Small businesses can breathe a sigh of relief. The dreaded 1099 filing requirement added in last year’s health care law is repealed before it has a chance to take effect.
Under the health care law, a business is required to issue a 1099 form to all vendors starting in 2012 if the business purchases $600 or more in goods or services in a year from that vendor. It’s especially burdensome for small businesses to collect information from corporate vendors such as chain stores or even gas stations.
It took a new law to repeal this provision in the health care law. The new law has a tongue-twisting name: Comprehensive 1099 Taxpayer Protection and Replacement of Exchange Subsidy Overpayments Act of 2011. It passed both houses with overwhelming support, 314-112 in the House, 87-12 in the Senate. President Obama is expected to sign it. For once, politicians do agree on something.
After the repeal, it’s back to business as usual. In general, a 1099 is required only if the vendor is a person, not a corporation, AND only if the purchase is for services, not goods.
The new law also repealed a similar 1099 reporting requirement for landlords enacted in last year’s Small Business Jobs Act.
Reference: 1099 Taxpayer Protection Act of 2011, CCH Tax Briefing