The new health insurance legislation imposes significant new tax reporting requirements.  In essence, you will have to report most annual payments for goods and services exceeding $600.00 -- including payments to corporations -- on form 1099MISC.  At least this little-discussed provision doesn't kick in until 2012.  So you still have plenty of time to prepare for the onslaught of new paperwork.

Background:  Under current law, a business must report on form 1099 compensation (commissions, fees, etc.) paid to an individual, such as an independent contractor, in the annual amount paid exceeds $600.00.  The same rule applies to interest, rent, royalties and income items paid to a single recipient.

Both the recipient and the IRS receive a copy of the 1099.  It must include the annual amount of the payment, contact information and the recipient's Taxpayer Identification Number (TIN).

However, these reporting rules generally don't apply to payments made to a corporation.  Also, your business doesn't have to issue 1099s when it purchases goods.

New law changes: Begining in 2012, the new Patient Protection and Affordable Health Care Act of 2010 changes the current reporting rules in three ways:

1. Payments to corporations: The reporting exemption for corporations no longer applies.
2. Payments for goods: The reporting requirement is generally extended to payments for property such as merchandise, equipment, raw materials and the like.
3. Payments of gross proceeds: At this point, it's not exactly clear what "gross proceeds" covers.  The IRS is expected to issue guidance shortly.

These three new law requirements will likely affect you on both ends of the spectrum.  As a payer, you may have to churn out significantly more 1099s and obtain the TINs of each recipient; this can be easily accomplished with a W9 form.  As a recipient, you could be bombarded with forms and you must supply the payers with your own TIN.

Don't wait until the last minute to implement these changes.  You can get a head start by contacting us to help you modify your business accounting procedures to accomodate the new reporting rules.  You can reach our office at (816) 792-9966 or via email at This e-mail address is being protected from spambots. You need JavaScript enabled to view it to set up your appointment.

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