JA Reports on New Laws for 2012

What will we do between them?

New Law For 1099s

Tucked into the 2,409 pages of President Obama's health care bill is a new provision of law that will affect every business and corporation. It doesn't take effect until January of 2012, but the internal process to ramp up for compliance begins now.

Section 9006 of the health care bill mandates that, beginning in 2012, all companies will have to issue 1099 tax forms not just to contract workers but to ANY individual or business from which they buy more than $600 in goods or services in that tax year. This means businesses will have to issue millions of new tax documents each year. Every business will have to send all its suppliers 1099s as long as the cost is over $600. It expands the scope of 1099s by using them to track payments not only for services but now for tangible goods, and it requires that 1099s be issued not just to individuals, but to corporations as well. The idea behind the change is that audits of the 1099s will capture unreported income, and generate more government revenue to offset the cost of the health care bill.

The IRS will develop implementing regulations next year, and in the meantime, there is an effort underway in Congress, primarily by small businesses, to repeal the provision.

In an alert sent to National Jeweler and addressed to the chief executive officers of firms using gold as well as the minerals coltan, cassiterite and wolframite, JA warned that the "Dodd-Frank Wall Street Reform and Consumer Protection Act," legislation that is designed to bring sweeping changes to Wall Street, includes a section that would have a big impact on the jewelry industry. The addendum to the bill is meant to ensure minerals aren't subsidizing conflicts in the Democratic Republic of Congo, as well as nine surrounding countries: Angola, Zambia, Tanzania, Burundi, Rwanda, Uganda, Sudan, the Central African Republic and Congo.

According to JA, the provision, section 1502, dictates that companies using gold or any of the other minerals mentioned above will have to file annual reports with the Securities and Exchange Commission (SEC) regarding the source of those materials, a step that the organization believes will surely require companies to hire a third-party firm to audit and validate the reports.

"We cannot imagine making a disclosure to the SEC if you didn't do an audit to know for a fact it would stand up," said JA Chief Operating Officer Robert Headley.

If a company's gold or minerals did originate from one of the 10 African countries included in the bill, then that company would have to show what steps they took to trace their materials back to their source.

Headley said that while JA is against materials of any kind that support conflict, it views the bill--which would impact a large number of industry players, including retailers--as "impractical" as written now given the current lack of traceability in the supply chain.

"How would anyone know [where their gold is coming from] unless you're buying it from a particular mine only?" he says. "Bottom line, it's too hard to trace."

In addition, the provision dictates that the materials information be placed on the company's Web site for public review; there is no allowance in the bill for those companies that may not have Web sites.

The Dodd-Frank bill already has passed the U.S. House of Representatives and is now being readied for a final vote in the Senate. Senators, who have been on a break, are slated to return to their offices on Tuesday.

Headley said that the provision that could potentially impact the jewelry industry, Section 1502, was "quite recently" introduced and is a random add-on to the bill, which is a piece of financial regulatory reform legislation.

"I think we would all acknowledge this has nothing to do with this bill," he says.

In the alert, JA recommends members of the jewelry industry contact their U.S. senators to ask them to defeat this provision of the bill (Section 1502) or the entire bill if the provision cannot be defeated.

Sales

Our August clearance sale is comming up

20%-50% off our entire stock and 40% off our 14kt and 18kt designer gold lines

Check it out on our new website:

www.arareity.com

Store hours.

Arareity is closed on Sundays and Mondays, as it has been for the past sixteen years or so. As of recent, there has been talk of the store swaping the longtime five day week for an extended seven day week. Who knows, maybe soon you'll be able to take care of your jewelry needs any day of the week!

Silver sale!

Come in and find twenty percent off of our entire sterling silver stock now through the end of July.