SENATE FAILS TO REPEAL NEW 1099 REQUIREMENTS

The Senate came up short yesterday in securing enough votes for a provision in the Small Business Lending Fund Act that would have repealed or scaled back the hotly-discussed expanded 1099 reporting requirements. 

  

The controversial regulation, which is included in Section 9006 of the Patient Protection and Affordable Care Act, demands that businesses report to the IRS any purchase of goods or services worth $600 or more during the calendar year. The mandate is slated to begin in 2012 for forms filed in 2013.

 

Sen. Bill Nelson’s (D-Fla.) revised amendment proposal, also denied, called for a $5,000 threshold and exempting businesses with 25 or fewer employees, but would pay for the lost health care revenue by eliminating oil & gas industry tax incentives, which would have had a lasting effect to Texas.

 

http://www.webcpa.com/news/Senate-Fails-Pass-1099-Repeal-Amendments-55560-1.html

Comments

[Cab Taxi]

So sad, It's not good for company record. I think there are various region for failure of that's requirement otherwise SENATE is a very good organization.
http://www.cab-accounts.co.uk/

[James A. Smith, CPA, Chair, TSCPA Federal Tax Policy Communications Subcommittee]

Patrick, the TSCPA Federal Tax policy is unanimously opposed to this requirement, and a letter expressing this view as the opinion of the TSCPA as whole will be released soon setting forth our reasons for this position. Our opposition is primarily because it will be practically impossible to reconcile 1099 payments to tax return revenues. Accrual versus tax basis accounting, fiscal versus calendar year reporting, and the effect of consumer versus business sales will result in virtually no instance where 1099 revenue will tie to tax return revenue. Consequently, the IRS will have either tax return revenue in excess of 1099 reports, in which case the reporting will be ignored, or will be sending businesses notices of reporting discrepancies to which the businesses will have to spend time and money responding and then the IRS will have to spend time and money processing the responses. Fiscal year and accrual basis filers will face an enormous task trying to reconcile differences, the result of which will be no significant additional revenue. Please see our letter when it is posted for a more detailed discussion.

[Patrick]

As CPA's do we support or oppose the new reporting requirement? Although unpopular with our clients I have to think this is a good idea. Why? As CPA's we have a responsibility to represent honest, ethical clients. This program, although burdensome to implement, will snare the cash only businesses that fly under the IRS radar. I believe, as a general rule, these are not the typical clients of CPA's.

By bringing in more revenue through increased taxapayer compliance, we reduce the need to raise tax rates on honest, ethical taxpayers that are the typical clients of a CPA. I think it is our responsibility to support this reporting requirement and to communicate to our clients that in doing so, it raises additional revenue for the government without raising taxes on our clients - the businesses already reporting their income correctly.

And let's be honest, once a vendor is set up the first time in any reputable accounting software as a "1099 vendor" how difficult is it to print five 1099's or 5,000?