Wednesday, December 1, 2010

1099 Reporting Requirements for 2012 On Their Way to Being Repealed

Included as part of the massive Patient Protection and Affordable Care Act, or Obama's health care reform bill, was a provision set to go into place in 2012 where business owners would have to file 1099s for any goods and services of over $600 paid to any person or company. This is as opposed to current law which requires a 1099 for any service provided by an independent contractor. If kept in place, this provision would cause a major reporting problem for small businesses. As well, the IRS doesn't currently have the resources necessary to attempt to match up the flood of 1099's to the returns of those being paid. All the way around it seems like a really bad deal and it makes you wonder how much forethought was put into it. Luckily though legislators have been made aware of their error, which isn't unusual, but the fact that they seem to be rectifying the issue is. Sen. Max Baucus of Montana, one of the major authors of the health care bill, has added a repeal of this rule to another bill. The repeal will not affect landlords, for whom the provisions will remain the same.

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