Burdensome 1099 Requirement Sticks (And Still Sucks)... For Now
There's no shaking off that annoying 1099 requirement just yet. Who wants to bet it's here to stay?
Members of two of the nation's small business associations reacted negatively last week to the House of Representatives' failure to pass the Small Business Paperwork Mandate Elimination Act (H.R.5141) which would have repealed an expanded 1099 reporting requirement that many small business owners say will be difficult to comply with.
Rep. Dan Lungren's (R-Calif.) 1099 tax reporting repeal bill would have overturned a new 1099 reporting law which will require businesses – even small ones – to report to the Internal Revenue Service (IRS) any purchase from a goods or service provider of $600 or more annually. The reporting requirement is included in the Patient Protection and Affordable Care Act (PPACA) and is effective for purchases made in 2012 that will be reported on 1099 forms filed in 2013. The provision was estimated to cost the government $19.206 billion over 10 years. (This is the amount the expanded 1099 reporting would have brought in to government coffers.)
The AICPA might have to get a little angrier with their next angry letter to Congress.
A quick refresher on this obnoxious new requirement via NYT's You're the Boss if you're trying to catch up:
The reporting provision at issue is Section 9006 of the Patient Protection and Affordable Care Act, which adds “amounts in consideration for property” to the types of payments over $600 for which a business must file an information return with the Internal Revenue Service. In addition, the provision also closes a loophole that made payments to corporations exempt from the filing requirement. Under the new law, a company will have to file a Form 1099 with the I.R.S. for every vendor from whom it buys more than $600 in goods.
The section was intended to be a fund-raiser for the rest of the health care bill; it was projected to deliver $19 billion over the course of 10 years by making it more difficult for businesses to keep income unreported. But business groups assailed the new provisions. “This is absolutely unmanageable,” said Bill Rys, tax counsel for the National Federation of Independent Business, which is leading the effort to overturn the law. “It’s not just the amount of time and money businesses will have to spend, but all that goes with collecting this information. Who do you send it to? What do you do with employees who travel and are making purchases on the road?”
Gee, now why would they want to stuff the coffers while simultaneously making reporting a massive headache for all involved?