The federal government of the United States has laid down significant changes in the IRS tax structure in 2013 that is going to bring a sea change in the existing Internal Revenue Code (IRC). This change is believed to affect those individuals who work as freelancers or on contract basis and file Form 1099 to declare their income for a given financial year.
The imposition of this change now will give the taxpayers little room for complacency. Take for an example a freelance worker who has earned an amount greater than 600 USD in 2012. Now he or she has to fill up the Form 1099. This applies to even to the non-tax-exempt outfits, like LLCs.
Any business organization that works with freelancers also need to act swiftly adhering to the latest changes under Health Care Act 2010. They now need to file both goods and services earned during the year. The major aim of such a step is to cut down the total compliance costs.
The law also strictly mentions to an increase in penalty charges for the defaulters. A 30-days delay in providing all the required information to IRS in the desired manner will attract a penalty of 30 USD per payee. If the delayed time becomes more than 30 days then the penalty will rise to 60 USD per payee. However, this is applicable to those payments only that are completed before August 1. Anything after that will attract a penalty of hefty 100 USD per payee.
This new system in place is estimated by Joint Committee on Taxation to increase the federal exchequer by a whopping 17.1 billion USD within 10 consecutive years.