Summer won’t be here for months, but finance pros have been taken on quite a roller-coaster ride when it comes to the repeal of the new 1099 requirements. So how close are we now?
It was looking good for a while there. A few weeks back you’d probably all-but written off the fact that your company would have to track payments and then issue 1099s for every vendor you pay more than $600 in a given year.
For the first time since that requirement was passed as a revenue generator in healthcare reform, we’d finally been making headway:
- In early February, the Senate passed a repeal tacked on to a funding bill for the Federal Aviation Administration.
- Less than a month later, the House passed the Small Business Paperwork Mandate Elimination Act of 2011.
And that’s when the trouble began. Both bills are looking to make up the revenue lost by repealing the reporting requirements in very different ways. So both sides are now duking it out in Congress to see which version will stand.
There’s plenty of pressure to get it done – small business groups have been lobbying long and loud due to the massive burden this will put on these companies. The AICPA’s bucking for a repeal, too.
But the bumpy road won’t end there.
President Obama has made it clear he doesn’t like either option to make up the money. So even though he has admitted a repeal of the 1099 requirements may be necessary, he’s not going to sign it unless lawmakers find another way to make up the revenue.
In the meantime …
Seeing as it’s already been a year since these requirements were passed and they’re still on your to-do list starting Jan. 1, it couldn’t hurt to at least start thinking about what you’d have to do to comply. A few factors to consider:
- Determine what changes you’d need to make to your A/P system to flag all vendors, incorporated or not, once they pass the $600 threshold starting Jan. 1, 2012.
- Figure out how you’d capture Employer ID numbers and other pertinent data you’ll need to file 1099s starting with Tax Year 2012.
Hopefully it’ll never come to this, but at least you won’t be caught off guard if the requirements don’t get repealed.
Stay tuned. We’ll keep you updated every step of the way.
