The IRS has changed its 2011 tax forms and added the following new questions on all business tax returns (including Schedule C for sole proprietors as well as partnership, LLC, and corporate tax returns), with the exception of Form 990, which asks for reportable compensation for highly compensated/key employees whether by 1099 or W-2:
Form 1099 is used to report certain payments to recipients and to the IRS. The most common 1099 type form is Form 1099-MISC which is used to report the payment by a business for services rendered to the business (there may also be Form 1099 reporting requirements if a business pays interest or dividends).
We have been following the progress of the bill to repeal the burdensome 1099 Reporting Provision that would have required companies to file a 1099-Misc for every vendor for any cumulative annual amount of $600 or more. The provision was expected to contribute $19 billion toward paying for healthcare reform but was widely critisized for the intense reporting effort it would require. With the President signing this bill, the funds will be collected from people who will have to repay excess amounts claimed above and beyond what they were entitled under the healthcare reform.
One of the components of the 2010 Health Care legislation included significantly expanded 1099 reporting requirements. The new rule would be that all corporations and organizations would have to report purchases over $600 and on rental real estate. The Senate and the House had dueling versions of bills to repeal the additional reporting requirements and spent a year duking it out. The Senate approved a modified version in February and the House has now approved it as well. The next stop is the President’s desk.
The Senate passed a bill on February 18th that included provisions to repeal the new expanded 1099 reporting requirements. The House Ways and Means Committee has also approved its own bill including a similar repeal with additional passages covering rental property businesses. The House bill includes some controversial off-sets involving getting some repayments from low-income and middle-income taxpayers who received credits and subsidies under the original health care act. The Senate’s version of the bill has non-specific offsets comprised of spending cuts as opposed to repayments. The House is expected to vote on the Senate’s bill when they return from recess.
See more about it here.
Yesterday the Senate approved an amendment to repeal the expanded 1099 requirements that were put in place with the Patient Protection and Affordable Care Act. The expanded requirements would require businesses to report any purchases of goods and services over $600 a year from another business or individual.
Senate Finance Committee Chairman Max Baucus, D-Mont said “We heard small businesses loud and clear, and today both parties came together in a bipartisan manner to respond to their concerns. Eliminating these paperwork requirements lets small businesses focus on the critical work of growing their businesses and creating jobs. ” He continued noting that the repeal is a “common-sense solution”.
Read more about the repeal here.