Ah the joy of our new health care rules.
When the government isn’t reducing reimbursement rates, threatening to take back money already paid to you (via a RAC audit) or hanging huge fine threats over your head if you don’t follow privacy rules (HIPAA)…they sneak in a nifty little (additional) paperwork pothole.
With the passage of the new health care bill, among the 2,400 plus pages is hidden this little gem: all companies, starting in 2012, will have to issue IRS 1099 tax forms to any individual or corporation from which they buy more than $600 in goods or services in a tax year.
CNN said the following:
Right now, the IRS Form 1099 is used to document income for individual workers other than wages and salaries. Freelancers receive them each year from their clients, and businesses issue them to the independent contractors they hire.
But under the new rules, if a freelance designer buys a new iMac from the Apple Store, they’ll have to send Apple a 1099. A laundromat that buys soap each week from a local distributor will have to send the supplier a 1099 at the end of the year tallying up their purchases.
The bill makes two key changes to how 1099s are used. First, it expands their scope by using them to track payments not only for services but also for tangible goods. Plus, it requires that 1099s be issued not just to individuals, but also to corporations.
What’s this mean? More trees destroyed for one.
For any individual or company that pays for services from you for greater than $600, they have to provide you with a 1099.
Let’s think about how this will affect the typical practice:
- Supplies: how often do you order less than $600 in supplies = 1099
- Equipment: not much medical equipment for less than $600 = 1099
- Software: EMR/EHR/PM not below $600 for sure, oh and if you use a web based EHR that costs more than $600 per month = 1099 x 12.
- Support: most software support is greater than $600 per year = 1099
The list goes on.
Why is this happening?
Well, more paperwork means an easier to follow paper trail which is expected to make it more difficult for folks to dodge taxes ergo this is an attempt to collect more taxes to pay for the new healthcare reform bill.
Sit back for a moment and just think through all the additional paperwork this will generate for your office…not only the 1099’s that you have to fill out and send, but the 1099’s all your patients will need to fill out and send to you…that you will need to keep organized.
There’s a bill introduced by Rep. Dan Lungren (H.R. 5141), which has gathered over 80 members of Congress as co-sponsors to repeal this section.
It’s probably worth noting you should talk to your congressman about this.