Despite the profession's best efforts, the expanded Form 1099 reporting requirement for businesses is still in place.
On July 31, the U.S. House of Representatives failed to pass H.R. 5982, which would have repealed the section of the new health care law that requires businesses to report to the Internal Revenue Service (IRS) any purchase from a vendor of goods or services worth $600 or more during the calendar year.
The reporting requirement is included in the Patient Protection and Affordable Care Act and is effective for purchases made in 2012 that will be reported on 1099 forms filed in 2013.
In a recent letter, the American Institute of CPAs (AICPA) told Congress it would be burdensome and costly for small businesses to compile the data and prepare the Form 1099-MISC information return. Furthermore, the AICPA said the information collected on the 1099 forms would not be very helpful to the IRS in collecting any unpaid taxes that should have been paid by the vendor because it will be difficult to reconcile payments reported on the forms and income reported by the vendor.
Where does this leave you and your clients? What changes will you need to implement in terms of recordkeeping and software? What do you need to communicate to your clients?
Also, the IRS has indicated it plans to exempt from this reporting requirement any business transactions completed via credit or debit card, as such transactions are already reported by the payment processors. While the exemption might provide some administrative relief, could small businesses unable to adapt lose customers who seek vendors that don't require the additional reporting?
Read a recent article from the Journal of Accountancy for more info on this requirement, and share your thoughts, concerns and ideas here at http://www.cpacafe.com/.