What's the Latest on 1099 Reporting?
Currently, under the Patient Protection and Affordable Care Act (PPACA), all businesses, charities and state and local governments will need to file a 1099 Form information return for all payments of more than $600 to a single provider of goods and services (other than to tax-exempt organizations). The resulting reporting and potential additional tax revenue was earmarked in the PPACA as a revenue generator to fund health care reform.Because this requirement encompasses so many vendors of products and services, members of Congress are working to repeal the expanded provisions before they impact anyone at the end of this year. Reporting requirements would currently start for payments made after December 31, 2011, and reported in 2013. What this means is that services or goods invoiced for more than $600 this year that are paid for after December 31, 2011, would require reporting on a 1099 form by January 31, 2013.Similar bills have been passed in the House and Senate to repeal the expanded reporting requirements. President Obama has also addressed 1099s with regard to repealing reporting requirements for goods providers only, not services providers.Until this is sorted out, we recommend keeping track of all vendor contact information in your database to ensure that it is handy in the event that you need to file a 1099. We will keep you posted on further developments. Based on this newsletter item: Repeal of 1099 business reporting gains momentum in CongressBefore recessing for its Presidents’ Day holiday, the Senate voted to repeal the expanded business Form 1099 information reporting requirements under the Patient Protection and Affordable Care Act (PPACA). The Senate vote came after the House Ways and Means Committee approved a similar repeal bill.Expanded reportingThe PPACA imposed new business information reporting requirements as a revenue raiser to help fund health care reform.Since passage of the PPACA in early 2010, many businesses, especially small businesses, have complained about the burdens of complying with the expanded reporting. In 2010, the House voted to repeal the new reporting requirement but the bill died in the Senate.Senate billThe Senate’s repeal bill (Sen. 223) is an amendment to the FAA Air Transportation Act, which passed the Senate by a vote of 87 to eight on February 17. The Senate bill pays for the cost of repealing the expanded business information reporting by rescinding discretionary spending. The Senate considered, but rejected, some repeal bills that were not offset.House billThe House bill (H.R. 4) also repeals the expanded business information reporting requirements but the bill is not offset. This is an important difference from the Senate bill, which could slow passage of the bill if it is sent to the Senate. The challenge remains of placing the repeal of Form 1099 reporting into a larger bill to which both the House and Senate can agree. White House positionPresident Obama has signaled his support to modify but not entirely repeal the expanded business information reporting requirements. In his fiscal year (FY) 2012 federal budget, the president proposed to exclude payments for goods from reporting. Information returns would only be required for payments of services.If you have any questions about repeal of the expanded 1099 business information reporting rules, or your current obligations under the new information reporting rules in effect now, please contact our office. We will keep you posted of developments.