Guest Article

(From the November 22, 2010 issue of Deloitte's Washington Bulletin, a periodic update of legal and regulatory developments relating to Employee Benefits.)

New Form 1099 Reporting May Be Repealed

Senate Finance Committee Chairman Max Baucus (D-Montana) last week introduced legislation to repeal the Form 1099 reporting requirement enacted under the Patient Protection and Affordable Care Act. Passed as a revenue raiser to better enable the IRS to keep track of tax liabilities, the requirement will generally obligate businesses to file a Form 1099 information report for any expense payment they make of $600 or more during the taxable year, beginning with payments made after December 31, 2011.

The announcement from the Senate Finance Committee explained that the idea - of using Form 1099 to indicate how much money businesses pay to corporations - was to help the IRS keep track of what businesses spend and earn and, in doing so, keep better track of tax liability. An estimated $345 billion in owed taxes go unpaid each year according to the Treasury Department, and the purpose of the expanded reporting was to collect more of those unpaid taxes. But some are concerned the new reporting requirement will impose too large a paperwork burden.

Senate Bill 3946 was introduced on November 15 to repeal the expanded Form 1099 reporting requirements under the Affordable Care Act. (A similar bill, H.R. 5141, was introduced earlier this year in the House of Representatives.) Notably, Senate Bill 3946 does not attempt to repeal the expanded reporting requirements under the Small Business Jobs Act of 2010, which will require landlords to report expense payments of $600 or more per year, effective for payments that are made after December 31, 2010.

The information in this Washington Bulletin is general in nature only and not intended to provide advice or guidance for specific situations. If you have any questions or need additional information about articles appearing in this or previous versions of Washington Bulletin, please contact: Robert Davis 202.879.3094, Elizabeth Drigotas 202.879.4985, Mary Jones 202.378.5067, Stephen LaGarde 202.879-5608, Bart Massey 202.220.2104, Tom Pevarnik 202.879.5314, Sandra Rolitsky 202.220.2025, Deborah Walker 202.879.4955. Copyright 2010, Deloitte.