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New 1099 Reporting Requirement May Be Repealed

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Due to newly enacted legislation companies that pay any individual or corporation for goods or services more than $600 will be required to issue a 1099 to report the transaction to the Internal Revenue Service beginning in 2012.  This creates a financial burden on small businesses that may not have the means to track and report every transaction for the year.

The 1099 form is used to document income for individual workers other than wages and salaries: Freelancers get them and businesses send them out.

Under the health care law, the 1099 form would be used to track payments for services and tangible goods. Also, it requires that 1099s be issued not just to individuals, but to corporations as well.

The new mandate has drawn sharp criticism from the business community, politicians and even President Obama. In November, President Obama pledged that he would support a repeal of the provision.

The purpose of this addition to the law was to make sure individuals are reporting all of their income earned and hopefully to find additional tax money in order to pay for the health care bill.  However if the paperwork itself creates a financial burden on small businesses this can cause additional companies to close down and continue the issues that are making this recession last so long.

The senators said they “are confident that the Senate can quickly act” on the repeal once the House has moved it along.