For more than 60 years, IRS law required businesses to prepare and mail a Form 1099 to any non-corporate service provider receiving $600 or more in payments during a calendar year. The law ensures that sole proprietors report their income and that businesses everywhere shoulder the administrative cost of tax compliance. In yet another disappointing provision of “The Patient Protection and Affordable Care Act,” Section 9006 on page 737 greatly expands this administrative burden by requiring that the form be prepared and mailed for payments on tangible goods in addition to services. But wait…there’s more! Not only has Congress expanded the types of transactions on which to require Form 1099 reporting, but businesses must now also report on all purchases from corporate sellers, as well. So, if I have 1,000 vendors, I can expect to send all of them a Form 1099, which will cost me $440 in postage alone.
Rep. Dan Lungren (R-Ca) has introduced a bill in Congress to repeal this provision of PPACA, and this bill has languished in the House Committee on Ways and Means since April.
Incidentally, Sage Accpac ERP supports the IRS electronic filing requirement for filers of 250 or more Form 1099s.
- Brian Terrell, CPA and Managing Partner