In the June 23 issue of this newsletter, we discussed new 1099 rules contained in the Patient Protection and Affordable Healthcare Act that would make businesses report to the IRS any purchase from a vendor worth $600 or more. These rules, set to take effect in 2012, would be a tremendous headache for many small business owners, and as they expand, the headache would get bigger. Many businesses have been upset by this, so much so that the American Institute of CPAs has been urging Congress to scale back the impending rules. Fortunately, it looks as though they will get their wish.
Although the exact mechanism by which those rules are eased remains in question, enough Members of Congress and Senators, both Democrats and Republicans, have been introducing such amendments to the Small Business Jobs Act that it is a safe bet that some amendment or other making that a reality will make it into the final bill.
Without going too much into the legislative procedural details, here’s a quick overview of where things stand and what to expect: The House of Representatives failed to pass the Small Business Tax Relief Act before leaving for August Recess due to Democrats using a procedural tactic requiring them to secure a 2/3 majority for passage, rather than the usual simple majority, which they were unable to do, despite the Bill receiving a healthy majority of votes. They are likely to revisit small business tax relief later this year when they return from recess. The Senate, meanwhile, was in the process of amending the Small Business Jobs Act before the August Recess and will return to it in September.
Before the Senate broke for Recess, several amendments were offered which may wind up in the eventual bill that addressed the 1099 problem, and they are in various stages of committee. The rule is likely to either be completely repealed, or the amount of money that triggers the necessity of a 1099 is likely to be raised dramatically (one amendment raises it from $600 to $5,000). The bottom line is that if they can pass a bill repealing or amending the law, the 1099 rule will be significantly scaled back, avoiding serious headaches for business owners.
- Hiring Incentives to Restore Employment Act Approved by Congress; Time for President Obama to Sign the Bill Into Law
- What You Need to Know About the New Healthcare Bill
- Healthcare Law Imposes Daunting New Requirements and Non-compliance Penalties
- Tax Alert: COBRA Subsidy Eligibility Extended to May 31, 2010
- The Hidden Surprise in the Healthcare Bill: Student Loan Reform
