1099 Update

It’s not news to anyone who’s been following ÆtherCzar’s 1099 mandate coverage, but starting next year an onerous requirement will be placed on small businesses by clueless politicians with no real-world experience in business and no understanding of the unintended impact of their mandates.

The  provision, slipped into the Health Care Bill, targets small businesses and independent contractors by requiring them to file a 1099 form with the IRS for the cumulative purchases they’ve made from any other individual or business with whom they’ve done more than $600 of business in any year. The compliance cost with this provision would likely exceed any additional revenue obtained by the IRS. The accountant at the business where I work estimated needing to file a couple hundred extra 1099’s when the provision takes effect requiring at least a man day’s effort (“But Will They Cover Mental Health Services for Accountants“).

Now an update on attempts to repeal the 1099 mandate. Representative Joe Pitts reports:

In the last week of July, Rep. Dave Camp (R-CA), the leading Republican on the House Ways and Means Committee, prepared to offer a simple amendment that would have eliminated the provision. The measure appeared to enjoy broad bipartisan support. Rather than let the amendment pass, Democratic leadership removed a larger tax bill from consideration on the House floor.

The very next day, the House considered a brand new bill that removed the reporting requirement, but introduced new tax increases to make up for lost revenue. This bill failed because it was brought up under expedited rules requiring two-thirds of the House to agree. I voted against the bill because I thought it solved one problem by creating a dozen other problems.

The movement to repeal the 1099 mandate appears to be gathering momentum, but repeal is far from certain. TaxGirl offered a 1099 update a couple of weeks ago as well.

Update:

The U.S. Chamber of Commerce points out that the mandate will be devastating to small businesses as companies consolidate their vendor lists to reduce the burden of compliance. They also have a petition you can sign on to. And the American Institute of Certified Public Accountants observes that structural flaws will render the mandate useless for tax purposes and thus a senseless burden on small businesses.

Previously on ÆtherCzar:

• But Will They Cover Mental Health Services For Accountants?,
• Escaping the 1099 Avalanche?,
• The 1099 Mandate, and
• 1099 Mandate Hits Gold Coin Dealers.