Congress Urged to Scrap New Form 1099 Reporting Requirements
By Heather M. Rothman
Publication Date: 08/18/2010
The U.S. Chamber of Commerce announced Aug. 17 that more than 1,099 companies around the nation have signed a letter to lawmakers asking them to repeal new Form 1099 reporting requirements, calling them burdensome, complex, and very costly.
Implemented as part of the recently enacted health care reform law (Pub. L. No. 111-148 as modified by Pub. L. No. 111-152), the new rules require all businesses to report purchases totaling $600 or more with any vendor every tax year. According to the Joint Committee on Taxation, the provision, which is slated to go into effect in 2012, would raise $17.1 billion through 2019.
“If this provision is implemented, the 1099 reporting mandate will impose substantial paperwork and reporting burdens on the backs of governments, nonprofits, and businesses—especially small businesses,” the companies wrote. “This provision will also serve to dramatically increase accounting costs, expose businesses to costly and unjustified audits by the [Internal Revenue Service], and subject more small businesses to the challenges of electronic filing.”
The Chamber-organized letter noted that the new rules will alter “behavior in the marketplace,” with small businesses and startups the likely losers because, to cut down on the reporting, governments and businesses might consolidate their purchases to only large vendors.
Finally, the companies said Congress should not offset the cost of repeal with new or increased taxes on businesses. “At a time in which we have seen an unprecedented growth of the federal government, it is imprudent for lawmakers to saddle any one segment of the business community with the obligation to pay for the repeal of this ill-conceived, expanded information reporting mandate,” the companies wrote.
The letter is post-dated for September, when lawmakers return from the summer recess. The Senate will vote Sept. 14 on two plans for changing the Form 1099 reporting requirements when it resumes consideration of a small business bill (H.R. 5297).
The complete text of this article can be found in the BNA Daily Tax Report, August 18, 2010. For comprehensive coverage of taxation, pension, budget, and accounting issues, sign up for a free trial or subscribe to the BNA Daily Tax Report today. Learn more »
© 2010, The Bureau of National Affairs, Inc.
