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  1. #1
    Join Date
    Nov 2004
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    366

    1099's required for $600 in services..

    Are any of you familiar with the new tax laws going into effect in 2012?

    http://www.accountingweb.com/topic/t...alth-care-bill

    "Under the new law, businesses will be required to send a 1099 to other businesses for virtually all purchases,"

    The incredibly low threshold is $600 / year.

    I spend over $600 year in Hosting fees, Internet fees, telephone fees and more. Will I need to send out 1099's to all these companies?

    Does anyone have a better summary of this of things that will NOT need to be reported?

  2. #2
    Join Date
    Mar 2010
    Posts
    4,533
    I thought this was always in place? Well w9's at least.

  3. #3
    Quote Originally Posted by techjr View Post
    I thought this was always in place? Well w9's at least.
    Under current law, businesses send Forms 1099 for payments in excess of $600 for rent, interest, dividends, and non-employee services when these payments are made to entities other than corporations. Payments made to a corporation and payments for merchandise are not required to be reported.
    The newest part to this, requiring corporation to corporation reporting, is what's going to kill most small businesses who simply don't have the resources to comply with this behemoth regulation requirement.

    Hey, to look at the bright side, kiddie-hosts won't possibly be able to keep up with the reporting requirements, so there's alot less competition out there!
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  4. #4
    Join Date
    Nov 2000
    Posts
    374
    Wow, this is ridiculous!

    “Have a large business-related meal at a restaurant, this will need to be reported on a 1099. Spend a week in a hotel in Waco, Texas; you will need to send a 1099.”

  5. #5
    Join Date
    Nov 2000
    Posts
    374
    Quote Originally Posted by ServerGurus View Post
    Hey, to look at the bright side, kiddie-hosts won't possibly be able to keep up with the reporting requirements, so there's alot less competition out there!
    I would think most "kiddie-hosts" probably aren't even spending $600 a year, and since when would they care about tax requirements.

  6. #6
    Join Date
    Aug 2008
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    2,469
    It's quite obvious Obama will not be getting a 2nd term. Another reason McCain was the way to go.

  7. #7
    Join Date
    Dec 2002
    Posts
    371
    I came across this earlier today, just amazing, absolutely insane. Our government is doing one dumb thing after another to crush business development in this country instead of kick starting business by simplifying the tax code. Think about the sheer volume of corporation 1099 reporting this will mean.


  8. #8
    Join Date
    Jul 2009
    Location
    NC
    Posts
    938
    Maybe someone thought "Hey, this will create a bunch of jobs!" . . . Yeah, for IRS workers!!!
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  9. #9
    Join Date
    Feb 2006
    Location
    Kepler 62f
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    16,703
    Closing tax loopholes is a good thing.
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  10. #10
    Join Date
    Aug 2008
    Location
    UK, Major Cities
    Posts
    501
    Ahh, bureaucracy gone mad...
    - Colin Dunn | Systems Administrator
    I think CentOS is a pretty cool guy. eh runs mah server and doesnt afraid of anything...
    ^ That sig/meme is so old, I just don't have the heart to change it. I hope the cool kids around still get it... 2008 was a good year!

  11. #11
    Join Date
    Mar 2008
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    1,717
    Quote Originally Posted by JG View Post
    I would think most "kiddie-hosts" probably aren't even spending $600 a year, and since when would they care about tax requirements.
    It's not even that - the ones that do, by some miracle, manage to survive long enough to send $600 to one vendor simply aren't going to comply.

    It won't stop them from starting a "business", but it'll be another mine on their very very short path to going under. In short: another tool with which kiddie hosts can shoot themselves in the foot.

    Exactly what the web hosting industry didn't need.
    I used to run the oldest commercial Mumble host.

  12. #12
    Join Date
    Jun 2003
    Location
    United States of America
    Posts
    1,847
    If they throw a 14 year old kid in jail for this that would be so ridiculous. I can already see the headlines minor in jail for failing to file tax forms.

    On another note I don't live that far from the Canadian Border. And my skills and talents would come in quite handy up there.
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  13. #13
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    Mar 2010
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    4,533
    Quote Originally Posted by gilbert View Post
    If they throw a 14 year old kid in jail for this that would be so ridiculous. I can already see the headlines minor in jail for failing to file tax forms.

    On another note I don't live that far from the Canadian Border. And my skills and talents would come in quite handy up there.
    Well I think the main issue, well it may not be an issue per-say but wouldn't this show the age of the host? Paypal and the datecenter they are hosted with assuming they are under 18 are more then likely to have issues with it.

  14. #14
    Join Date
    Nov 2000
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    374
    Quote Originally Posted by kpmedia View Post
    Closing tax loopholes is a good thing.
    Are you kidding me? You must not operate a small business. I don't even keep track of how many companies I pay over $600 a year to. Now I'm going to have to, and pay my accountant to send them 1099s.

    Now each dedicated server provider I use is going to receive a 1099 from practically every customer they have, and have to deal with the associated increase in costs to deal with them. These costs will likely be passed on to me (and trickle down to you, even if you only have a shared hosting account)

    This is a good thing?

  15. #15
    Join Date
    Sep 2008
    Location
    Seattle, WA
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    *sends mcdonalds 1099*
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  16. #16
    Join Date
    Jul 2008
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    West Virginia
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    Quote Originally Posted by StealthyHosting View Post
    *sends mcdonalds 1099*
    That's too funny, but true for a lot of people I bet!
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  17. #17
    Am I going to have to 1099 strippers? I can't get them to give me their real names. How am I supposed to get a tax ID number from them?

  18. #18
    Join Date
    Aug 2008
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    2,469
    Quote Originally Posted by cstamets View Post
    Am I going to have to 1099 strippers? I can't get them to give me their real names. How am I supposed to get a tax ID number from them?
    You'll have to use their pornstar/stripper name then I get to send the USPS one of these awesome, not.

  19. #19
    Join Date
    Nov 2002
    Posts
    4,667
    Quote Originally Posted by JG View Post
    Are you kidding me? You must not operate a small business. I don't even keep track of how many companies I pay over $600 a year to. Now I'm going to have to, and pay my accountant to send them 1099s.
    Are you kidding me? You run a small business and don't keep track of expenses? How do you fill out your Schedule C?

  20. #20
    Join Date
    Jan 2003
    Location
    Chicago, IL
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    Quote Originally Posted by Techno View Post
    Are you kidding me? You run a small business and don't keep track of expenses? How do you fill out your Schedule C?
    First, for a corporation you'd likely be filing an 1120, where Schedule C is about dividends. Though where does any tax form demand expenses according to vendor? Most companies run on books that are much broader in scope than individual vendors, expenses categorized by the what the service is, not who provided it. For taxes, these requirements for expense classifications are EXTREMELY broad.

    One major issue here is going to be on expense reports, as generally those will all just get reviewed and then booked together, whereas now you're going to need to line item every single thing all the way through to assure you can get a 1099 to all parties paid over $600.

    Also, mentioning McDonald's brings up an interesting question, when dealing with corporations how do you even know who to get the 1099 to in many cases? The franchise is owned by one corporation, but it is a franchise of another corporation, then there are conglomerates with each division being a separate corporation or some other very complex arrangements. Our contract with Digital Realty Trust for example lists 5 different corporations that we're entering into an agreement with.

    The way we keep our books we're likely fine with figuring out who we need to send a 1099 to, the hard part will be determining what address to send it to, what EIN to use, etc. That is certainly going to take a good number of "man hours" thus will certainly incur a decent expense, not to mention the sheer number of 1099's we'll be receiving, along with W-9's, etc... On the other hand, I know we pay our fair share of taxes and thus want to assure it is an even playing field and everyone else is paying all theirs as well, not to mention the additional revenue that could bring in, but I'd imagine there must be a way to simplify this...
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  21. #21
    Join Date
    Aug 2008
    Location
    UK, Major Cities
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    501
    Is this all in the USA? Im not a regged company, just a 'Sole Trader' or self employed. I just fill out a lengthy tax return form every year, and that's that.

    I guess its different for larger corporations. But just looking over this. It looks wayyyyy to complicated for you average joe business owner.
    - Colin Dunn | Systems Administrator
    I think CentOS is a pretty cool guy. eh runs mah server and doesnt afraid of anything...
    ^ That sig/meme is so old, I just don't have the heart to change it. I hope the cool kids around still get it... 2008 was a good year!

  22. #22
    Join Date
    Nov 2000
    Posts
    374
    Quote Originally Posted by Techno View Post
    Are you kidding me? You run a small business and don't keep track of expenses? How do you fill out your Schedule C?
    As Karl mentioned, there's no need to break down on corporate returns (or any returns that I'm aware of) what you've paid to individual vendors.

    I never said anything about not keeping track of expenses.

  23. #23
    Hi, everybody. Long-time lurker, first-time poster.

    This is, indeed, a scary-sounding law as written. However, the IRS commissioner has already made it clear that credit card purchases will almost certainly be exempt from the new reporting requirements.

    [I can't seem to post a link, but you can find the details with a quick Google search for "IRS won't require 1099s — if you pay by credit card".]

    So, while you can certainly debate the merits of the legislation, as a practical matter, it should be easy enough for most small businesses to avoid any meaningful compliance costs with regard to this particular provision.

  24. #24
    Join Date
    Nov 2004
    Posts
    366
    I believe that this is for sole proprietorships as well.

  25. #25
    Join Date
    Feb 2002
    Location
    New York, NY
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    Quote Originally Posted by FM-Jack View Post
    However, the IRS commissioner has already made it clear that credit card purchases will almost certainly be exempt from the new reporting requirements.
    As much as this legislation sucks, an exemption for credit card transactions will certainly avoid a lot of the extra paperwork, at least for this industry.

    We already get and make most of our payments by credit card. For anything that involves a check payment, there should already be a formal invoice that has the address of the company. Perhaps invoices will start including an EIN by default.
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