Regardless of your political beliefs, there is a health care bill which has just passed through Congress that will have an unbelievable impact on our industry. Section 9006 of the new health care bill has a provision requiring every business, charity and even state and local governments to file a 1099 tax form listing every purchase of goods or services or accumulated purchases which exceed $600.
In past years, this requirement was strictly limited to payment for services. This is not the case anymore. Now, if your phone bill is greater than $600, or your purchases at Home Depot or a similar store exceed $600, your business is required to file a 1099 tax form.
It is unthinkable the amount of paperwork that this will create for manufacturers, distributors, service providers and retailers within this industry (not to mention the IRS). As such, you can count on a massive increase in the number of IRS agents and supporting staff which will be hired to respond to this requirement.
Furthermore, the added costs to most businesses will be tremendous. Estimates of up to $23,000 annually have been calculated.
Senator Mike Johanns (R-Neb.) has written an amendment to repeal section 9006. It is suggested that concerned business people write their senators asking for support of this repeal.
There is also an alternative amendment submitted by Senator Bill Nelson (D-Florida), which would exempt businesses with 25 or fewer employees for compliance with this section. However, with the current movement to reclassify independent contractor status, a majority of the companies in the home improvement business who are affected by section 9006 will not find much relief in Senator Nelson’s amendment.
Again – we urge you to become familiar with this provision and write to your senator asking for support of Senator Johanns’ amendment. Forward this to any of your suppliers and other companies similar to yours.
For more information on how this legislation will affect your business, don’t forget to attend the home improvement profitability summit in Baltimore, where our team of experts will give you the latest legal news regarding our industry.