FEBRUARY 3, 2011
AHC WASHINGTON UPDATE – American Horse Council
1099 Reporting Requirement Amendments Passes
This week the Senate approved an amendment to the FAA Air Transportation Modernization and Safety Improvement Act that will repeal the recent 1099 paperwork mandate. The amendment was offered by Senator Debbie Stabenow (D-MI).
The 1099 paperwork mandate was a provision of the health care bill passed last year that imposes new tax reporting requirements, on every business in the U.S., including those in the horse industry, beginning in 2012.
There were several attempts to repeal the 1099 requirement last Congress which failed.
The AHC supports repeal of the new 1099 reporting requirement.
Background
The Patient Protection and Affordable Care Act (“Health Care Bill”) that was signed into law last year included a provision broadly-expanding 1099 IRS form reporting requirements starting in 2012. Currently the law requires 1099s to be sent to any independent contractor that receives $600 or more from a business in a year. The new requirement requires 1099s be sent not only to independent contractors but also to any individual or corporation from whom a business purchases a total of $600 or more in goods or services in any given year. Its stated purpose is to identify unreported taxable income, fraudulent tax deductions, and increase tax compliance.
This new requirement will greatly increase the administrative burden on all businesses, particularly small businesses, including those in the horse industry. For example if a horse farm buys $600 worth of hay and grain from a particular retailer, or purchases buckets and bridles for a total of $600 from a tack shop, or an even buys office supplies of $600 from a supply store over the course of the year, or an individual buys a computer for $700 from a local store, they are required to issue each business a 1099 form that must be completed and returned to the IRS. This reporting mandate places an added burden on each business involved. The horse businesses would have to collect information and tax identification numbers for every entity they do $600 worth of business with and mail them forms and the business receiving the forms must complete them.
The Stabenow amendment repeals only the new reporting requirements. Businesses would still have to send 1099s to independent contractors.
Next steps
The Senate must now approve the FAA Air Transportation Modernization and Safety Improvement Act which will then be considered by the House. Repeal of the 1099 provision has broad bipartisan support. But the larger bill may or may not pass both the Senate and the House. Therefore, repeal at this juncture is not assured.
Senator Mike Johanns (R-NE), Senator Max Baucus (D-MT), Congressman Dan Lungren (R-CA), and Congressmen Steve Scalise (R-LA), have each introduced stand alone bills that would also repeal the 1099 provision.
The AHC supports repeal of the new 1099 reporting requirement.
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