What is a 1099?
- It is only applicable for payments of over $600/year.
- It is filled out by the buyer, aka the person who hands over money in exchange for services.
- 3 Copies are made; One to the buyer. One to the Seller. One to the IRS.
- Only filed for payments made for services and the like, and is explicitly exempt from buying of merchandise.
- Scrap yards, as of present, DO NOT FILE a 1099 for customers who sell them metal scrap, as it is “merchandise.”
How Does A 1099 Change In 2012?
In 2012, 1099 forms will be issued when paying individuals, but ALSO when paying corporations, FOR ANY PROPERTY! These 1099 forms will be given to you by any business, or in our case a scrap metal yard, if over $600 of money changes is payed to you by them.
Why Am I HAPPY These 1099 will be filed: (read “The glass is half full:”)
One of the reasons I think selling scrap metal is so great, is that there are no sales saxes taken out of the money you receive! There is no social security payed into when you get your money! Metal selling businesses enjoy these perks, and many individuals try to get away with not declaring the money they receive as income!
As a registered llc, I have dealt with 1099s before. But being a registered llc will not stop the scrap yards from giving you a 1099 in 2012. Up until now scrap yards did not have to issue them to the sellers (me and you) because we were selling property/merchandise. Now, most of my income will come from these 1099 jobs, but that doesn’t change how much money in taxes I pay on it!
The introduction of 1099s will simply deter small time scrappers from selling metal, and instead allow bigger, more well established companies, reclaim the business everybody now thinks they are an expert in. (See the Spike TV disaster “Scrappers”)
Why I don’t plan on making any changes in 2012:
I don’t plan on making any changes in 2012, because this law has NOT YET BEEN CLARIFIED BY THE IRS. Basically, as the law stands, the IRS has the power to make any type of exception to the rule.
If the law ends up including “merchandise” (which is currently one of the exceptions to 1099s), if I buy over $600 of toilet paper from Wal*Mart, I would need to send them a 1099 at the end of the year… Why? They already are without a doubt declaring that money, and the IRS will just get stuck with a bunch of extra paper.
So before you go jump off a bridge, just wait until 2012 to see if this actually happens. My opinion is that it will not be a big deal.
… But maybe it will.