IRS Commissioner Excited About New Law
Douglas H. Shulman, IRS Commissioner, recently spoke before the American Payroll Association & the American Accounts Payable Association. He said he’s excited about the new law I mentioned earlier this week giving the IRS more tools to close the Tax Gap…
Commissioner Shulman stated that the IRS is gearing up to implement new requirements recently passed into law to require Form 1099’s for payments “made from businesses to corporations, and on payments businesses make for goods.”
Shulman stated, “This new information reporting requirement applies if businesses pay a single entity $600 or more per year in aggregate for these types of transactions starting in 2012.” The Form 1099, reporting payments to corporations, must be filed in January of 2013.
This requirement will apply to payments you make for services by independent consultants who have formed a corporation.
The IRS has been lobbying Congress for several years to get this law.
In a written statement, dated February 16, 2007, Nina E. Olson, IRS Taxpayer Advocate, said:
“Under current law, an individual taxpayer can escape information reporting by incorporating. This is true even if the taxpayer is performing the same services that would be subject to Form 1099-MISC (Miscellaneous Income) reporting if the taxpayer were conducting business as an unincorporated entity.
For Form 1099-MISC information reporting purposes, I believe there should be no distinction between taxpayers providing the same services for compensation merely because one taxpayer has incorporated and another has not.”
Also in her 2008 report to Congress, she again recommended that Congress require service recipients to issue Forms 1099-MISC to incorporated service providers and increase the penalties for failure to comply with the information reporting requirements.
So now it’s law.
The IRS knows this will place a new burden on small business.
Shulman stated, “…those that represent small businesses…have raised concerns about the burden that this new provision may impose. I want to assure the business community that the IRS will look for opportunities to minimize burden and avoid duplicative reporting.
He went on to state, “…We plan to…exempt from this new requirement business transactions conducted using payment cards such as credit and debit cards. These transactions will already be covered by reporting requirements on payment card processors…”
He closed the talk saying it was “very exciting…”
“In conclusion, let me thank you again for inviting me to share some thoughts with you today on the evolution of information reporting. We are entering a very exciting new phase of information reporting with great potential for improving compliance and the effectiveness and efficiency of our tax system…”
The laws and requirements change all the time. Are you keeping up?
Leave a Reply