As companies come to terms with new 1099 reporting requirements, software firms are starting to build new solutions-or update their existing ones--to help make finance executives' lives a little easier.
The new 1099 reporting requirement that all vendors who supply more than $600 worth of goods or services within the tax year be sent a form 1099, which takes effect in 2012, could cause untold headaches for small, medium, and even large companies, given the vastly-increased reporting burden that it is likely to create.
The law extends 1099 reporting requirements to all service and product purchases, whether from an individual or partnership-as was previously the cases-or from a business or corporate entity-which is currently excluded. However credit card purchases (and p-card purchases) are still exempt, as I discussed last month.
But for those companies that are worried about how they will manage the much-increased reporting burden, there is help at hand. A number of software firms are already at work on new or updated solutions to ease the process.
For example, business software provider Epicor just announced the launch of a new cloud-based 1099 offering, Tax Connect 1099 that links directly to its enterprise resource planning (ERP) solution to pull necessary data out and automate the process of sending and filing 1099s as much as possible.
Microsoft Dynamics is also hot on the job to ensure its ERP solutions have fixes in place to manage changing 1099 requirements.
Of course, all the major ERP systems vendors will be working on their own solutions as the year progresses and the 2012 end-date approaches.
It behooves the tech-savvy (and not-so tech-savvy) CFO to be aware not only of what system providers are up to in this space, but also to make use of the automation available from their current ERP, A/P and accounting system providers to ease the process as much as possible.
The challenge for vendors will be to manage that changeover process while also keeping up-to-date on potential repeals, which could still be in the cards for the coming year.
The first repeal effort-in the form of a bill introduced by Senate Finance Committee Chairman Max Baucus in November-did not pass muster, but further efforts may be forthcoming.