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07-22-2010, 05:54 PM #1Aspiring Evangelist
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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?
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07-22-2010, 05:58 PM #2Web Hosting Master
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I thought this was always in place? Well w9's at least.
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07-22-2010, 07:05 PM #3Web Hosting Evangelist
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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.
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!█ GenesisAdaptive.com · IP Transit and Connectivity, Colocation, & Enterprise IT Services
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07-22-2010, 07:36 PM #4Aspiring Evangelist
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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.”
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07-22-2010, 07:37 PM #5Aspiring Evangelist
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07-22-2010, 07:38 PM #6Web Hosting Master
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It's quite obvious Obama will not be getting a 2nd term. Another reason McCain was the way to go.
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07-22-2010, 07:47 PM #7Aspiring Evangelist
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- Dec 2002
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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.
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07-22-2010, 08:03 PM #8Geek Of All Trades
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Maybe someone thought "Hey, this will create a bunch of jobs!" . . . Yeah, for IRS workers!!!
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07-22-2010, 08:18 PM #9Web Host Reviewer
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Closing tax loopholes is a good thing.
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07-22-2010, 08:37 PM #10Web Hosting Evangelist
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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!
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07-22-2010, 08:41 PM #11Web Hosting Master
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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.
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07-22-2010, 08:48 PM #12Web Hosting Master
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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.Computer Steroids - Full service website development solutions since 2001.
(612)234-2768 - Locally owned and operated in the Minneapolis, Minnesota area.
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07-22-2010, 10:16 PM #13Web Hosting Master
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07-22-2010, 10:42 PM #14Aspiring Evangelist
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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?
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07-22-2010, 10:51 PM #15Web Hosting Master
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*sends mcdonalds 1099*
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07-22-2010, 11:02 PM #16Corporate Member
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Reliable Hosting Services, LLC
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07-22-2010, 11:43 PM #17Newbie
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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?
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07-23-2010, 12:27 AM #18Web Hosting Master
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07-23-2010, 01:42 AM #19Web Hosting Master
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07-23-2010, 02:02 AM #20THE Web Hosting Master
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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...Karl Zimmerman - Founder & CEO of Steadfast
VMware Virtual Data Center Platform
karl @ steadfast.net - Sales/Support: 312-602-2689
Cloud Hosting, Managed Dedicated Servers, Chicago Colocation, and New Jersey Colocation
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07-23-2010, 02:25 AM #21Web Hosting Evangelist
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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!
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07-23-2010, 02:49 AM #22Aspiring Evangelist
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07-23-2010, 09:59 AM #23Newbie
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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.
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07-23-2010, 09:59 AM #24Aspiring Evangelist
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I believe that this is for sole proprietorships as well.
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07-23-2010, 11:23 AM #25Backup Guru
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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.Scott Burns, President
BQ Internet Corporation
Remote Rsync and FTP backup solutions
*** http://www.bqbackup.com/ ***
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