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Businesses are currently required to issue Internal Revenue Service Form 1099 to its non-corporate contractors who provide more than $600 worth of services to the business in a calendar year.
For example, a home remodeling firm would issue a 1099 to a plumber operating as a sole proprietor if he provided work in excess of $600 during a single year. If the plumber is a corporation/LLC, the firm need not issue the 1099. Further, the 1099 is for services only. If the firm buys $600 worth of lumber from a sole proprietor, no 1099 is required.
Let the madness begin.
As part of ObamaCare, there is a provision to be implemented in 2012 mandating that businesses issue 1099s to all persons who provide more than $600 worth of services and/or goods to that business in that calendar year. Persons includes any corporation.
This means, for example, that if a business purchases more than $600 worth of goods from Home Depot, that business will have to issue Home Depot a 1099.
I am thinking about what a nightmare that would be for my very small business. Think of the nightmare of places like Home Depot, Costco, WalMart, … the list goes on.
Not only that, but what of franchisees? Think Ace Hardware owns the store down the street? Think again. It’s likely operated by some licensee who has some strange corporate name like Marge and Dick LLC with a mailing address of New Port Richey, FL.
Good luck with all of this, Mr. Obama.
There is a nice little discussion here from May.
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