As you may already know, tucked away in the new health-care law is a mandate that beginning in 2012,  small businesses and charities must file 1099’s for every vendor they have purchased goods or services from in excess of $600.   This new mandate applies to everyday purchases, like shipping costs, supplies, even Internet and phone service.  That means if you’re a business owner, you will need to get the tax ID numbers for almost everyone you deal with and keep track of all your expenses:  a daunting task.   Furthermore, if your business has more than 250 vendors that qualify to get 1099s, you will have to enroll in electronic 1099 filings with the IRS.

The government is looking to capture unreported income to help offset the cost of the health bill, but businesses are not too happy about it:  it is predicted to cost them billions.  More effort will be needed to obtain tax identification numbers from payees, track purchases from specific vendors, and prepare the actual filings.  At the same time, it is questionable how the IRS will be able to effectively match the 1099s with the payees returns, especially when considering fiscal year filers.  The IRS has tried to ease some of the burden, saying that payments made by credit card will be exempt from 1099 reporting, but that seems of little help.

The good news is there is a growing movement to repeal this section of the health-care bill. Senators Pat Roberts (R-Kan.) and Mike Johanns (R-Neb.) have introduced legislation that repeals this new healthcare mandate.  To join the effort, sign onto the U.S. Chamber of Commerce’s letter in support of the Small Business Paperwork Mandate Elimination Act (H.R. 5141).  Click here to tell the IRS how this mandate will hurt your business.