This will change dramatically in 2012 when new reporting requirements come into effect. Businesses will have to keep track of all noncredit card purchases made that exceed $600 in a calendar year. This includes goods as well as services and also applies to purchases from a corporation

   If, for example, your business buys $600 in office supplies from a single retailer, you will be required to file a 1099 form. Multiply this by the number of vendors that you do business with and you have a big headache.

   It’s easy to imagine rooms full of receipts and 1099s – all of which must be filed appropriately. This requirement will make accounting exponentially more burdensome, and it will force businesses to divert scarce resources from serving customers and creating jobs to bookkeeping and tax filing.

   If this sounds like a recipe for disaster, that’s because it is.

   The new reporting requirement may also cause businesses to run into problems with the IRS. If the revenue reported to the IRS on 1099s doesn’t match with company reported revenue, the vendor could be subject to a costly and time-consuming audit.

   And with 40 million entities required to file 1099s under this rule, it’s not hard to imagine that mistakes will be made.

   These rules may also cause businesses to limit the number of suppliers they use in order to cut down on paperwork. It’s possible that small businesses – which offer a narrower range of goods and services – could be left out in the cold. This isn’t good for anyone.

   The U.S. Chamber urges Congress to repeal this reporting provision so that businesses can focus on what they do best – providing goods and services, creating jobs, and stimulating economic development.

   If policymakers fail to act, they’ll be putting the brakes on badly needed job creation.

Originally published 2010. Reprinted by permission, uschamber.com, 2010.
Copyright© 2010,U.S. Chamber of Commerce.