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New reporting requirements look likely to hit small biz hardest
Although it's just one of many new taxes in the health care reform law, and its effective date is more than a year away, the new Form 1099 reporting requirements are suddenly on everyone's radar screen.
The requirements, included as Section 9006 in the Patient Protection and Affordable Care Act, will require the tracking of payments for goods as well as services, and for payments to corporations as well as individuals. All businesses, tax-exempt organizations, and federal, state and local government entities will be required to issue Forms 1099 to vendors from whom they make purchases totaling $600 or more during a calendar year.
National Taxpayer Advocate Nina Olson cited the new requirements as one of her main concerns during the fiscal year ahead, saying that the burdens "may turn out to be disproportionate as compared with any resulting improvement in tax compliance."
During 2011, her office will study the impact of the new reporting requirement more closely and, depending on what the study finds, may propose administrative or legislative recommendations to modify the provision or suggest that Congress consider less burdensome tax gap proposals.
"This will add an untold number of 1099s to the mix, and it's going to be a record-keeping burden for the purchaser," said Benson Goldstein, senior technical manager at the American Institute of CPAs. "What if they have multiple locations, and the purchaser is buying from many different vendors? There's a lot to be worked...