New 2012 Tax Laws, 1099-K and W4

H

handsonhosting

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This affects US Tax Laws

Is it too early to start talking about the new tax laws that went into effect for 2012 but likely people won't even hear of them until January 2013 when it's too late to go back and figure everything out?

In particular, I'd like to discuss the new 1099-K that's been introduced which requires people who spend more than $600 with a company (even Corporation) to fill out a 1099-K. This also applies to web hosting companies, and here's how (at least from what I've read and how I've read the tax laws);

You purchase servers from a datacenter, you spend more than $600, you have to file a 1099-K and collect the datacenter's TIN numbers.
A client purchases hosting services with you and it amounts to more than $600 in a year - you have to fill out tax forms for them and provide your TIN, EIN or SSN.
You're a web designer, you do a design for a client, they send you 1099-K forms for more paperwork
You sell stuff on eBay, you have to 1099 if you sell more than $600/year

Now it starts to get messy;
If you fill out more than 200 individual forms, you now must file electronicly - no biggie right? Wrong;
1099's are billed individually by electronic filing places

So, now you're sending W4 & 1099's to clients, paying for stamps, time, filing fees etc etc - are you raising your hosting price to cover costs yet?

Think of it from a logistics end of things with a DataCenter that has thousands of servers and clients - they'll spend WEEKS filling out forms for people.

Even ourselves, we'll have a few thousand forms to fill out in January 2013.

Are you tracking things yet? What are your plans to stay ahead and not get penalized by the government for filing incorrectly (or failing to file 1099's)?

And while I'm at it -I'll just jab this last little bit of info at you :) This was all included in the healthcare bill ;)
 
Don't know how this works in USA, but here you should be able send any document/form/whatever in electronic form (say pdf, excel sheet, word document). You need to sign it with an electronic signature and then it is as good as a document on paper.

Doesn't this work in USA too? If yes, all you need is some not very complicated addition to your accounting software which generates the forms, signs them with electronic signature and emails them?
 
So, it's the responsibility of the vendor to provide these forms and fill them too? I mean.. If I spend $1000 on Amazon.com.. Will they send me the 1099 form and provide the EIN/TIN number or do I have to go out of my way to find this info and fill the form myself (speaking as a consumer)?

I will have to do some research these next few days... :(
 
This affects US Tax Laws
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It would be interesting to know how this affects the international companies/individuals dealing with US companies.

Us Europeans have reports upon reports, invoices and VAT numbers and VAT regulations to deal with. I find it all a very serious hindrance on productivity and a significant added cost to being in business. I don't think that going down this route would be a good idea for the US (or any country to be perfectly honest).
 
i will find out on Monday when i contact one of my USA suppliers. i will be ordering well over $600 worth of stock for my other business
 
rds100 said:
Don't know how this works in USA, but here you should be able send any document/form/whatever in electronic form (say pdf, excel sheet, word document). You need to sign it with an electronic signature and then it is as good as a document on paper.

Doesn't this work in USA too? If yes, all you need is some not very complicated addition to your accounting software which generates the forms, signs them with electronic signature and emails them?
Click to expand...

i agree with it was nice though that we have electronic signature which have right to our self only and this signature will work only for tax return form
 
It looks like I may have some miss-information on all of this. It appears that this was in section 9006 of the health care reform bill which passed in 2010 and then appears to have maybe been repealed in 2011. I'm finding a number of conflicting posts from places saying that reporting has to be done, and then others saying that it doesn't.

I know that there is the 1099-K form that went into effect for 2011 which talks about 200 transactions AND $20k revenue - then forms need to be filled out - but the $600 reporting would have been on the 1099-MISC forms AND 1099-K forms.

I've been trying to hunt around the IRS site for more information on this so I can link to it - not having much success. I've contacted legal here to find out if they can point me to the tax codes so I can cross link them.

Sometimes, I hate the internet and it's archiving of older information posing as NEW information!
 
also the 1099-K form asked for your federal Tax ID, which if you are not a USA business then you wont have 1, so if line me you are in the UK and trade with a USA supplier, yes you can complete the 1099-K form, but you cant fully complete it as you dont have a Federal Tax ID
 
handsonhosting said:
This affects US Tax Laws

Is it too early to start talking about the new tax laws that went into effect for 2012 but likely people won't even hear of them until January 2013 when it's too late to go back and figure everything out?

In particular, I'd like to discuss the new 1099-K that's been introduced which requires people who spend more than $600 with a company (even Corporation) to fill out a 1099-K. This also applies to web hosting companies, and here's how (at least from what I've read and how I've read the tax laws);

You purchase servers from a datacenter, you spend more than $600, you have to file a 1099-K and collect the datacenter's TIN numbers.
A client purchases hosting services with you and it amounts to more than $600 in a year - you have to fill out tax forms for them and provide your TIN, EIN or SSN.
You're a web designer, you do a design for a client, they send you 1099-K forms for more paperwork
You sell stuff on eBay, you have to 1099 if you sell more than $600/year

Now it starts to get messy;
If you fill out more than 200 individual forms, you now must file electronicly - no biggie right? Wrong;
1099's are billed individually by electronic filing places

So, now you're sending W4 & 1099's to clients, paying for stamps, time, filing fees etc etc - are you raising your hosting price to cover costs yet?

Think of it from a logistics end of things with a DataCenter that has thousands of servers and clients - they'll spend WEEKS filling out forms for people.

Even ourselves, we'll have a few thousand forms to fill out in January 2013.

Are you tracking things yet? What are your plans to stay ahead and not get penalized by the government for filing incorrectly (or failing to file 1099's)?

And while I'm at it -I'll just jab this last little bit of info at you :) This was all included in the healthcare bill ;)
Click to expand...

Someone will need to implement an automated process for this. Maybe the people at WHMCS and others that distribute this type of software can find a way.
 
Well this could get extremely interesting. And we all thought the IRS ran slow now.. wait until they get 10 tons of mail of returns. This has irked me personally so much that rather than filing electronically, I'm half tempted to have the accountant send it via paper just out of spite!

Most frustrating....

AB
 
At this time, this all appears to have been repealed - at least for 2011 & 2012 taxes anyway.

@agentblack - with regards to filing by paper rather than electronic, that will only work if you don't have more than 200 filings. More than that you MUST file electronically. I don't know if they just reject it or if they fine you, but I do know that more than 200 pieces and you must file electronically.
 
handsonhosting said:
At this time, this all appears to have been repealed - at least for 2011 & 2012 taxes anyway.

@agentblack - with regards to filing by paper rather than electronic, that will only work if you don't have more than 200 filings. More than that you MUST file electronically. I don't know if they just reject it or if they fine you, but I do know that more than 200 pieces and you must file electronically.
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Just another way to backlog our already over worked and under staffed central taxing office. Can't wait until I drop the boxes of papers off to her and watch her head explode from filing all of these needless forms:shaky: . Hopefully the elected folks will realize this is just needless burdensome work for businesses and taxing officials.

AB
 
agentblack said:
Just another way to backlog our already over worked and under staffed central taxing office. Can't wait until I drop the boxes of papers off to her and watch her head explode from filing all of these needless forms:shaky: . Hopefully the elected folks will realize this is just needless burdensome work for businesses and taxing officials.

AB
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i am in the UK so this should not effect me, but this would have most lilely been devised by a young wipper snapper straight from diapers to university and then a job with IRS and not actually been in ther real world doing a real job
 
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