My business has been filing 1099's for many years now. Any payments I made over $600 to individuals or non incorporated businesses receive these. If I had an electrician rewire a building or something like that and and the bill was $601 or $6000, he gets a 1099. Businesses have been doing this for many years. It is the law. I did not like the fact they were making me the "policeman", but that's how it is.
The plumber does not have to pay taxes on the $601 or whatever amount. He will pay the taxes on the profit. This 1099 thing is just so EVERYBODY knows he received it. Me, him, and the IRS. That way he need to include it in his gross sales. He can't "hide" it anymore. Even if paid in cash.