Help ASMP – Protest New 1099 Requirements!

Dear ASMP Members:

One of the provisions of the new healthcare reform legislation will significantly impact the administrative burdens of your business unless the IRS changes it. As of now, starting after next year, if you pay any person or corporation more than $600 in a year for goods or services, you must report that to both the IRS and the entity or person whom you paid. For example, if you bought a new camera or lens for $1,000, you would have to report that on your income tax returns and issue a 1099 to the company from which you made the purchase. Fortunately, there is now an exemption for credit card transactions, but that doesn’t apply if you paid by cash or check.

The good news is that the IRS has asked for comments from the public. Please copy and paste the sample letter below, edit it as you choose, and email it to Notice.Comments@irscounsel.treas.gov. Please be sure that the subject line of your email says Notice 2010-51. Please note that the emails must be sent by Sept. 29, 2010.

We understand the government’s desire to track cash transactions, but the current system would impose an unacceptable record-keeping and reporting burden on small businesses like yours.

Thank you for your support and your membership in ASMP,

Vic

Victor S. Perlman
General Counsel & Managing Director

    (SAMPLE EMAIL)

TO: Notice.comments@irscounsel.treas.gov

RE: Notice 2010-51

Dear Sir or Madam:

I am a professional photographer and a small business person. I have virtually no administrative staff to handle my record-keeping and reporting responsibilities. The new requirement under Section 6041 of the Internal Revenue Code would place impossible burdens on me. The exemption for credit card transactions was a great step toward reducing the impact of this change in the tax code. Unfortunately, it does not go far enough.

I often pay for computer and camera equipment, studio and equipment rentals, catering services, and other items by check or cash. Those expenditures often total more than $600 per vendor in any given year. Having to keep separate track of each of these items — and then to issue Form 1099’s to each vendor — would simply take more time than I have as the owner of a very small business operation, and it would require back office support that I do not have and cannot afford.

Please change the requirements so that they apply only to larger business entities, such as persons or entities that employ more than 25 people.

Thank you for your time and understanding.

By Susan Carr | Posted: August 27th, 2010 | 30 comments


 

30 Responses to 'Help ASMP – Protest New 1099 Requirements!'

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  1. Thank you for this sample letter, I’ll get it right off. This is so crazy. How does a small fry like me issue a 1099 to Amazon.com? I would have to if I pay by bank account funds instead of a CC.

    Here’s one: If I buy something from Adorama and I use Bill Me Later toget 6 months No Interest, is that considered an exempt credit card purchase? If not, who gets the 1099? Bill Me Later paid Adorama, I’m paying Bill Me Later. Techincally I should issue the 1099 to BML for their “service, right? And what do they need with a 1099 for when they already have a record of the sale and have paid tax on it??

    The whole thing is a typical mess!

    By Paul | Aug 27, 2010

     

  2. My email’s been sent! Thanks for the heads-up, ASMP!
    Troy

    By Troy Freund | Aug 27, 2010

     

  3. Dear Sir or Madam:

    I am a professional photographer and a small business person. I have virtually no administrative staff to handle my record-keeping and reporting responsibilities. The new requirement under Section 6041 of the Internal Revenue Code would place impossible burdens on me. The exemption for credit card transactions was a great step toward reducing the impact of this change in the tax code. Unfortunately, it does not go far enough.

    I often pay for computer and camera equipment, studio and equipment rentals, catering services, and other items by check or cash. Those expenditures often total more than $600 per vendor in any given year. Having to keep separate track of each of these items — and then to issue Form 1099’s to each vendor — would simply take more time than I have as the owner of a very small business operation, and it would require back office support that I do not have and cannot afford.

    Please change the requirements so that they apply only to larger business entities, such as persons or entities that employ more than 25 people.

    Thank you for your time and understanding.

    By Emily Hall | Aug 27, 2010

     

  4. Great job putting this together, ASMP. I encourage every photographer to join in. It takes 30 seconds!

    Brian Smith
    President – Editorial Photographers

    By Brian Smith | Aug 27, 2010

     

  5. Ultimately, the seller/vendor needs to track their cash sales and pay what’s due. Why should the buyer have to issue a 1099, that’s not our job to track that transaction. And for us startups, that $600 may be coming out of my own pocket to get the business going… that means I’m using my NET income that already got stripped of taxes by my employers. The whole idea of this is looney.

    By Paul | Aug 27, 2010

     

  6. Thank you for putting this together!
    You deserve overwhelming appreciation!

    By Darlene Almeda | Aug 28, 2010

     

  7. This will mean a lot of extra work for me. I am a one person business, and most purchases for equipment, software, and product are more than $600.00. I would understand this new rule, if I hired contractors for services. I thought the 1099 form was for work performed, and used with contract jobs.

    Thank you for your time and understanding. . .

    By Karen Ulvestad | Aug 28, 2010

     

  8. This is another absurdity added to the already overly complex and obscure tax rules small business owners must comply with (see many state sales tax laws and independent contractor rules for assistants).
    I have a couple of questions:
    1) do we know the individual politicians who added these clauses?
    2) is it possible to lobby them directly to let them know the harm they will cause?
    3) Are there other, larger, organizations we can join (individually or as photo orgs) to fight against this legislation and to lobby for better rules for SMALL businesses (preferably non-political – politicians of all stripes care little for truly small business interests which are very different from medium and large corp interests)?

    By Nick Burchell | Aug 30, 2010

     

  9. Thanks for the heads up, email is out.

    By RUFUSPHOTO | Aug 30, 2010

     

  10. [...] Read how you can publicly comment (here). [...]

     

  11. I have been a supporter of the Obama administration but in this case I have to question the logic behind the provision… We want to try and help small business right?

    By Andy Goodwin | Aug 30, 2010

     

  12. this could be the final nail in the coffin of working as a self employed photographer in today’s climate. Will send the letter immediately, and I agree totally with all the comments so far. Thank you Victor, and ASMP.

    By Mikki Ansin | Aug 30, 2010

     

  13. message sent!

    By johnwaire | Aug 30, 2010

     

  14. Big thanks to Vic Perlman for helping us combat an unnecessary and burdensome regulation.

    Hello? ComEd? May I have your EIN please? I paid more then $600 by check for electricity last year and need to file a 1099 form. To whose attention shall I send yours?

    Can you imagine having to contact everyone from your local gas station to the camera store to the electric company, phone company, web host, etc… not to mention your assistants, stylists, printers. Oy!

    Everyone get the lead out and send an e-mail!!

    By Joseph Pobereskin | Aug 31, 2010

     

  15. This is ridiculous. These types of transactions are already overseen by individual states and sales tax requirements. As a former Credit Manager in and accounting department for a semi-large company, it appears to me that this would be a form of double taxation for the IRS to also oversee these transactions and require all of this extra work for ANY company. I have sent my email telling them my feelings. Thank you!!

    By Angela | Aug 31, 2010

     

  16. My email just went out. Just another reason to lobby for a flat income tax with no exemptions – postcard sized form attached to one annual check.

    Unfortunately that would remove the power to dictate social policy from politicians. Pity they can’t get productive jobs.

    By Mel | Aug 31, 2010

     

  17. I am not a full time pro photographer, but a small slice of my income does come from photographic work. I modified your form letter to better fit my circumstances and beliefs. Anyone who would like to copy all or part of my draft is welcome to. I don’t like asking for the burden to be placed on businesses of more than 25 people, I don’t think the additional burden should exist for ANY business.
    As I said in my version of your letter, “Regulatory policy should constantly endeavor to reduce the administrative footprint placed upon productive activity.” I always will believe so. My letter below:

    I am a small business person. I have no administrative staff to handle my record-keeping and reporting responsibilities. All the responsibilities of my business rest upon my shoulders. The new requirement under Section 6041 of the Internal Revenue Code would place unfair and impossibly burdensome new requirements on my already limited administrative time.

    I often pay for computer, business equipment, hardware, and equipment rentals, as well as other items by check or cash. Those expenditures often total more than $600 per vendor in any given year. Having to keep separate track of each of these items — and then to issue Form 1099’s to each vendor — would simply take more time than I have as the owner of a very small business operation, and it would require back office support that I do not have and cannot afford.
    The exemption for credit card transactions was a good first small step toward reducing the impact of this change in the tax code. Unfortunately, it does not go nearly far enough and favors a financial method that adds cost to my operation. In these tough economic times, adding to the financial burdens of small business owners is especially poor public policy. Through my own hard work, the country benefits in some small measure from the positive economic impact of my business operations. Small businesses help fuel demand for goods and services that boost the economy and already generate significant tax revenue. Adding administrative overhead to my business subtracts from the time available to do the productive work that generates income for my business. In a nutshell, you will reduce my profitability, likely resulting in a net loss of taxable income. Regulatory policy should constantly endeavor to reduce the administrative footprint placed upon productive activity. The more successful I become through my own hard work, the more likely I am to create demand that fuels jobs for others.

    Please eliminate these requirements that unduly burden small businesses that form the backbone of our great nation.

    Thank you for your time and understanding.

    By Jim Allen | Aug 31, 2010

     

  18. Regarding the Request from Victor Perlman, ASMP Managing Director & General Counsel, the wording should have read after next year. Referring to the change in the tax code would impact the 2012 not the 2011 tax year. Either way this is a burden on small business. back in May, Money Magazine reported on this here
    It should be noted in the article, this was not an Obama Administration but a congressional add on from the finance committee. I do not think it is the final nail in the coffin, at least for this photographer I rarely buy anything these days that is not on a credit card, which is currently exempt. But it does add to the amount of paperwork generated and in these “green” times anything we can do to reduce paperwork is better.

    By Richard Kelly | Sep 1, 2010

     

  19. Thank you!
    Message has been sent!

    By Tori Gonzalez | Sep 4, 2010

     

  20. Does anyone know if the credit card exemption also applies to cards like Visa Check Cards that are attached to a checking account?

    By Jenny | Sep 4, 2010

     

  21. Although it may cause some additional effort on a very small number of people I can not see where it has much impact on the majority of people. In reality those who make money off the sale of equipment in any large amount should be reporting their income and if it takes the consumer to create honesty and force the retailers to pay their fair share I support the idea. We pay our fare share (and some times more) in taxes at all levels of government (often over and over through various levels of government) and I can not see why we should support loopholes for retailers’ to earn without paying their fair share. This should not take much effort if a person is keeping even the simplest form of records.

    By Dwayne | Sep 5, 2010

     

  22. Just want to add my thanks.

    By Chet | Sep 5, 2010

     

  23. Sent

    Thanks for the heads up.

    By Lucas Ridley | Sep 5, 2010

     

  24. Amen to the comments above. Thanks, for compiling a sample letter for us…that’s one less paperwork task for us to deal with ;-)

    By Julie Rorden | Sep 6, 2010

     

  25. Email sent!

    Here’s my edited version:
    Dear Sir or Madam:
    I am a professional photographer and a small business person. I have no administrative staff less myself to handle my record-keeping and reporting responsibilities. The new requirement under Section 6041 of the Internal Revenue Code would place impossible burdens on me. The exemption for credit card transactions was a great step toward reducing the impact of this change in the tax code. Unfortunately, it does not go far enough – especially when there is already a charge to process credit card transactions to begin with.
    I often pay for computer and camera equipment, studio and equipment rentals, catering services, and other items by check or cash because I want to stay debt free and do not want to be another statistic with high credit card debt. Those expenditures often total more than $600 per vendor in any given year due to the equipment requirements of being a photographer not affiliated with a studio. Having to keep separate track of each of these items — and then to issue Form 1099’s to each vendor — would simply take more time than I have as the owner of a very small business operation, and it would require back office support that I do not have and cannot afford. As a result, this would interfere in my availability to clients which would cause me to lose my customer base and ultimately my business would go bankrupt.
    Please change the requirements so that they apply only to larger business entities, such as persons or entities that employ more than 100 people.
    Thank you for your time and understanding.

    Respectfully,

    By MK Storm | Sep 6, 2010

     

  26. Too bad things are moving this way. Writing letters might be a good way to start taking a stand against this ghastly little monster.

    However, suggesting that large businesses be subject to this over small businesses is almost as crazy as the concept itself.

    NO ONE should have to take these extreme measures to track any transaction – cash or otherwise.

    If it’s unreasonable that a small business (photographers, in this case) with staffs from 1-10 people can’t track the few hundred transactions that might qualify for tracking here, how is it reasonable to expect that large companies, who might make transactions like that every hour of every day be on the hook for “extra” accounting?

    Just say no. Why try to pass the burden up to a bigger company?

    By Will Seberger | Sep 7, 2010

     

  27. this is ridiculous.

    The CC exemption makes sense, most of my purchases of equipment are on a bank card or CC,

    I’m wondering who is forking over wads of cash to the camera store, vendors, etc. ?

    I’m very honest when it comes to reporting all income and also deductions, I pay a good accountant to help me every year, the IRS wouldn’t be gaining anything from me through these changes.

    By Jacob | Sep 9, 2010

     

  28. Welcome to the brave new world of socialism. I see Big Brother all over this. Reminds me way too much of my ex home country, Denmark. Be prepared for a 25% sales tax, and the IRS knowing everything you buy, sell or swap. So sorry to see this.

    By Marianne Bush | Sep 12, 2010

     

  29. [...] for the opinion of business owners and the American Society of Media Photographers has organized an e-mail protest campaign to protect the interests of small business owners. All submissions must be sent in before September [...]

     

  30. TO: Notice.comments@irscounsel.treas.gov

    RE: Notice 2010-51

    Dear Sir or Madam:

    I am a professional photographer and a small business person. I have virtually no administrative staff to handle my record-keeping and reporting responsibilities. The new requirement under Section 6041 of the Internal Revenue Code would place impossible burdens on me. The exemption for credit card transactions was a great step toward reducing the impact of this change in the tax code. Unfortunately, it does not go far enough.

    I often pay for computer and camera equipment, studio and equipment rentals, catering services, and other items by check or cash. Those expenditures often total more than $600 per vendor in any given year. Having to keep separate track of each of these items — and then to issue Form 1099’s to each vendor — would simply take more time than I have as the owner of a very small business operation, and it would require back office support that I do not have and cannot afford.

    Please change the requirements so that they apply only to larger business entities, such as persons or entities that employ more than 25 people.

    Thank you for your time and understanding.

    By Penny Harris | Sep 17, 2010

     


 

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