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Tuesday, November 30, 2010

The 1099 Drama Continues

The expanded 1099 filing requirement brought about in the March 2010 health care legislation and calls for its repeal are starting (continuing?) to look like soap opera drama. There have been a few efforts to repeal the requirement, but with the need to find an offset for the roughly $2 billion per year it was expected to generate, it is difficult to repeal. Also, conventional wisdom is that information reporting helps reduce the tax gap. So, what message is being delivered when a 1099 requirement is repealed? Of course, it needs to be appropriate information reporting to have any significant impact on the tax gap.

The latest news is that two efforts to repeal it this week have failed. See a New York Times article of 11/29/10 by Carl Hulse, "Senators Cannot Agree on Fix to the Health Law."

It is also a bit comical perhaps in that there are arguably more pressing matters, such as what to do about the 72 provisions that expired in 2009 as well as the 2001/2003 tax cuts - all matters that greatly affect filing 2010 returns which starts in less than six weeks! The 1099 requirement doesn't start until 2012. Of course, given the challenge of finding revenue to cover repeal, it very well might need to be considered before renewing provisions that expired in 2009.

What a mess!

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1 comment:

Peter Reilly said...

As I think about it I'm not sure the requirement would be quite as disastorous for small business as some people think. I'm sure bill paying 1099 issuing services will pop-up similar to payroll services and the cost will be driven down fairly low. Vendors will cooperate if they want to get paid.