WASHINGTON BUREAU — Form 1099 fixer legislation probably will be introduced in the Senate this week, according to Sen. Max Baucus.
Form 1099 is the form businesses and others use to report a wide variety of payments to the Internal Revenue Service (IRS). A broad new 1099 reporting requirement is part of the new Patient Protection and Affordable Care Act (PPACA), a part of the Affordable Care Act package.
The provision, set to take effect in 2012, is supposed to raise $18 billion over 10 years by requiring all businesses, tax-exempt organizations, and federal, state and local government entities to issue Form 1099 to vendors from whom they buy goods totaling $600 or more during a calendar year.
Some critics have suggested that strict enforcement of the provision could require a free-lancer who buys a $700 computer from the local discount store to send a Form 1099 to the discount store.
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Baucus, D-Mont., chairman of the Senate Finance Committee, says lawmakers put the provision in PPACA in an effort to hold down taxes, by giving the IRS more collection tools.
“However, following passage of the law, some business owners expressed concern that when the provision does go into effect, the forms would place too large of a paperwork burden on businesses struggling in a still-recovering economy,” Baucus says.
Baucus says he will support repealing the new reporting requirements while looking for other ways to improve tax compliance and keep taxes low.