What’s up with the Form 1099 Reporting Requirements?
Well, many of us thought we’d have to file a form 1099 with the U.S. Internal Revenue Service for payments for goods and services totaling more than $600 in a calendar year, rendered by a single payee, including corporations. This provision was part of the health care reform law passed last year and is current law. Whew! What a bunch of paperwork!
But put your pens and Form 1099’s away! After months of debate and several previous unsuccessful attempts, The U.S. Senate finally approved HR 4, legislation to repeal expanded Form 1099 reporting requirements. President O’bama announced he will sign the bill when it reaches his desk.
When the president signs HR4 into law, it will mark the first significant change to the health care reform law that was enacted a little over a year ago.
The provision has been widely criticized by members of both political parties, as it is believed to be overly burdensome to small businesses. So, the question wasn’t whether to repeal the decision, but how to replace lost revenue the provision was expected to generate.
HR 4 addresses the revenue issue through tax credits in the health care reform law that would provide assistance in the payment of health insurance premiums. Where tax credits were overpaid, HR 4 would require recipients to repay a greater share. Not all were in favor of this approach, as some claimed it effectively would result in tax increases for certain middle-class taxpayers. Ultimately, however, this wasn’t a big enough concern to halt the legislation, which passed both chambers of Congress with veto-proof margins.