider the franchisee’s payment back to corporate? If the franchises send more than $100 of my purchase back to corporate, do I have to consider that and 1099 corporate as well?
I guess it’s time to officially stop all economic activity inside the US, and simply do anything that is billable or expense-account related overseas. I’ll just become an employee of an HK company rather than an independent contractor, so the US Government will lose out on all my taxes (I’ll make sure I’m compensated under the limits for expats), and the US economy will lose my purchases.
If this actually becomes enforced (it’s already law), I’ll let my CPA and lawyer go, since I won’t be in the US any more. There’s a good amount of money that will permanently leave the US market.
This is what happens when Congress is populated by lawyers rather than business people. If you’ve never run a small business - success or failure - you have no experience with actual real-world economics and the needs/challenges of small business. And you shouldn’t be in Congress at all.
Time for the little guy to get hammered, but I guess as long as we’re not too big to fail it doesn’t matter, huh?