GP Users Prepare for Increased 1099 Reporting Requirements from US Health Care Reform

As you get ready to kick off your 1099 process, you need to be aware of a piece of US federal legislation that could expand your 1099 reporting requirements in 2012-the health care reform bill.

"To be able to fund the requirements of the bill, Democrats on the U.S. Senate Finance committee slid a provision into it that would expand 1099 reporting requirements, which means we would have to report on all vendors paid more than $600 per year," said Zubin Gidwani, Financial Systems Manager of Maui Land & Pineapple Company Inc. at an online meeting of the Microsoft Dynamics GP User Group. "Currently companies only have to file on service providers that are paid more than $600. This will potentially increase it to all vendors. The intent is to capture about two billion in unreported tax income but the execution puts a big burden on companies so just be aware of that."

Gidwani said he ran a couple SQL queries to try and measure the impact of this potential expanded reporting requirement on his company. He noted that if he had to issue 1099s to all the vendors his company paid more than $600, they would have to issue many times more 1099s than they do now.

"So you can imagine the potential impact of what it's going to mean to your team to collect and validate the tax identification numbers . . . ," he said.

Gidwani said when companies process their 1099s, there's a very powerful and nerve-wracking process they have to go through with the IRS to do TIN (Tax Identification Number) matching as part of their vendor creations.

He said one of the problems is that in some cases vendors provide incorrect information and then things ...