Friday, April 15, 2011

Form 1099 enhanced reporting by businesses is repealed

It's finally official. Enhanced 1099 reporting is dead.

On April 14 President Obama signed into law H.R. 4, the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011.

This erases from the tax code the enhanced 1099 reporting rule.

This provision, created as a way to pay for health care, that in 2012 would have required submit to the IRS a Form 1099 for payments made to any single vendor for goods and services totaling more than $600 a year.

Also gone thanks to the president's signature is a similar reporting requirement, as part of the Small Business Jobs Act of 2010, that applied to those receiving rental income from real estate.

To make up the money lost by nullifying the original 1099 expansion, the new law raises the amount of a health care tax credit, which will be available beginning in 2014, that can be recaptured from taxpayers in cases of overpayment.

The Joint Committee on Taxation has estimated that the new offset will raise $24.9 billion over 10 years and that repealing the 1099 reporting requirements will cost $24.7 billion over 10 years.

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