MRAA - There’s More to the Health Care Bill Than Health Care

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There’s More to the Health Care Bill Than Health Care

MRAA has just learned the newly passed Health Care Bill will impose significant burdens on businesses by requiring them to issue a Form 1099 to all vendors where the business does more than $600.00 per year in purchases. Perhaps now we know why the Health Care bill was over 2,700 pages long.

Beginning in 2012 all businesses, tax-exempt organizations, and federal, state, and local governments will be required to issue a Form 1099 to vendors from whom they purchase goods totaling $600.00 or more during the calendar year. To meet this new requirement, businesses and other entities will have to keep track of all purchases they make by vendor. For example, is a self-employed individual makes numerous small purchases from an office supply store during a calendar year that total at least $600.00, the individual must issue a Form 1099 to the vendor and the IRS showing the exact amount of total purchases.

The problem has a very broad reach. According to an analysis by the Internal Revenue Service, about 40 million businesses and many entities will be subject to the new requirement, including roughly 26 million non-farm sole proprietorships, four million S corporations, two million C corporations, three million partnerships, two million farming businesses, one million charities and other tax-exempt organizations, and more than 100,000 government entities. All of these nearly 40 million businesses and other entities are subject to the new reporting requirements.

By reporting a purchase on a Form 1099 the purchase becomes income to the selling organization, which under previous accounting rules would have recorded the transaction as a sale. MRAA recommends all marine retailers consult with their accountants on this new requirement.

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