Remember to get their name and address, as well EIN / SSN so that you can actually fill out the fields in the 1099 form. And even if it's below $600, you _might_ buy from them before the year-end, so you need to record the amount in case the total aggregate amount for the year goes above $600.

This requirement is just plainly insane, but at least IRS also agrees that it's insane ( http://www.irs.gov/newsroom/article/0,,id=225270,00.html )

I feel that this requirement is only there so that the data can be collected for a coming VAT in the US. They can't push such unpopular legislation through at once.

That doesn't make sense for me. First, US lawmakers don't really think that far ahead. But more tellingly, this isn't a universal requirement - it just applies to business transactions that can't otherwise be audited.

I think it's no more than what it appears to be: a ham-handed way to shore up the traceability of money flow.

And why does the government need to trace money flow?

The better to tax it, my dear. Presumably. I'm not saying I agree with it - I don't. Just that it's a smaller leap of faith in my opinion to believe that's the motivation.