Timely Tax Alert

1. Updates  on Form 1099 Reporting.  Congress attempts to give small business owners relief from 1099  record-keeping requirements.

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The House passed (314-112) legislation (H.R. 4) to repeal new Form 1099 reporting rules that are burdensome to all businesses. Bills passed by the House and Senate use different methods to offset the cost of the repeal and that could delay enactment of a final resolution. Almost all Representatives and Senators have signaled their support for repeal by voting for measures that would repeal new requirements requiring businesses and landlords to issue a Form 1099 for payments to corporations for goods and services that exceed $600 per year.

Although the reports are not required until 2012, businesses need to know whether to invest in programs or implement procedures that enable them to track the payments during 2011 in order to report in 2012. The House debate focused almost exclusively on a $25 billion adjustment to the premium assistance tax credits in the 2010 health care law that the Republican majority used to pay for the Form 1099 repeal.

Currently, 1099 forms are issued to independent service contractors who provide $600 or more in services. Payments made to a corporation and payments for merchandise are generally not currently required to be reported.

The new regulations are aimed at catching businesses which underreport income. These regulations require a 1099 form to be issued to any vendor from which more than $600 worth of goods or services was purchased. This means all businesses, tax-exempt organizations, and Federal, State and local government entities will be required to issue Forms 1099 to all vendors from whom they make purchases totaling $600 or more during a calendar year. It becomes the responsibility of the owner to keep track of which businesses will reach the $600 threshold for a particular vendor during the calendar year. The impact of this new reporting requirement would be a record-keeping nightmare for the small business owner. 

2. Internal Revenue Service Advisory Council Public Reports

http://www.irs.gov/taxpros/article/0,,id=102281,00.html

3. Updates on Foreign Earned Income Exclusion

http://www.irs.gov/pub/irs-drop/n-10-27.pdf

4. Updates on Foreign Bank Account Reporting: Secondary Disclosures.

http://www.irs.gov/newsroom/article/0,,id=235695,00.html

1 comment

  1. Jesslyn
    2011/11/14 at 06:16:31

    Glad I’ve finally found somehting I agree with!

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