Just Plain Dumb... Special Post by Ann Sullivan, WIPP Government Relations
1:10 PM July 21, 2010
Maybe the 100 degree heat and rain forest-like humidity in Washington is getting to me, but I just don't have an explanation for what was put into law earlier this year - the "1099" issue as it is known in Washington.
As a matter of background, the 1099 IRS form was used for independent contractors - a way of the IRS tracking that in fact, the contractor paid his/her taxes. In 2001, the Congress instituted a new requirement that all businesses must submit 1099 forms for any service that exceeded $600.00. This year, tucked away in the health care overhaul, the Congress expanded the reporting requirement to include goods and services purchased over $600.00. This new requirement goes into effect in 2012.
Are you kidding me?
As a business owner, I cannot believe that the Congress put this requirement into effect. Let me see - if I book an airline ticket above $600.00, I have to get 1099 information from United Airlines? If I buy office supplies from Office Depot, I need to get 1099 information from them? Buy a computer- well it will be fun to try to get Apple to send me information so I can fill out a 1099 now, won't it?
The IRS estimates that about 40 million businesses and other entities will be subject to the new requirement ($600/goods and services). Even before the $600.00 requirement on services, the Government Accountability Office (GAO) found that filing only 10 of these forms required 3-5 business hours doing the paperwork. With the new changes, businesses could now spend days filling out hundreds of 1099 forms.
And then when we all go to the trouble of filling out all this paperwork, who is going to use it? Not the IRS, according to the National Taxpayer Advocate Nina Olson. In a recent testimony to Congress, she reported that the IRS wouldn't even be able to keep up with the millions of new 1099 filings caused by the changes. ―The conventional wisdom seems to be that more hard-core enforcement actions like liens and levies mean more revenue,‖ said Olson. She went on to point out that the government actually lost money by chasing liens and levies, so imagine chasing 1099 compliance for 40 million companies.
But there is hope. Some in Congress have figured it out. Senator Mike Johanns (R-NE) and Representative Lungren (R-CA) introduced legislation to repeal the ―goods‖ requirement contained in the health care law this year. It would make a good amendment to the Small Business Jobs Act because of its adverse impact on small businesses.
Take action. Call or email your Senator/Representative and tell them to get rid of this requirement. We are too busy running our businesses and trying to create jobs to do this paperwork.
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