1099 Changes. Now you see them, now you don’t, now you …
“Focus on the core problem your business solves and put out lots of content and enthusiasm and ideas about how to solve that problem.” Laura Fitton, Founder of Oneforty.com.
Marcia Miller, EA, lives and breathes this idea. Miller has a thriving tax practice in South Florida, but she may be best known nationally as the “1099 Queen.” Miller lectures and teaches widely on 1099 issues, shining a light on the murky issues of contractor versus employee and the on-again-off-again attempts of the Federal government to close its huge tax gap with changes to 1099 requirements.
“Major changes to 1099 reporting that were passed under the cover of Affordable Care Act were repealed in April, but businesses shouldn’t get too complacent. They’ll be back in some form, sooner rather than later,” Miller predicts. The tax gap is just too huge to let it go. (The IRS is expected to provide updated estimates of the tax gap by the end of 2011, but the most recent estimate puts the gap at about $350 billion annually.)
Will the reprieve from issuing 1099s to corporations be short lived? Possibly. Businesses and the corporations with whom they contract should brace themselves. Will the IRS change how it applies the 20 factors that define the difference between an employee and a contractor? The government publishes the factors, but they are secretive about how they use those factors. How many of them do you have meet to be considered a contractor—that’s a mystery, says Miller, the 1099 Queen. “However, the IRS panel discussion that I just attended stated that in most cases there will be more emphasis or determinations based upon review of the three categories of "control."
Miller’s advice? Keep a watchful eye on lawmakers in the months to come.
Here are some useful resources provided by Miller.
by Sue Anderson - Based on 30 years of experience in continuing education for accountants. Currently program director for online CPE provider, CPE Link. Formerly with the California CPA Education Foundation managing key operational areas including marketing, program development, and distance learning.