Form 1099 Changes Just Need President’s Signature

On April 5, 2011, the Senate approved by a vote count of 87 to 12 a bill that would repeal an extension of the Internal Revenue Service’s burdensome Form 1099 reporting requirements.

As a “pay-go” effort to offset the cost to taxpayers of the new healthcare reform law, Congress last year extended the 1099-MISC reporting provisions to cover payments for goods valued over $600. Rep. Dan Lungren’s (R-CA) H.R. 4 would repeal this extension, and would also repeal an additional Form 1099 rental real estate related reporting requirement.

Credit unions and other businesses have long been required to report on Form 1099-MISC certain payments of $600 or more that will be considered income by the IRS.

Lungren’s legislation, which passed the House with 324 affirmative votes last month, incorporated language authored by Rep. Dave Camp (R-MI). Lungren hailed the Tuesday passage of the bill as “a great day for small business owners in [his] district and all across America.”

Camp estimated that the tax law change would save taxpayers $20 billion over a 10-year span and would reduce the deficit by more than $166 million over that same time period.

The Credit Union National Association earlier this year backed the bill, noting that requiring 1099-MISC forms on goods was extremely burdensome and had questionable value in actually increasing federal revenue.

Camp implored President Barack Obama to work with legislators to “find other ways to reduce the heavy burden of federal mandates, regulations and paperwork that take employers’ time, energy and resources away from creating jobs.”

President Obama must still sign the bill before it can become law.

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Posted in Industry Insight.