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Senate Adopts House Bill to Repeal Expansion of 1099 Reporting |
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Dear Financial Leader,
On Tuesday, April 5, the Senate approved H.R. 4, Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 (Repeal Act). The Repeal Act reverses the expansion of information reporting requirements that were included in the 2010 Patient Protection and Affordable Care Act (Health Care Act) and the Small Business Jobs Act (Jobs Act).
The Repeal Act will now go to the President for signature before it becomes law. In a statement released by the White House Press Secretary, the President said “we are pleased Congress has acted to correct a flaw that placed an unnecessary bookkeeping burden on small businesses.” The AICPA issued a statement and congratulated Congress on its April 5 repeal.
Effective for payments made after December 31, 2011, the Repeal Act eliminates the need to file information returns for payments to corporations or for payments for property and other gross proceeds as well as for rental property expenses.
The Repeal Act did not reverse increases of the following penalties laid out in the Jobs Act:
- failure to file information returns correctly or completely;
- failure to file information returns by the prescribed filing date;
- failure to file information returns electronically if required to do so;
- reporting incorrect or failing to report taxpayer identification numbers; and
- filing paper forms that are not machine readable.
Companies should continue to review practices and procedures to maintain compliance with reporting requirements. Each penalty is based on when the information return is filed:
| |
Per Return |
Maximum |
Small Business Maximum |
| File Within 30 Days of Due Date |
$30 |
$250,000 |
$75,000 |
| File More than 30 Days Late but by August 1 |
$60 |
$500,000 |
$200,000 |
| File After August 1 or fail to file |
$100 |
$1,500,000 |
$500,000 |
The minimum penalty for each failure due to intentional disregard increases from $100 to $250. The increased penalties apply to information returns required to be filed on or after Jan. 1, 2011.
The AICPA proudly advocated on behalf of our profession, and sent letters urging members of the House Ways and Means Committee and Senate Finance Committee to repeal the enhanced 1099. You can find out more about this issue and other important information affecting our profession in the Journal of Accountancy, AICPA News Update, BusIndNews and CPA Letter Daily.
Sincerely,
Carol Scott, CPA, MBA
Vice President - Business, Industry & Government
American Institute of Certified Public Accountants
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