Don’t bet on it.
via CCH
Because Congress and the IRS both have a lot of issues to address at year-end, little guidance on 1099 compliance will be forthcoming until after the next filing season, according to John W. Roth, J.D., Senior Tax Analyst at CCH.
“Congress has so much on its plate now that it is not likely to be addressed until next year, and a lot depends on who controls Congress at that time,” Roth says. “There are likely to be continued efforts to repeal, but who knows if these efforts have any chance at success.”
So far, the IRS has said only that companies who pay bills with credit or debit cards will dodge the 1099 bullet, because the reporting burden will fall on the credit card companies, Roth says.
But many vendors or suppliers may not want to allow it because of the extra cost to them of 2 to 3 percent per transaction, and some purchases will exceed the dollar limit for company credit cards.
Today most corporations are required to perform 1099 reporting for less than 10% of their supplier population. But that will jump to 90% in 2012. Legislation could make corporations do nine times as much 1099 reporting.
Congress expects the 1099 measure to raise $17 billion in taxes and fees, offsetting part of the cost of health care reform.
“Increasing third-party reporting is proven to increase compliance,” says Roth. But it places a heavy accounting and reporting burden on businesses. “There’s been a lot of pushback from the business community,” Roth says. “But intense lobbying to amend or repeal the 1099 reporting requirement has fallen short. It still remains set to go into effect.”
