New 1099 rules set for 2012

Every once in a while some news comes along that doesn’t appear directly email marketing related, but is relevant to email marketers as business owners. At Boomerang, we have a number of customers who use our services to pass through to their own customers.  So, the new reformed 1099 rule change will apply to our customers.

New 1099 Rules

As part of the healthcare reform bill, changes to the way 1099 forms are to be managed will also change. These rules take effect in 2012, so there’s still a year left for people to reform the law before it takes effect.

Starting 1/1/2012, all companies will be required to issue 1099 tax forms not just to contract workers (as has been the case in the past), but to all corporations, contractors and individuals who purchase more than $600 in goods or services during a tax year.

Reasons behind the change

The primary motivation behind this change appears to close the loop on previously honorary tax burdens. With this new change, requiring 1099s of everyone who purchases more than $600 in goods or services means explicit tax liabilities for companies to the IRS.  More forms means more paperwork, yes.  It also means more income for the IRS.  For small businesses, this additional burden can be a challenge requiring mailing out a whole lot more 1099s than previously required. This change also helps out the postal service who has also been flagging and desperately trying to find more ways to get more physical mail delivered.

Email Marketing

Of course, it may be possible to PDF these forms and email them which will save on postage costs. Boomerang does support sending out emails with linked PDF files or, indeed, attached PDFs.  So, Boomerang may be able to help you fulfill this requirement when it enacts in 2012 by sending them as email rather than physical mail.

Law Reform

According to this article, there is a reform underway to attempt to repeal the 1099 portion of the healthcare reform bill.  Repeal of this section would then return us back to the previous laws. However, it appears that lawmakers are trying to use the repeal vehicle to add in extra language and, so far, this extra language has failed to work.  The repeal is not off of the table yet, but lawmakers need to rethink their strategy of extra language of they really want the 1099 burden to go away.

Either way that it works out, Boomerang is here to help support your email marketing needs whether for your customers or directly for you own business.

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