Here's the description:
The provision, which takes effect next year, will require businesses to file 1099 tax forms reporting any purchases they make of goods or services above $600 from any individual or business, including corporations. Currently, businesses only need to file 1099s when they buy services - and only when the vendor is an unincorporated person or business.There are currently proposals to drop or modify the provision.
I'm sure I don't understand. If I'm a business, I've a check book and a credit card. And I have accounting software (Quicken or whatever). So I know to whom I make payments and for how much, don't I? And I could run a yearly report showing payments by payee, couldn't I? And to make a payment in Quicken I need the payee's name and address. So as far as I can see the only thing I'm missing is the payee's social security number or tax ID number. Getting that, I admit, would be a pain.
So based on my lack of understanding, what would make sense is:
- allow a small business to certify they do not use any accounting software and waive the requirement
- businesses which use accounting software would have to submit a yearly report of payments along with their tax return
- tell IRS they have to, when developing software to audit such reports, include a module to try to match the incoming name and address to their master file of tax ID's and SSN's.
- give IRS the right to go to developers of accounting software and pay them to tweak their software if necessary to meet the requirement, assuming my ignorance hides some other complication. (I don't really like this idea; it would set a precedent, but if you're going to lose billions in taxes over ten years, spending a few millions is cost-effective.