How is the government going to bridge the tax gap of over $300 billion plus in lost tax revenue? They are going to do it with a little help from all of you. You see, as it stands now, if you own a small business and have say a painter come in and do over $600 of work in your office, you have to issue them a 1099 at year end. Now starting in 2012, the burden will fall on you to issue 1099's for any vendor who provides goods or services over $600. That means even the $600 or more in toilet paper you buy for office supplies at Target will bring the need to issue a 1099.
In order to do this, small businesses will need to track how much is being spent throughout the year to each vendor (this should be a step already being done by your trusty accountant). Also, the way it is written, if a vendor refuses to give you their federal tax ID number, you will be forced to withhold 28% for taxes.
Only those companies that issue 250 or more 1099's per year are able to file electronically. This means for all those who fall below this number, 1099's will have to be issued in paper form. Sounds to me like the IRS might be hiring soon.
