Business owners across the land gave a sigh of relief as an unpopular portion of the Healthcare Reform Act was repealed by the Senate two weeks ago. Or was it?
In a bi-partisan 81-17 vote, the so called 1099 requirement would have mandated that all businesses issue 1099’s to anyone, incorporated or otherwise, with whom they engaged in $600 dollars in business in a year.
But don’t celebrate yet.
Called the ‘new 1099 requirement,’ this regulation will require small businesses to file an IRS form 1099 for each vendor from whom they make purchases of $600 or more. Many small business owners and national associations have advocated for the repeal of this provision.
Small business is already burdened with excess record-keeping and government reporting forms. That is a non-productive time waster. That will harm local economies.
Form 1099 is the Internal Revenue Service’s catch-all category for reporting income that needs to be reported for tax purposes but doesn’t fall into the category of wages and salaries.
The rule, which would go into effect in 2012, would require businesses to file a Form 1099 with the Internal Revenue Service any time they spend more than $600 on goods with another business or contractor. That means restaurants, hotels, office supply shops and just about any other business you can think of would be inundated with paperwork from their customers.
If you’re in business, you’re already scrambling to comply. How much did we spend on office supplies, and was the total over $600 with any one vendor. Gotta get their taxpayer ID number and send them one?
It’s a huge burden on small businesses, particularly the small ones, and all so the IRS could squeeze a few billion dollars more out of taxpayers to make up for the costs of so-called health care reform.
Yep. The controversial national health care bill is the first place I’d look for that kind of business accounting tax law change.
It’s had a lot of small-business folks tied in knots, and for good reason.
Even the IRS admits businesses would spend more money complying with the rule than the IRS would recover in otherwise lost revenues.
If you’re in business, this mess bears watching. Many accounting systems are not set up for these rules. Unless the repeal is ratified soon, you’ll have to consider how to comply come January 2012. That means setting up your system well in advance.
So maybe we are actually in 1099 purgatory?
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This 1099 debacle, stemming from the Health Care Reform, creates an unbelievable burden on small businesses. Let us hope this matter is disposed of soon.
Amen to that!
We are almost there. Still need the Senate. >>
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House Repeals 1099 Reporting Requirements
Source: Accounting Today.com / MARCH 8, 2011
Washington, D.C. – The House approved a repeal of the expanded 1099 information reporting requirements by a vote of 314-112.
The bill, H.R. 4, “”The Small Business Paperwork Mandate Elimination Act of 2011,” introduced by Rep. Dan Lungren, R-Calif., would repeal the provisions in last year’s Affordable Care Act and Small Business Jobs Act requiring businesses, including rental property owners, to file a Form 1099-MISC with the Internal Revenue Service reporting any purchases of $600 or more from another business during the calendar year.
Every Republican in the House voted to approve the bill, but 76 Democrats objected to an offset in the bill that would pay for the cost of the repeal by requiring people who had received tax credits to pay for health insurance under the health care reform bill to repay the subsidies if they end up earning too much during the year to qualify. They argued that the offset amounted to a tax increase.
“This bill would saddle hundreds of thousands of middle-income taxpayers with a hefty tax increase,” said Rep. Sander Levin, D-Mich., the ranking member on the House Ways and Means Committee. “We all favor repealing 1099, but to do so on the backs of the middle class is irresponsible. With this legislation, Republicans continue their reckless overreach, this time by gouging middle-income taxpayers.”
However, Rep. Dave Camp, R-Mich., who chairs the Ways and Means Committee, said he did not view the provision as a tax increase. “Voluntarily choosing to not enroll in government health care and thus forgoing the associated tax subsidies that one may not be eligible for might result in more government revenue according to the Joint Tax Committee, but it is not a tax increase,” he said.
He hailed the passage of the bill. “Clearly there is strong, bipartisan support to repeal the 1099 provisions so that small businesses can focus on what they do best – creating jobs,” Camp said in a statement. “With more than 70 percent of the House, including 76 Democrats, voting for repeal of the 1099 provisions, I urge the Senate to move quickly to take up and pass this legislation so we can send a bipartisan bill to the President.”
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Excessive 1099 requirements will retard small business potential and this should be instigated and resolved by Congress before the IRS runs amok as they are apt to do.
I pray that this 1099 new requirement goes away!
Helpful blog, I hate 1099s! LOL!
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