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Progress in 1099 battle, but no final action yet

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Financials

Progress in 1099 battle, but no final action yet

The much-maligned 1099 reporting requirement set to take effect in 2012 is still on the books


By Jonathan Sweet, Editor in Chief February 8, 2011

Despite headlines trumpeting its demise, the much-maligned provision in the Patient Protection and Affordable Care Act that increases 1099 reporting requirements continues to survive.
The rule, scheduled to take effect in 2012, would require businesses to issue IRS form 1099 for any service provider that they pay more than $600 to in a given year. The requirement’s original purpose was to generate an estimated $22 billion annually in lost revenue from underreported income, but small businesses in many industries (including remodeling) have raised objections to the increased paperwork required by the law. Trade associations from the NAHB and NARI to the Chamber of Commerce have been lobbying against it.
The Senate passed an amendment to the FAA Air Transportation Modernization and Safety Improvement Act repealing the 1099 requirement, but roadblocks remain. First, the entire FAA bill must be passed, then the House must also pass the repeal. Some legal scholars have also said the passage by the Senate is a moot point because the U.S. Constitution requires all tax-related acts to originate in the House.

Click here for more on the 1099 debate.

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